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Accounting Policies of Mahanagar Telephone Nigam Ltd. Company

Mar 31, 2015

1. Basis of preparation of financial statements

The financial statements have been prepared in accordance with Generally Accepted Accounting Principles (GAAP), Accounting Standards specified under section 133 of Companies Act, 2013 read with Rule-7 of Companies (Accounts) Rules, 2014 & as amended time to time and the relevant provisions of the Companies Act, 2013.

The financial statements are prepared on accrual basis under the historical cost convention, except the following items, which are accounted for on cash basis:

- Interest income/liquidated damages, where reliability is uncertain.

- Annual recurring charges of amount up to Rs. 1.00 lakh each for overlapping period.

2. Use of Estimates

The preparation of the financial statements in conformity with GAAP requires judgments, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognized in the period in which the results are known/ materialized.

3. Revenue Recognition

(a) Revenue is recognized on accrual basis, including income from subscribers whose disputes are pending resolution, and closure of the subscribers'' line. Revenue in respect of service connection is recognized when recoverability is established.

(b) (i) Provision is made for wrong billing, disputed claims from subscribers (excluding operators covered under the agreements related to IUC/Roaming/MOU) and cases involving suspension of revenue realization due to proceedings in Court.

(ii) In case of landline services provision is made for debtors outstanding for more than 1 year but up to 3 years to the extent of 50 % and 100% in respect of more than 3 years.

(iii) In respect of closed connections, provision is made in respect of outstanding for more than 3 years along with spillover amount for upto 3 years.

(iv) In case of wireless services (GSM & CDMA), provision is made for dues, which are more than 180 days.

(c) Activation charges, in case of Landline, are recognized as income in the year of connection.

(d) Activation charges, in case of Mobile Services (GSM), are recognized as revenue on connection.

(e) Income from services includes income from leasing of infrastructure to other service providers.

(f) The cost of stores and materials is charged to project or revenue job at the time of issue. However, spill over items at the end of the year lying at various stores are valued at weighted average method.

(g) The sale proceeds of scrap arising from maintenance & project works are taken into miscellaneous income in the year of sale.

(h) Bonus/ Excreta is paid based on the productivity linked parameters and it is to be provided accordingly subject to the profitability of the company.

(i) Income from services pertaining to prior years is not disclosed as prior period item. In respect of other income/expenditure, only cases involving sums exceeding Rs. 1.00 lakh are disclosed as prior period items.

4. Employee Retirement Benefits

(a) In respect of officials who are on deemed deputation from DOT and other Govt. Departments, the provision for pension contribution is provided at the rates specified in Appendix 2(A) to FR 116 and 117 of FR. & SR. and provision for leave encashment is made @ 11% of pay as specified in appendix 2(B) of F.R.116 and 117 of F.R. & S.R. Provision of gratuity, in respect of these officers, is not required to be made.

(b) (i) For absorbed combined service pension opted employees in MTNL, no provision is made for the pensioner benefits viz pension and gratuity, except for the amounts due to difference in pay scales of MTNL and BSNL which is payable by MTNL to the Government of India till next wage revision by which time MTNL and BSNL shall achieve pay scale parity.

(ii) Annual pension contribution in respect of absorbed combined service pension optee employees in MTNL is payable to the Govt. of India as per FR-116 as in BSNL with equivalent BSNL pay scales and it is expensed off in the relevant year.

(iii) Liability for leave encashment for all employees of MTNL is accounted for on Actuarial valuation basis.

(iv) For absorbed CPF opted and direct recruits of MTNL, actuarial valuation is made for gratuity.

(c) For post retirement medical benefits, no provision is made since insurance policy is taken periodically and the premium is expensed off in the relevant year.

5. Fixed Assets

(a) Fixed Assets are carried at cost less accumulated depreciation. Cost includes directly related establishment expenses including employee remuneration and benefits and other administrative expenses. Establishment overheads and expenses incurred in units where project work is also undertaken are allocated to capital and revenue based either on time allocated or other attributable basis. Assets are capitalized, as per the practices described below, to the extent completion certificates have been issued, wherever applicable.

(i) Land is capitalized when possession of the land is taken.

(ii) Building is capitalized to the extent it is ready for use.

(iii) Apparatus & Plants principally consisting of Telephone Exchange Equipments and Air Conditioning Plants are capitalized on commissioning of the exchange. Subscribers Installations are capitalized as and when the exchange is commissioned and put to use either in full or in part.

(iv) Lines & Wires are capitalized as and when laid or erected to the extent completion certificates have been issued.

