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Notes to Accounts of Reliance Communications Ltd.

Mar 31, 2015

Note: 1.

Previous year

Figures of the previous year have been regrouped and reclassified, wherever required. Amount in Financial Statements are presented in Rupee crore, except as otherwise stated.

Note: 2.

Foreign Currency Monetary Items

In view of the option allowed pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs (MCA),Government of India, for the year ended on March 31, 2015, the Company has added Rs. 583 crore (Previous year Rs. 1432 crore) of exchange differences on long term borrowing relating to the acquisition of depreciable capital assets to the cost of capitalized assets. Further, the Company has accumulated foreign currency variations of Rs. 206 crore (Previous year Rs. 541 crore) arising on other long-term foreign currency monetary items in FCMITDA and Rs. 199 crore (Previous year Rs. 254 crore) has been amortised during the year, leaving balance which will be amortized over the balance period of loans.

Note: 3.

Schemes of Amalgamation and Arrangement of the earlier years

The Company, during the previous years, undertook various Schemes including restructuring of ownership structure of telecom business so as to align the interest of the shareholders. Accordingly, pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon'ble High Court of respective Judicature, the Company, during the respective years, recorded all necessary accounting effects, along with requisite disclosure in the notes to the accounts, in accordance with the provisions of the said Schemes. The cumulative effects of the Schemes in case of Equity Share Capital of the Company have been disclosed below the respective Notes to the Accounts. Reserves, pursuant to the said Schemes, include:

(i) Rs. 8,047 crore being Securities Premium Account, which was part of the Securities Premium of erstwhile Reliance Infocomm Limited (RIC), the transferor company.

(ii) General Reserve I of Rs. 5,538 crore representing the unadjusted balance being the excess of assets over liabilities relatable to Telecommunications Undertaking transferred and vested into the Company.

(iii) General Reserve II of Rs. 2,785 crore representing the unadjusted balance of the excess of assets over liabilities received by the Company relatable to Telecommunications Undertaking transferred and vested into the Company.

(iv) General Reserve III of Rs. 12,375 crore comprises of Rs. 4,159 crore transferred to General Reserve from Statement of Profit and Loss and Rs. 8,215 crore arising pursuant to Scheme of Amalgamation of erstwhile Reliance Gateway Net Limited and Rs. 1 crore of erstwhile Global Innovative Solutions Private Limited.

(v) Reserve for Business Restructuring of Rs. 1,287 crore representing the unadjusted balance of revaluation of investment in Reliance Communications Infrastructure Limited, the Holding company of Reliance Infratel Limited after withdrawing an amount equivalent to writing off Passive Infrastructure assets, transferred to RITL, to the Statement of Profit and Loss. Balance in Reserve for Business Restructuring shall be available to meet the increased depreciation, costs, expenses and losses including on account of impairment of or write down of assets etc.

(vi) Additional depreciation of Rs. 1,177 crore arising on fair value of the assets has been adjusted, consistent with the practice followed in earlier years, from General Reserve III as permitted pursuant to the Scheme of Arrangment (the Scheme) sanctioned vide an order dated July 3, 2009 by the Hon'ble High Court and as determined by the Board of Directors.

(vii) During the previous year, the Company has adjusted Rs. 47 crore additional depreciation arising on fair value of the assets from Provision for Business Structuring.

(viii) Also Refer Note 2.38 "Exceptional Items" below.

Note: 4.

Provisions

(i) Provisions include, provision for disputed claims of verifcation of customers Rs. 9 crore (Previous year Rs. 9 crore) and others of Rs. 1,206 crore (Previous year Rs. 1,206 crore).

The aforesaid provisions shall be utilised on settlement of the claims, if any, there against.