(v) Cables are capitalized as and when ready for connection with the main system.

(vi) Vehicles and Other Assets are capitalized as and when purchased.

(vii) Intangible assets including application software are capitalized when ready for use. Entry fee for onetime payment for 3G spectrum is also capitalized.

(b) The fixed assets of the company are being verified by the management at reasonable intervals i.e. once in every three years by rotation. The physical verification of underground cables is done on the basis of working of network and based on records available together with a certificate from the technical officers.

(c) Expenditure on replacement of assets, equipments, instruments and rehabilitation work is capitalized if it results in enhancement of revenue earning capacity.

(d) Upon scrapping / decommissioning of assets, these are classified in fixed assets at the lower of Net Book Value and Net Realizable Value and the resultant loss, if any, is charged to Statement of Profit and Loss.

6. Depreciation & Amortization

(a) Depreciation is provided on Straight Line Method on the basis of the useful lives prescribed in Schedule II of the Companies Act 2013 except in respect of Apparatus & Plant (including Towers, Transceivers, switching centres, transmission & other network equipments), which are depreciated at the rates based on technical evaluation of useful life of these assets i.e. 10 years, which is lower than the lives prescribed in Schedule II of the Companies Act 2013.

(b) 100 % depreciation is provided on assets of small value in the year of purchase, other than those forming part of project, the cost of which is below Rs.0.10 lakh in case of Apparatus & Plants, Training Equipment & Testing Equipment and Rs.2.00 lakh for partitions.

(c) Intangible assets represented by one-time upfront payment for 3G spectrum is amortized over the period of license i.e. 20 years.

(d) Application software is amortized over the useful life of the assets which is considered as 10 years.

(e) Value of Leasehold Land is amortized over the period of lease.

7. Inventories

Inventories being stores and spares are valued at cost or net realizable value, whichever is lower and the cost is determined on weighted average basis. However, inventories held for capital consumption are valued at cost.

8. Foreign Currency Transactions

Transactions in foreign currency are stated at the exchange rate prevailing on the transaction date. Year- end balances of current assets and liabilities are restated at the closing exchange rates and the difference adjusted to Statement of Profit & Loss.

9. Investments

Current investments are carried at the lower of cost & fair market value. Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary in the opinion of the management.

10. Taxes on Income:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961.

Deferred Tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantially enacted as on balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the asset will be realized in the future. In situations where the company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

Minimum Alternate Tax (MAT) credit is recognized, as an asset only when and to the extent there is convincing evidence that the company will pay normal Income Tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by The Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit

Entitlement.

11. Impairment of assets:

The company assesses at each balance sheet date whether there is any indication that any asset, may be impaired. If any such indication exists, the carrying value of such assets is reduced to its estimated recoverable amount and the amount of such impairment loss is charged to the Statement of Profit and Loss. If, at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

12. Provisions and contingent liabilities:

A provision is recognized when the company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation and also in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Where there is a possible obligation or a present obligation for which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent liabilities are disclosed in case of present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation.


Mar 31, 2014

1. Basis of preparation of financial statements

The financial statements have been prepared in accordance with Generally Accepted Accounting Principles (GAAP), Accounting Standards as per Companies (Accounting Standards) Rules, 2006 & as amended time to time and the relevant provisions of the Companies Act, 1956.

The financial statements are prepared on accrual basis under the historical cost convention, except the following items, which are accounted for on cash basis:

1 Interest income/liquidated damages, where realisability is uncertain.

2 Annual recurring charges of amount up to Rs. 0.10 Million each for overlapping period.

2. Use of Estimates

The preparation of the financial statements inconformity with GAAP requires judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognized in the period in which the results are known/materialized.

3. Revenue Recognition

(a) Revenue is recognized on accrual basis, including income from subscribers whose disputes are pending resolution, and closure of the subscribers'' line. Revenue in respect of service connection is recognized when recoverability is established.

(b) (i) Provision is made for wrong billing, disputed claims from subscribers (excluding operators covered under the agreements related to IUC/Roaming/MOU) and cases involving suspension of revenue realization due to proceedings in Court.

(ii) In case of landline services provision is made for debtors outstanding for more than 1 year but upto 3 years to the extent of 50 % and 100% in respect of more than 3 years.

(iii) In respect of closed connections, provision is made in respect of outstanding for more than 3 years along with spillover amount for upto 3 years.

(iv) In case of wireless services (GSM & CDMA), provision is made for dues, which are more than 180 days.

(c) Activation charges, in case of Landline, are recognized as income in the year of connection.

(d) Activation charges, in case of Mobile Services (GSM), are recognized as revenue on connection.

(e) Income from services includes income from leasing of infrastructure to other service providers.

(f) The cost of stores and materials is charged to project or revenue job at the time of issue. However, spill over items at the end of the year lying at various stores are valued at weighted average method.

(g) The sale proceeds of scrap arising from maintenance & project works are taken into miscellaneous income in the year of sale.

(h) Bonus/ Exgratia is paid based on the productivity linked parameters and it is to be provided accordingly subject to the profitability of the company.

(i) Income from services pertaining to prior years is not disclosed as prior period item. In respect of other income/expenditure, only cases involving sums exceeding Rs. 0.10 Million are disclosed as prior period items.

4. Employee Retirement Benefits

(a) In respect of officials who are on deemed deputation from DOT and other Govt. Departments, the provision for pension contribution is provided at the rates specified in Appendix 2(A) to FR 116 and 117 of FR. & SR. and provision for leave encashment is made @ 11% of pay as specified in appendix 2(B) of F.R.116 and 117 of F.R. & S.R. Provision of gratuity, in respect of these officers, is not required to be made.

(b) (i) For absorbed combined service pension optee employees in MTNL, no provision is made for the pensionary benefits viz pension and gratuity, except for the amounts due to difference in pay scales of MTNL and BSNL which is payable by MTNL to the Government of India till next wage revision by which time MTNL and BSNL shall achieve pay scale parity.

(ii) Annual pension contribution in respect of absorbed combined service pension optee employees in MTNL is payable to the Govt. of India as per FR-116 as in BSNL with equivalent BSNL pay scales and it is expensed off in the relevant year.

(iii) Liability for leave encashment for all employees of MTNL is accounted for on Actuarial valuation basis.

(iv) For absorbed CPF optees and direct recruits of MTNL, actuarial valuation is made for gratuity.

(c) For post retirement medical benefits, no provision is made since insurance policy is taken periodically and the premium is expensed off in the relevant year.

5. Fixed Assets

(a) Fixed Assets are carried at cost less accumulated depreciation. Cost includes directly related establishment expenses including employee remuneration and benefits and other administrative expenses. Establishment overheads and expenses incurred in units where project work is also undertaken are allocated to capital and revenue based either on time allocated or other attributable basis. Assets are capitalized, as per the practices described below, to the extent completion certificates have been issued, wherever applicable.

(i) Land is capitalized when possession of the land is taken.

(ii) Building is capitalized to the extent it is ready for use.

(iii) Apparatus & Plants principally consisting of Telephone Exchange Equipments and Air Conditioning Plants are capitalized on commissioning of the exchange. Subscribers Installations are capitalized as and when the exchange is commissioned and put to use either in full or in part.

(iv) Lines & Wires are capitalized as and when laid or erected to the extent completion certificates have been issued.

(v) Cables are capitalized as and when ready for connection with the main system.

(vi) Vehicles and Other Assets are capitalized as and when purchased.

(vii) Intangible assets including application software are capitalized when ready for use. Entry fee for onetime payment for 3G spectrum is also capitalized.

(b) The fixed assets of the company are being verified by the management at reasonable intervals i.e. once in every three years by rotation. The physical verification of underground cables is done on the basis of working of network and based on records available together with a certificate from the technical officers.

(c) Expenditure on replacement of assets, equipments, instruments and rehabilitation work is capitalized if it results in enhancement of revenue earning capacity.

(d) Upon scrapping / decommissioning of assets, these are classified in fixed assets at the lower of Net Book Value and Net Realisable Value and the resultant loss, if any, is charged to Statement of Profit and Loss.

6. Depreciation & Amortisation

(a) Depreciation is provided on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956 except in respect of Apparatus & Plant (including Air Conditioning System attached to exchanges), which is depreciated at the rates based on technical evaluation of useful life of these assets i.e. 9.5%, which is higher than the rates prescribed in Schedule XIV to the Companies Act, 1956.

(b) 100 % depreciation is provided on assets of small value in the year of purchase, other than those forming part of project, the cost of which is below Rs. 0.01 Million in case of Apparatus & Plants, Training Equipment & Testing Equipment and Rs. 0.20 Million for partitions.

(c) Intangible assets represented by one-time upfront payment for 3G spectrum is amortized over the period of license i.e. 20 years.

(d) Application software is amortised over the useful life of the assets which is considered as 10 years.