(ii) During the earlier years, pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon'ble High Court of Judicature at Mumbai vide orders dated July 21, 2006 and August 10, 2006 (revised) and by Hon'ble High Court of Gujarat vide order dated July 18, 2006, out of the excess of fair value of assets over liabilities, Rs. 3,000 crore was credited to and held as Provision for Business Restructuring (PBR) to meet increased depreciation cost, expenses and losses including on account of impairment or write down of assets which would be suffered by the Company, pursuant to the Scheme or otherwise in course of its business or in carrying out such restructuring of the operations of the Company or its Subsidiaries. The Company had reassessed the requirement for maintaining such PBR and based thereon, reversed balance of Rs. 441 crore during the previous year as no longer required. The said amount on reversal of PBR was reflected as part of Other Income during the previous year.

Note: 5.

Contingent Liabilities and Capital Commitment (as represented by the Management)

(Rs. in crore)

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

(i) Estimated amount of contracts remaining to be executed on 781 282 capital accounts (net of advances) and not provided for

(ii) Disputed Liabilities in Appeal

- Sales Tax and VAT 20 22

- Excise and Service Tax 23 29

- Entry Tax and Octroi 37 34

- Income Tax 451 303

- Other Litigations 1,689 1,354

(iii) Guarantees given by the Company on behalf of its Subsidiaries 5,237 4,791

(iv) Guarantees given by the Company on behalf of other companies 10 12 for business purpose

(v) Spectrum Charges

Department of Telecommunication (DoT) has, during the earlier years, issued demand on the Company for Rs. 1,758 crore towards levy of one time Spectrum Charges, being the prospective charges for holding CDMA Spectrum beyond 2.5 MHz for the period from January 1, 2013 till the expiry of the initial terms of the respective Licenses. Based on a petition fled by the Company, the Hon'ble High Court of Kolkata, vide its order dated April 19, 2013 has stayed the operation of such impugned demand till further order. The Company is of the opinion that the said demand, inter alia, is an alteration of financial terms of the licenses issued in the past and has also been legally advised. Accordingly, no provision in this regard is required.

(vi) License Fees and Special Audit

Pursuant to the Telecom License Agreement, Department of Telecommunications (DoT) directed audit of various Telecom companies including of the Company. The Special Auditors appointed by DoT were required to verify records of the Company for the years ended March 31, 2007 and March 31, 2008 relating to license fees and revenue share. The Company has received show cause notice dated January 31, 2012 and subsequently, received demand note dated November 8, 2012 based on report of the Special Audit directed by DoT relating to alleged shortfall of license fees of Rs. 300 crore and interest thereon as applicable. The Company has challenged the said notices, inter alia demanding license fee on non telecom revenue based on Special Audit Report before the Hon'ble Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and also before the Hon'ble High Court of Kerala. The impugned demand has been stayed by Hon'ble High Court of Kerala during the pendency of the Petition. Meanwhile, Hon'ble TDSAT vide its judgment dated April 23, 2015 has set aside all License fee related demands and directed DoT to rework the license fees payable by the operators for the past periods, in light of the findings, observations and directions made in the said judgment and to issue fresh demands, which the operators will pay within the time prescribed under the law. As per the judgment of Hon'ble TDSAT and other judicial pronouncements directly applicable to the issues of License fee dues raised by Special Auditors, there shall not be any liability of License fee and hence, no provision is required in the accounts of the Company.

(vii) Spectrum Auction

The Company, successfully bid in the 10 service areas and won spectrum including additional spectrum at a total cost of Rs. 1,706 crore. 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 opted for the deferred payment and has made upfront payment of Rs. 441 crore on April 8, 2015 and balance Rs. 2,491 crore is payable in 10 annual installments starting from FY 2017-18. Pending completion of subsequent formalities as per the Notice Inviting Applications (NIA) for the auction and any orders that may be passed by Hon'ble Supreme Court in related and connected matters currently before it.

Note: 6.

Export Commitments

The Company has obtained licenses/ authorisations under the Export Promotion Capital Goods (EPCG) Scheme for importing capital goods at a concessional rate of customs duty against submission of bonds. Under the terms of the respective licenses/ authorisations, the Company is required to export goods of FOB value equivalent to or more than, eight times the amount of duty saved in respect of such licenses/ authorisations, where export obligation has been refixed by the order of Director General Foreign Trade (DGFT), Ministry of Commerce and Industry, Government of India, as applicable. The Company has fulfilled its export obligation under the aforesaid license as on March 31, 2015 and has submitted the necessary documents to DGFT for availing discharge letter for completion of export obligation amounting to Rs. Nil (Previous year Rs. 334 crore).