(e) Value of Leasehold Land is amortized over the period of lease.

7. Inventories

Inventories being stores and spares are valued at cost or net realizable value, whichever is lower and the cost is determined on weighted average basis. However, inventories held for capital consumption are valued at cost.

8. Foreign Currency Transactions

Transactions in foreign currency are stated at the exchange rate prevailing on the transaction date. Year-end balances of current assets and liabilities are restated at the closing exchange rates and the difference adjusted to Statement of Profit & Loss.

9. Investments

Current investments are carried at the lower of cost & fair market value. Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary in the opinion of the management.

10. Taxes on Income:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961.

Deferred Tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantially enacted as on balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the asset will be realized in the future. In situations where the company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

Minimum Alternate Tax (MAT) credit is recognized, as an asset only when and to the extent there is convincing evidence that the company will pay normal Income Tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by The Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement.

11. Impairment of assets:

The company assesses at each balance sheet date whether there is any indication that any asset, may be impaired. If any such indication exists, the carrying value of such assets is reduced to its estimated recoverable amount and the amount of such impairment loss is charged to the Statement of Profit and Loss. If, at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

12. Provisions and contingent liabilities:

A provision is recognized when the company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation and also in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Where there is a possible obligation or a present obligation for which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent liabilities are disclosed in case of present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation.


Mar 31, 2013

1. Basis of preparation of financial statements

i. The accounts are prepared under the historical cost convention on accrual method of accounting except the following items, which are accounted for on cash basis:

(a) Interest income/liquidated damages, where realisability is uncertain.

(b) Annual recurring charges of amount up to Rs. 0.10 Millions each for overlapping period.

ii. Revenue Recognition

(a) Revenue is recognized on accrual basis, including income from subscribers whose disputes are pending resolution, and closure of the subscribers'' line. Revenue in respect of service connection is recognized when recoverability is established.

(b) Provision is made for wrong billing, disputed claims from subscribers (excluding operators covered under the agreements related to IUC/Roaming/MOU), cases involving suspension of revenue realization due to proceedings in Court and debtors outstanding for more than 3 years. In respect of closed connections provision is made for outstanding for more than 3 years along with spillover amount less than 3 years. In case of Wireless Services (GSM & CDMA), the provision is made for dues, which are more than 180 days.

(c) Activation charges recovered from the subscribers at the time of new telephone connection is recognized as income in the year of connection.

(d) Activation charges in case of Mobile Services (GSM) is recognized as revenue on connection.

(e) Income from services includes income from leasing of infrastructure to other service providers.

iii. The cost of stores and materials is charged to project or revenue job at the time of issue. However, spill over items at the end of the year lying at various stores are valued at weighted average method.

iv. The sale proceeds of scrap arising from maintenance & project works are taken into miscellaneous income in the year of sale.

v. Bonus/ Exgratia is paid based on the productivity linked parameters and it is to be provided accordingly subject to the profitability of the company.

vi. Income from services pertaining to prior years is not disclosed as prior period item. In respect of other income/expenditure, only cases involving sums exceeding Rs. 0.10 Millions are disclosed as prior period items.

1.1 Employee Retirement Benefits

a) In respect of officials who are on deemed deputation from DOT and other Govt. Departments, the provision for pension contribution is provided at the rates specified in Appendix 2(A) to FR 116 and 117 of FR. & SR. and provision for leave encashment is made @ 11% of pay as specified in appendix 2(B) of F.R.116 and 117 of F.R. & S.R. Provision of gratuity, in respect of these officers, is not required to be made.

b) In respect of others, provision is made as per Actuarial Valuation except for post retirement medical benefits for which insurance policy is taken periodically.

2. Fixed Assets & Depreciation

i. Fixed Assets are carried at cost less accumulated depreciation. Cost includes directly related establishment expenses including employee remuneration and benefits and other administrative expenses. Establishment overheads and expenses incurred in units where project work is also undertaken are allocated to capital and revenue based either on time allocated or other attributable basis. Assets are capitalized, as per the practices described below, to the extent completion certificates have been issued, wherever applicable.

(a) Land is capitalized when possession of the land is taken. Value of Leasehold Land is amortized over the period of lease.

(b) Building is capitalized to the extent it is ready for use.

(c) Apparatus & Plants principally consisting of Telephone Exchange Equipments and Air Conditioning Plants are capitalized on commissioning of the exchange. Subscribers Installations are capitalized as and when the exchange is commissioned and put to use either in full or in part.

(d) Lines & Wires are capitalized as and when laid or erected to the extent completion certificates have been issued.

(e) Cables are capitalized as and when ready for connection with the main system.

(f) Vehicles and Other Assets are capitalized as and when purchased.

(g) Intangible assets include application software are capitalized when ready for use, entry fees for one-time payment for 3G and BWA spectrum are capitalized when the liability for the same is known and are amortized over the period for which the spectrum is provided.

ii. The fixed assets of the company are being verified by the management at reasonable intervals i.e. once in every three years by rotation. The physical verification of underground cables is done on the basis of working of network and based on records available together with a certificate from the technical officers.

iii. Expenditure on replacement of assets, equipments, instruments and rehabilitation work is capitalized if it results in enhancement of revenue earning capacity.

iv. Upon scrapping / decommissioning of assets, these are classified in fixed assets at the lower of Net Book Value and Net Realisable Value and the estimated loss, if any, is charged to Profit and Loss A/c.

v. Depreciation

(a) Depreciation is provided on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956 except in respect of Apparatus & Plant (including Air Conditioning System attached to exchanges), which is depreciated at the rates based on technical evaluation of useful life of these assets i.e. 9.5%, which is higher than the rates prescribed in Schedule XIV to the Companies Act, 1956.

(b) 100 % depreciation is charged on assets of small value in the year of purchase, other than those forming part of project, the cost of which is below Rs. 0.01 Millions in case of Apparatus & Plants, Training Equipment & Testing Equipment and Rs. 0.20 Millions for partitions.

(c) Intangible assets of entry fees for one time payment for 3G and BWA Spectrum are depreciated over the period of license respectively i.e. 20/15 years. Application software is depreciated over the useful life of the assets considered as 10 years and amortization is charged on depreciable amount accordingly. There will be no residual value at the end of the life of the assets.

3. Inventories

Inventories being stores and spares are valued at cost or net realizable value, whichever is lower and the cost is determined on weighted average basis. However, inventories held for capital consumption are valued at cost.

4. Foreign Currency Transactions

Transactions in foreign currency are stated at the exchange rate prevailing on the transaction date. Year-end balances of current assets and liabilities are restated at the closing exchange rates and the difference adjusted to Profit & Loss Account.

5. Investments

Current investments are carried at the lower of cost & fair market value. Long term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.


Mar 31, 2012

1. Basis of preparation of financial statements

i. The accounts are prepared under the historical cost convention adopting the accrual method of accounting except the following items, which are accounted for on cash basis:

(a) Interest income/liquidated damages, where realisability is uncertain.

(b) Annual recurring charges of amount up to Rs. 0.10 Millions each for overlapping period.

ii. Revenue Recognition

(a) Revenue is recognized on accrual basis, including income from subscribers whose disputes are pending resolution, and closure of the subscribers' line. Revenue in respect of service connection is recognized when recoverability is established.

(b) Provision is made for wrong billing, disputed claims from subscribers excluding operators covered under the agreements related to IUC/Roaming/MOU, cases involving suspension of revenue realization due to proceedings in Court and debtors outstanding for more than 3 years. In respect of closed connections provision is made for outstanding for more than 3 years along with spillover amount less than 3 years. In case of Wireless Services (GSM & CDMA), the provision is made for dues, which are more than 180 days.

(c) Activation charges recovered from the subscribers at the time of new telephone connection is recognized as income in the year of connection.

(d) Activation charges in case of Mobile Services (GSM) is recognized as revenue on connection.

(e) Income from services includes income from leasing of infrastructure to other service providers.

iii. The cost of stores and materials is charged to project or revenue job at the time of issue. However, spill over items at the end of the year lying at various stores are valued at weighted average method.

iv. The sale proceeds of scrap arising from maintenance & project works are taken into miscellaneous income in the year of sale.

v. Bonus/ Exgratia is paid based on the productivity linked parameters and it is to be provided accordingly subject to the profitability of the company.

vi. Income from services pertaining to prior years is not disclosed as prior period item. In respect of other income/expenditure, only cases involving sums exceeding Rs. 0.10 Millions are disclosed as prior period items.

1.1 Employee Retirement Benefits

a) In respect of officials who are on deemed deputation from DOT and other Govt. Departments, the provision for pension contribution is provided at the rates specified in Appendix 2(A) to FR 116 and 117 of FR. & SR. and provision for leave encashment is made @ 11% of pay as specified in appendix 2(B) of F.R.116 and 117 of F.R. & S.R. Provision of gratuity, in respect of these officers, is not required to be made.

b) In respect of others, provision is made as per Actuarial Valuation.