Note: 7.

Segment Performance

Disclosure as per Accounting Standard ("AS") 17 "Segment Reporting" is reported in Consolidated Accounts of the Company. Therefore, the same has not been separately disclosed in line with the provision of AS.

Note: 8.

Exceptional Items

(a) During the year ended March 31, 2015, the Company has revised the existing terms of lease of optic fibre cable availed from its subsidiary, as required in line with arm's length pricing, with effect from April 1, 2014. Accordingly, lease rent equalisation liabilities of Rs. 4,328 crore for is reversed / written back as an exceptional item.

During the year, terms of Redeemable Preference Shares (RPS) issued by a subsidiary have been revised. Yield on RPS has been revised to 0.1% from 8.85% per annum, and accordingly amount earlier recognised of Rs. 1,359 crore is charged off as an exceptional item in Statement of Profit and Loss.

(b) Pursuant to the direction of the Hon'ble High Court of Judicature of Mumbai and option exercised by the Board of the Company, in accordance with and as per the scheme of arrangement approved by the Hon'ble High Court vide order dated July 3, 2009 binding on the Company, expenses and/ or losses, identified by the Board of the Company as being exceptional or otherwise subject to the Accounting treatment prescribed in the Schemes of Arrangement sanctioned by the Hon'ble High Court and comprising of Rs. 387 crore (Previous year Rs. 333 crore) of depreciation consequent to addition of exchange differences on long term borrowing relating to capital assets to the cost of capitalised assets, as also Rs. 31 crore (Previous year Rs. 54 crore) of exchange variation (net) on items other than long term monetary items, Rs. 199 crore (Previous year Rs. 254 crore) being amortization of FCMITDA excluding the portion added to the cost of fixed assets or carried forward as FCMITDA in accordance with Para 46 A inserted into (AS) 11 " The Effects of changes in Foreign Exchange Rates" in the context of unprecedented volatility in exchange rate during the year have been met by withdrawal from corresponding General Reserves, leaving no impact on profit for the year ended March 31, 2015. Such withdrawals have been included/ reflected in the Statement of Profit and Loss. The Company has been legally advised that such inclusion in the Statement of Profit and Loss is in accordance with Schedule III of the Companies Act, 2013. Had such write off of expenses, losses and depreciation/ amortisation (refer note 2.29(vi)) not met from General Reserve, the Company would have reflected a Loss after tax for the year of Rs. 1,948 crore (Previous year profit after tax of Rs. 89 crore).

Note: 9.

Recovery of the Expenses

Expenses are net of recoveries for common cost from; Reliance Communications Infrastructure Limited, a Wholly Owned Subsidiary of the Company, includes to Rs. 149 crore (Previous year Rs. 196 crore) for Network Expenses, Rs. 37 crore (Previous year Rs. 51 crore) for Salaries, Rs. 472 crore (Previous year Rs. 371 crore) for Interest Expenses and Rs. 6 crore (Previous year Rs. 143 crore) for Sales and General and Administration Expenses, Reliance IDC Limited, a Wholly Owned Subsidiary of Reliance Webstore Limited, includes Rs. 110 crore (Previous year Rs. Nil) for Network Expenses, Rs. 18 crore (Previous year Rs. 21 crore) for Salaries, Rs. 9 crore (Previous year Rs. 14 crore) for Interest Expense, Rs. 2 crore (Previous year Rs. 3 crore) for Hire charges and Rs. 33,97,180 (Previous year Rs. 1crore) for Other General Administration Expenses, Reliance Infratel Limited, a subsidiary of Reliance Communications Infrastructure Limited includes Rs. 40 crore (Previous year Rs. 52 crore) for Salaries and Rs. 20 crore (Previous year Rs. 28 crore) for Sales and General and Administration Expenses comprising of Rs. 4 crore (Previous year Rs. 7 crore) for Hire Charges and Rs. 16 crore (Previous year Rs. 21 crore) for Other General and Administration Expenses, Reliance Big TV Limited, a Wholly Owned Subsidiary of the Company includes Rs. 14 crore (Previous year Rs. 15 crore) for Salaries, Rs. 99 crore (Previous year Rs. 93 crore) for Interest Expenses and Rs. 2 crore (Previous year Rs. 5 crore) for Other General and Administration Expenses including Hire charges, Reliance Telecom Limited, a Subsidiary of the Company includes Rs. 16 crore (Previous year Rs. 10 crore) for Network Expenses, Rs. 101 crore (Previous year Rs. 101 crore) for Salaries, Rs. 175 crore (Previous year Rs. 199 crore) for Interest Expenses and Rs. 81 (Previous year Rs. 113 crore) for Sales and General and Administration Expenses, Reliance Tech Services Limited, a Wholly Owned Subsidiary of the Company includes Rs. 11 crore (Previous year Rs. 12 crore) for Salaries, Rs. 9 crore (Previous year Rs. Nil) for Interest Expenses and Rs. 11 crore (Previous year Rs. 12 crore) for Other General and Administration Expenses including Hire Charges, Reliance Webstore Limited, a Wholly Owned Subsidiary of the Company includes Rs. 47 crore (Previous year Rs. 21 crore) for Salaries, Rs. 53 crore (Previous year Rs. 55 crore) for Interest Expense and Rs. 5 crore (Previous year Rs. 67 crore) for Sales and General and Administration Expenses comprising of Rs. 5 crore (Previous year Rs. 5 crore) for Hire Charges, Rs. Nil (Previous year Rs. 61 crore) for Selling and Marketing expenses and Rs. 1 crore (Previous year Rs. 1 crore) for Other General and Administration Expenses, Reliance Infocomm Infrastructure Limited, a Wholly Owned Subsidiary of the Company includes Rs. 29 crore (Previous year Rs. 27 crore) for Interest Expense and Rs. Nil (Previous year Rs. 34,48,272) for Salary, General and Administration Expenses. Expenses under the heads Selling, Marketing and Distribution are net of recoveries of cost of Rs. 699 crore incurred for and on behalf of Reliance Webstore Limited (RWSL), a wholly owned subsidiary of the Company. These costs pertain to the activities related to customer life cycle management undertaken by RWSL with effect from April 1, 2014. Finance costs is net of recovery of interest cost from respective subsidiaries as mentioned above for the fund used by them for their business.

Note: 10.

Transfer of Business Undertaking

The Company has entered into a Business Transfer Agreement with Reliance Communications Infrastructure Limited (RCIL), a Wholly Owned Subsidiary Company and accordingly all moveable assets comprising of fixed assets of Rs. 121 crore, current assets of Rs. 208 crore alongwith liabilities of Rs. 124 crore related to Internet Service Provider (ISP) Business Division, on "as is where basis" as a going concern, have been transferred w.e.f. June 01, 2014.

Note: 11.

Employee Benefits

Gratuity : In accordance with the applicable Indian laws, the Company provides for the gratuity, a defined benefit retirement plan (Gratuity Plan) for all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on respective employee's last drawn salary and for the years of employment with the Company

Note: 12.

Employee Stock Option Schemes

The Company operates two Employee Stock Option Plans; ESOS Plan 2008 and ESOS Plan 2009, which cover eligible employees of the Company and its Subsidiaries. ESOS Plans are administered through an ESOS Trust. The Vesting of the Options is on the expiry of one year from the date of Grant as per Plan under the respective ESOS(s). In respect of Options granted, the accounting value of Options (based on market price of the share on the date of the grant of the Option) is accounted as deferred employee compensation, which is amortised on a straight line basis over the Vesting Period. Each Option entitles the holder thereof to apply for and be allotted/ transferred one Equity Share of the Company of Rs. 5 each upon payment of the Exercise Price during the Exercise Period. The maximum Exercise Period is 10 years from the date of Grant of Options.