2. Fixed Assets

i. Fixed Assets are carried at cost less accumulated depreciation. Cost includes directly related establishment expenses including employee remuneration and benefits and other administrative expenses. Establishment overheads and expenses incurred in units where project work is also undertaken are allocated to capital and revenue based either on time allocated or other attributable basis. Assets are capitalized, as per the practices described below, to the extent completion certificates have been issued, wherever applicable.

(a) Land is capitalized when possession of the land is taken. Value of Leasehold Land is amortized over the period of lease.

(b) Building is capitalized to the extent it is ready for use.

(c) Apparatus & Plants principally consisting of Telephone Exchange Equipments and Air Conditioning Plants are capitalized on commissioning of the exchange. Subscribers Installations are capitalized as and when the exchange is commissioned and put to use either in full or in part.

(d) Lines & Wires are capitalized as and when laid or erected to the extent completion certificates have been issued.

(e) Cables are capitalized as and when ready for connection with the main system.

(f) Vehicles and Other Assets are capitalized as and when purchased.

(g) Intangible assets include application software are capitalized when ready for use, entry fees for one-time payment for 3G and BWA spectrum are capitalized when the liability for the same is known.

ii. The fixed assets of the company are being verified by the management at reasonable intervals i.e. once in every three years by rotation. The physical verification of underground cables is done on the basis of working of network and based on records available together with a certificate from the technical officers.

iii. Expenditure on replacement of assets, equipments, instruments and rehabilitation work is capitalized if it results in enhancement of revenue earning capacity.

iv. Upon scrapping / decommissioning of assets, these are classified in fixed assets at the lower of Net Book Value and Net Realisable Value and the estimated loss, if any, is charged to Profit and Loss A/c.

v. Depreciation

(a) Depreciation is provided on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956 except in respect of Apparatus & Plant (including Air Conditioning System attached to exchanges), which is depreciated at the rates based on technical evaluation of useful life of these assets i.e. 9.5%, which is higher than the rates prescribed in Schedule XIV to the Companies Act, 1956.

(b) 100 % depreciation is charged on assets of small value in the year of purchase, other than those forming part of project, the cost of which is below Rs..0.01 Millions in case of Apparatus & Plants, Training Equipment & Testing Equipment and Rs..0.20 Millions for partitions.

(c) Intangible assets of entry fees for one time payment for 3G and BWA Spectrum are depreciated over the period of license respectively i.e. 20/15 years. Application software is depreciated over the useful life of the assets considered as 10 years and amortization is charged on depreciable amount accordingly. There will be no residual value at the end of the life of the assets.

3. Inventories

Inventories being stores and spares are valued at cost or net realizable value, whichever is lower. However, inventories held for capital consumption are valued at cost.

4. Foreign Currency Transactions

Transactions in foreign currency are stated at the exchange rate prevailing on the transaction date. Year-end balances of current assets and liabilities are restated at the closing exchange rates and the difference adjusted to Profit & Loss Account

5. Investments

Current investments are carried at the lower of cost & fair market value. Long term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.


Mar 31, 2011

1. Basis of preparation of financial statements

i. The accounts are prepared under the historical cost convention adopting the accrual method of accounting except the following items, which are accounted for on cash basis:

(a) Interest income/liquidated damages, where realisability is uncertain.

(b) Annual recurring charges of amount up to Rs. 0.10 Millions each for overlapping period. ii. Revenue Recognition

(a) Revenue is recognized on accrual basis, including income from subscribers whose disputes are pending resolution, and closure of the subscribers' line. Revenuein respect of service connection is recognized when recoverability is established.

(b) Provision is made for wrong billing, disputed claims from subscribers excluding operators covered under the agreements related to lUC/Roaming/MOU, cases involving suspension of revenue realisation due to proceedings in Court and debtors outstanding for more than 3 years. In respect of closed connections provision is made for outstanding for more than 3 years along with spillover amount less than 3 years. In case of Mobile Services (GSM), the provision is made for dues, which are more than 180 days.

(c) Activation charges recovered from the subscribers at the time of new telephone connection is recognized as income in the year of connection.

(d) Activation charges in case of Mobile Services (GSM) is recognized as revenue on connection.

(e) Income from services includes income from leasing of infrastructure to other service providers.

iii. The cost of stores and materials is charged to project or revenue job at the time of issue. However, spill over items at the end of the year lying at various stores are valued at weighted average method.

iv. The sale proceeds of scrap arising from maintenance & project works are taken into miscellaneous income in the year of sale.

v. Bonus/ Exgratia is paid based on the productivity linked parameters and it is to be provided accordingly subject to the profitability of the company.

vi. Income from services pertaining to prior years is not disclosed as prior period item. In respect of other income/expenditure, only cases involving sums exceeding Rs. 0.10 Millions are disclosed as prior period items.

1.1 Employee Retirement Benefits

a) In respect of officials who are on deemed deputation from DOT and other Govt. Departments, the provision for pension contribution is provided at the rates specified in Appendix 2(A) to FR 116 and 117 of FR. & SR. and provision for leave encashment is made @ 11 % of pay as specified in appendix 2(B) of F.R.116 and 117 of F.R. & S.R. Provision of gratuity, in respect of these officers, is not required to be made.

b) In respect of others, provision is made as per Actuarial Valuation.

2. Fixed Assets

i. Fixed Assets are carried at cost less accumulated depreciation. Cost includes directly related establishment expenses including employee remuneration and benefits and other administrative expenses. Establishment overheads and expenses incurred in units where project work is also undertaken are allocated to capital and revenue based either on time allocated or other attributable basis. Assets are capitalized, as per the practices described below, to the extent completion certificates have been issued, wherever applicable.

(a) Land is capitalized when possession of the land is taken. Value of Leasehold Land is amortized over the period of lease.

(b) Building is capitalized to the extent it is ready for use.

(c) Apparatus & Plants principally consisting of Telephone Exchange Equipments and Air Conditioning Plants are capitalized on commissioning of the exchange. Subscribers Installations are capitalized as and when the exchange is commissioned and put to use either in full or in part.

(d) Lines & Wires are capitalized as and when laid or erected to the extent completion certificates have been issued.

(e) Cables are capitalized as and when ready for connection with the main system.

(f) Vehicles and Other Assets are capitalized as and when purchased.

(g) Intangible assets include application software are capitalized when ready for use, entry fees for one-time payment for 3G and BWA spectrum are capitalized when the liability for the same is known.

ii. The fixed assets of the company are being verified by the management at reasonable intervals i.e. once in every three years by rotation. The physical verification of underground cables is done on the basis of working of network and based on records available together with a certificate from the technical officers.

iii. Expenditure on replacement of assets, equipments, instruments and rehabilitation work is capitalized if it results in enhancement of revenue earning capacity.

iv. Upon scrapping / decommissioning of assets, these are classified in fixed assets at the lower of Net Book Value and Net Realisable Value and the estimated loss, if any, is charged to Profit and Loss A/c.

v. Depreciation

(a) Depreciation is provided on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956 except in respect of Apparatus & Plant (including Air Conditioning System attached to exchanges), which is depreciated at the rates based on technical evaluation of useful life of these assets i.e. 9.5%, which is higher than the rates prescribed in Schedule XIV to the Companies Act 1956.

(b) 100 % depreciation is charged on assets of small value in the year of purchase, other than those forming part of project, the cost of which is below Rs.0.01 Millions in case of Apparatus & Plants, Training Equipment & Testing Equipment and Rs.0.20 Millions for partitions.

(c) Intangible assets of entry fees for one time payment for 3G and BWA Spectrum are depreciated over the period of license respectively i.e. 20/15 years. Application software is depreciated over the useful life of the assets considered as 10 years and amortization is charged on depreciable amount accordingly. There will be no Tesidual value at the end of the life of the assets.

3. Inventories

Inventories being stores and spares are valued at cost or net realizable value, whichever is lower. However, inventories held for capital consumption are valued at cost.

4. Foreign Currency Transactions

Transactions in foreign currency are stated at the exchange rate prevailing on the transaction date. Year-end balances of current assets and liabilities are restated at the closing exchange rates and the difference adjusted to Profit & Loss Account

5. Investments

Current investments are carried at the lower of cost & fair market value. Long term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.






Mar 31, 2010

1. Basis of preparation of financial statements

i. The accounts are prepared under the historical cost convention adopting the accrual method of accounting except the following items, which are accounted for on cash basis:

(a) Interest income/liquidated damages, where realisability is uncertain.

(b) Annual recurring charges of amount up to Rs. 0.10 Millions each for overlapping period.

ii. Revenue Recognition

(a) Revenue is recognized on accrual basis, including income from subscribers whose disputes are pending resolution, and closure of the subscribers line. Revenue in respect of service connection is recognized when recoverability is established.