The Company has established a Trust for the implementation and management of ESOS for the benefit of its present and future employees. Advance of Rs. 387 crore (Previous year Rs. 387 crore) has been granted to the Trust and the said amount has been utilized by the Trust for purchasing 2.13 crore (Previous year 2.13 crore) Equity Shares during the period upto March 31, 2015.The fall in the value of these underlying shares on account of market volatility and loss, if any, can be determined only at the end of the exercise period under ESOS Scheme.

Pursuant to the SEBI "Share Based Employee Benefit Regulations 2014 (the Regulation)" prescribing accounting treatment to be based on the Guidance Note on "Accounting for Employee Share Based Payments" issued by the ICAI, the Company has ceased to consolidate Financial Statements of the RCOM ESOS Trust with financial results for the year ended on March 31, 2015.The Company had, during the previous year, consolidated the financial statements of RCOM ESOS Trust as at March 31, 2014 with the Financial Statement of the Company in terms of SEBI (ESOS and ESPS) Guidelines, 1999 and the opinion of the Expert Advisory Committee (EAC) of The Institute of Chartered Accountants of India (the ICAI) and accordingly made comparable.


Mar 31, 2014

(1) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 5 per share. Each holder of equity shares is entitled 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. The distribution will be in proportion to the number of equity shares held by the shareholders.

During the previous year ended March 31, 2013, the amount of per share dividend recognised as distributable to equity shareholders was Rs. 0.25.

(2) Consolidation of RCOM ESOS TRUST (Trust)

The Company has consolidated financial statements of RCOM ESOS Trust as at 31st March, 2014 with the Standalone Financial Statement of the Company in terms of SEBI (ESOS and ESPS) Guidelines, 1999 and recent opinion of the Expert Advisory Committee (EAC) of The Institute of Chartered Accountants of India (the ICAI).

The said Trust is holding 2,12,79,000 no. of equity shares of Rs. 5 each of the Company. Rs.11 crore being the face value of such equity shares is presented as deduction from the paid up share capital.

2.01.1 Debentures, Foreign Currency Loans and Rupee Loan from Banks

During the earlier year, the Company, on March 2, 2009, allotted, 3,000, 11.20% Secured Redeemable, Non Convertible Debentures ("NCDs") of the face value of Rs. 1,00,00,000 each, aggregating to Rs. 3,000 crore to be redeemed at the end of 10th year from the date of allotment thereof. On February 7, 2012, the Company also allotted, 1,500, 11.25% and 5,000, 11.60% Secured Redeemable, Non Convertible Debentures ("NCDs") of the face value of Rs. 1,00,00,000 each and Rs. 10,00,000 each respectively, aggregating to Rs. 2,000 crore. Redemption of NCDs of Rs. 1,500 crore shall be in four annual equal installments starting at the end of fourth year from the date of allotment thereof and NCDs of Rs. 500 crore shall be redeemed at the end of 5th year from the date of allotment thereof.

Secured Redeemable, Non Convertible Debentures along with foreign currency loans and rupee loans ("the said secured loans") have been secured by first pari passu charge on the whole of the movable plant and machinery, of the Company including (without limitations) tower assets and optic fber cables, if any (whether attached or otherwise), Capital Work in Progress (pertaining to movable fixed assets) both present and future including all the rights, title, interest, benefits, claims and demands in respect of all insurance contracts relating thereto of the RCOM Group ("the Borrower Group"); comprising of the Company and its subsidiary companies namely; Reliance Telecom Limited (RTL), Reliance Infratel Limited (RITL) and Reliance Communications Infrastructure Limited (RCIL) in favour of the Security Trustee for the benefit of the NCD Holders and the Lenders of the said Secured Loans. The said loans (Refer Note 2.03.2 (b) (viii)) also include loan which are guaranteed. The Company, for the benefit of the Lenders of foreign currency loans, rupee loans of Rs.10 crore and 11.60%, 5,000 Secured Redeemable, Non Convertible Debentures aggregating to Rs. 500 crore has, apart from the above, also assigned 20 Telecom Licenses for services under Unifed Access Services (UAS), National Long Distance (NLD) and International Long Distance (ILD) by execution of Tripartite Agreements with Department of Telecommunications (DoT) and IDBI Bank, being the agent acting on their behalf.