(b) Provision is made for wrong billing, disputed claims from subscribers excluding operators covered under the agreements related to IUC/Roaming/MOU, cases involving suspension of revenue realisation due to proceedings in Court and debtors outstanding for more than 3 years. In respect of closed connections provision is made for outstanding for more than 3 years along with spillover amount less than 3 years. In case of Mobile Services (GSM), the provision is made for dues, which are more than 180 days.

(c) Activation charges recovered from the subscribers at the time of new telephone connection is recognized as income in the year of connection.

(d) Activation charges in case of Mobile Services (GSM) is recognized as revenue on connection.

(e) Income from services includes income from leasing of infrastructure to other service providers.

iii. The cost of stores and materials is charged to project or revenue job at the time of issue. However, spill over items at the end of the year lying at various stores are valued at weighted average method.

iv. The sale proceeds of scrap arising from maintenance & project works are taken into miscellaneous income in the year of sale.

v. Bonus / Ex - Gratia is paid based on the productivity - linked parameters and it is provided accordingly.

vi. Income from services pertaining to prior years is not disclosed as prior period item. In respect of other income/expenditure, only cases involving sums exceeding Rs. 0.10 Millions are disclosed as prior period items.

1.1 Employee Retirement Benefits

a) In respect of officials who are on deemed deputation from DOT and other Govt. Departments, the provision for pension contribution is provided at the rates specified in Appendix 2(A) to FR 116 and 117 of FR. & SR. and provision for leave encashment is made @ 11% of pay as specified in appendix 2(B) of F.R.116 and 117 of F.R. & S.R. Provision of gratuity, in respect of these officers, is not required to be made.

b) In respect of others, provision is made as per Actuarial Valuation.

2. Fixed Assets

i. Fixed Assets are carried at cost less accumulated depreciation. Cost includes directly related establishment expenses including employee remuneration and benefits and other administrative expenses. Establishment overheads and expenses incurred in units where project work is also undertaken are allocated to capital and revenue based either on time allocated or other attributable basis. Assets are capitalized, as per the practices described below, to the extent completion certificates have been issued, wherever applicable.

(a) Land is capitalized when possession of the land is taken. Value of Leasehold Land is amortized over the period of lease.

(b) Building is capitalized to the extent it is ready for use.

(c) Apparatus & Plants principally consisting of Telephone Exchange Equipments and Air Conditioning Plants are capitalized on commissioning of the exchange. Subscribers Installations are capitalized as and when the exchange is commissioned and put to use either in full or in part.

(d) Lines & Wires are capitalized as and when laid or erected to the extent completion certificates have been issued.

(e) Cables are capitalized as and when ready for connection with the main system.

(f) Vehicles and Other Assets are capitalized as and when purchased.

(g) Intangible assets include application software, are capitalized when ready for use.

ii. The fixed assets of the company are being verified by the management at reasonable intervals i.e. once in every three years by rotation. The physical verification of underground cables is done on the basis of working of network and based on records available together with a certificate from the technical officers.

iii. Expenditure on replacement of assets, equipments, instruments and rehabilitation work is capitalized if it results in enhancement of revenue earning capacity.

iv. Upon scrapping / decommissioning of assets, these are classified in fixed assets at the lower of Net Book Value and Net Realisable Value and the estimated loss, if any, is charged to Profit and Loss A/c.

v. Depreciation

(a) Depreciation is provided on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956 except in respect of Apparatus & Plant (including Air Conditioning System attached to exchanges), which is depreciated at the rates based on technical evaluation of useful life of these assets i.e. 9.5%, which is higher than the rates prescribed in Schedule XIV to the Companies Act, 1956.

(b) 100 % depreciation is charged on assets of small value in the year of purchase, other than those forming part of project, the cost of which is below Rs.0.01 Millions in case of Apparatus & Plants, Training Equipment & Testing Equipment and Rs.0.20 Millions for partitions.

(c) In case of intangible assets, the useful life of the assets is considered as 10 years and amortization is charged on depreciable amount accordingly. There will be no residual value at the end of the life of the assets.

3. Inventories

Inventories being stores and spares are valued at cost or net realizable value, whichever is lower. However, inventories held for capital consumption are valued at cost.

4. Foreign Currency Transactions

Transactions in foreign currency are stated at the exchange rate prevailing on the transaction date. Year-end balances of current assets and liabilities are restated at the closing exchange rates and the difference adjusted to Profit & Loss Account

5. Investments

Current investments are carried at the lower of cost & fair market value. Long term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

 
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