Assignment of Telecom Licenses of the Company for 1,500, 11.25% Secured Redeemable, Non Convertible Debentures aggregating to Rs. 1,500 crore and Rupee Loan from Others of Rs. 300 crore are pending to be executed. The Company, for the benefit of the Lenders of foreign currency loans, rupee loan of Rs.10 crore, 11.20%, 3,000 Secured Redeemable, NCDs of the face value of Rs. 1,00,00,000 each aggregating to Rs. 3,000 crore and 11.60%, 5,000 Secured Redeemable, NCDs aggregating to Rs. 500 crore, has, apart from the above, also pledged equity shares held by the Company and Reliance Infocomm Infrastructure Private Limited in RCIL and RTL respectively by execution of the Share Pledge Agreement with the Share Pledge Security Trustee.

2.01.2 Cash Credit and Rupee Loans from Banks

Cash Credit from Bank is secured by first pari passu charge over current assets comprising of stock and receivables of the Company ("Current Assets"). Apart from this, Cash Credit from Bank as above are secured by second pari passu charge on whole of the movable plant and machinery, including (without limitation) the tower assets and optic fbre cables, if any (whether attached or otherwise), capital work in progress (pertaining to movable fixed assets) both present and future including all the rights, title, interest, benefits relating thereto of the Borrower Group ("Movable Fixed Assets of the Borrower Group").

The Company has been sanctioned Rupee Loans of Rs. 6,015 crore (Term Loan Facility) under consortium banking arrangement on the terms and conditions as set out in sanction letters. Certain Lenders have, pursuant to the sanction letters for Term Loan Facility, agreed to grant Rs. 4,590 crore as interim disbursement/short term loan (Interim Facility) of the Term Loan Facility, pending the finalization and execution of defnitive documents for converting in regular Term Loan Facility. The said Interim Facility, shall be converted in Long Term Loan within its tenure with availment of the Term Loan Facility upon execution of defnitive documents and accordingly, has been classifed as part of Short Term Borrowings. Interim Facility includes loans of Rs. 4,390 crore secured by First pari passu charge on Movable Fixed Assets of the Borrower Group. The Term Loan Facility is, inter alia, secured by first pari passu charge on Fixed Assets of the Borrower Group, including claims and demands in respect of all insurance contracts relating thereto. Apart from the above, the Term Loan Facility has also been secured by assignment of telecom licenses of the Company and pledge of equity shares held by the Company and Reliance Infocomm Infrastructure Private Limited in RCIL and RTL respectively. The Company has created first pari pasu charge on Fixed Assets of the Borrower Group for the said Interim Loans.The balance Rs. 525 crore of Interim / Short Term Loan is secured by second pari pasu charge on Movable Fixed Assets of Borrower Group.

In view of the confirmed profitable orders pursuant to agreement with the customer for sharing of infrastructure, which shall result into additional revenue and savings of cost, the Company has recognised Deferred Tax Assets of Rs. 1,488 crore as at 31st March, 2014. This will get further supported by decision of structuring of its business through various measures including schemes of merger and/ or demerger etc. so as to bring revenue and profit earned by the respective subsidiaries into the Company, subject to approvals, under applicable rules and regulations.

* During the Previous year, in absence of virtual certainity of realisability of deferred tax assets, the company on a conservative basis had restricted deferred tax asset to Nil.

Note : 2.2

Previous year

The financial statements has been prepared as per Revised Schedule VI under the Companies Act, 1956. Figures of the previous year have been regrouped and reclassified, wherever required. Amount in Finanacial Statements are presented in Rupee crore,except as otherwise stated.

Note : 2.3

Foreign Currency Monetary Items ; Long Term

In view of the option allowed pursuant to the notifcation dated December 29, 2011 issued by the Ministry of Corporate Affairs (MCA),Government of India, for the year ended on March 31, 2014, the Company has added Rs. 1432 crore (Previous year Rs. 888 crore) of exchange differences on long term borrowing relating to the acquisition of depreciable capital assets to the cost of capitalized assets. Further, the Company has accumulated foreign currency variations of Rs. 541 crore (Previous year Rs. 496 crore) arising on other long-term foreign currency monetary items in FCMITDA and Rs. 254 crore (Previous year Rs. 546 crore) has been amortised during the year, leaving balance which will be amortized over the balance period of loans.

During the previous year, in accordance with the notifcation issued by the Ministry of Corporate Affairs (MCA) on August 9, 2012, the Company had added Rs. 543 crore to the cost of capitalised assets and Rs. 232 crore to the FCMITDA by reversing the exchange difference regarded as an adjustment to interest cost on account of restating Long Term Monetary Items expressed in foreign currency at year end prevailing rates in accordance with para 4 (e) of Accounting Standared 16 "Borrowing Costs". The said interest was adjusted by withdrawal of an equivalent amount from General Reserve III during the previous year ended March 31, 2012 and hence, it has been credited to General Reserve III.

Note : 2.4

Schemes of Amalgamation and Arrangement of the earlier years

The Company, during the previous years, undertook various Schemes including restructuring of ownership structure of telecom business so as to align the interest of the shareholders. Accordingly, pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon''ble High Court of respective Judicature, the Company, during the respective years, recorded all necessary accounting effects, along with requisite disclosure in the notes to the accounts, in accordance with the provisions of the said Schemes. The cumulative effects of the Schemes in case of Equity Share Capital of the Company have been disclosed below the respective Notes to the Accounts. Reserves, pursuant to the said Schemes, include:

(i) Rs. 8,047 crore being Securities Premium Account, which was part of the Securities Premium of erstwhile Reliance Infocomm Limited (RIC), the transferor company.

(ii) General Reserve I of Rs. 5,538 crore representing the unadjusted balance being the excess of assets over liabilities relatable to Telecommunications Undertaking transferred and vested into the Company.

(iii) General Reserve II of Rs. 2,785 crore representing the unadjusted balance of the excess of assets over liabilities received by the Company relatable to Telecommunications Undertaking transferred and vested into the Company.

(iv) General Reserve III of Rs. 14,193 crore comprises of Rs. 4,159 crore transferred to General Reserve from Statement of profit and Loss and Rs. 10,033 crore arising pursuant to Scheme of Amalgamation of erstwhile Reliance Gateway Net Limited and Rs. 1 crore of erstwhile Global Innovative Solutions Private Limited.

(v) The Company had, during the year ended on March 31, 2009, revalued its investments in one of its subsidiaries Reliance Globalcom BV, the Netherlands at then fair value, and credited an amount of Rs. 15,120 crore to General Reserve. On a conservative and prudent basis, and to refect the said investments at the present valuations, the Company has during the Previous year adjusted a sum of Rs. 10,880 crore in the General Reserve III.

(vi) Reserve for Business Restructuring of Rs. 1,287 crore representing the unadjusted balance of revaluation of investment in Reliance Communications Infrastructure Limited, the Holding company of Reliance Infratel Limited after withdrawing an amount equivalent to writing off Passive Infrastructure assets, transferred to RITL, to the Statement of profit and Loss. Balance in Reserve for Business Restructuring shall be available to meet the increased depreciation, costs, expenses and losses including on account of impairment of or write down of assets etc.

(vii) Additional depreciation arising on fair value of the assets has been adjusted from General Reserve III and Provision for Business Restructuring.

(viii) Also refer note 2.37 "Exceptional Items" below.

Note : 2.5

Provisions

(i) Provisions include, provision for disputed claims of verifcation of customers Rs. 9 crore (Previous year Rs. 9 crore) and others of Rs. 1,206 crore (Previous year Rs. 1,206 crore) and reversal of disputed liabilities Rs. Nil (Previous year Rs. 147 crore).

The aforesaid provisions shall be utilised on settlement of the claims, if any, thereagainst.

(ii) Pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon''ble High Court of Judicature at Mumbai vide orders dated July 21, 2006 and August 10, 2006 (revised) and by Hon''ble High Court of Gujarat vide order dated July 18, 2006, out of the excess of fair value of assets over liabilities, Rs. 3,000 crore was credited to and held as Provision for Business Restructuring (PBR) to meet increased depreciation cost, expenses and losses including on account of impairment or write down of assets which would be suffered by the Company, pursuant to the Scheme or otherwise in course of its business or in carrying out such restructuring of the operations of the Company or its Subsidiaries. The Company has reassessed the requirement for maintaining such PBR and based thereon, reversed balance of Rs. 441 crore during the year as no longer required.The said amount on reversal of PBR has been refected as part of Other Income.

Note ; 2.6

Contingent Liabilities and Capital Commitment (as represented by the Management)

(Rs. in Crore)

As at As at March 31, 2014 March 31, 2013

(i) Estimated amount of contracts remaining to be executed on 282 199 capital accounts (net of advances) and not provided for

(ii) Disputed Liabilities in Appeal

- Sales Tax and VAT 22 23

- Excise and Service Tax 29 2

- Entry Tax and Octroi 34 32

- Income Tax 303 -

- Other Litigations 1,354 1,078

(iii) Guarantees given by the Company on behalf of its Subsidiaries 4,791 5,065

(iv) Guarantees given by the Company on behalf of other companies 12 3 for business purpose

(v) License Fees

The Hon''ble Supreme Court of India, vide its judgment dated October 11, 2011, has set aside the Order of Hon''ble Telecom Disputes Settlement and Appellate Tribunal (TDSAT) dated August 30, 2007 and allowed time to the licensees to raise their disputes before the Hon''ble TDSAT w.r.t. the demands already raised by Department of Telecommunications (DoT). The Hon''ble Supreme Court of India, in the meanwhile, also restrained DoT from enforcing its demands already raised. Subsequently, Hon''ble TDSAT granted all licensees/ operators the liberty to fle additional affdavits thereby bringing on record the material facts including the subsequent events with respect to the petitions already pending before Hon''ble TDSAT which got revived post AGR judgment of Hon''ble Supreme Court of India dated October 11, 2011. On April 12, 2012, all the petitions (both old and new of all the operators including the Company''s) were heard and interim order of protection, earlier passed by Hon''ble TDSAT was extended to the new petitions also. The matter is now pending for hearing before Hon''ble TDSAT and accordingly no additional provision is required in this regard.

(vi) Special Audit

Pursuant to the Telecom License Agreement, DoT directed audits of various Telecom companies including of the Company. The Special Auditors appointed by DoT were required to verify records of the Company for the years ended March 31, 2007 and March 31, 2008 relating to license fees and revenue share. The Company has received show cause notices dated January 31, 2012 and subsequently received demand notice dated November 8, 2012 based on report of the Special Audit directed by DoT relating to alleged shortfall of license fees of Rs. 300 crore and interest thereon as applicable. The Company has challenged the said notices, inter alia demanding license fee on non telecom revenue based on Special Audit Report before the Hon''ble TDSAT and also before the Hon''ble High Court of Kerala. Both the Courts have stayed the operation of such impugned demand during the pendency of the Petitions before them. The Company is confdent that based on advice and, inter alia, on current understanding of the regulation by the industry and judicial pronouncements directly applicable to the issues raised in the special audit report, there shall not be any liability in this regard and hence, no provision is required in the accounts of the Company.

(vii) Spectrum Charges

Department of Telecommunication (DoT) has, during the previous year, issued demand on the Company for Rs. 1,758 crore towards levy of one time Spectrum Charges, being the prospective charges for holding CDMA Spectrum beyond 2.5 MHz for the period from January 1, 2013 till the expiry of the initial terms of the respective Licenses. Based on a petition fled by the Company, the Hon''ble High Court of Kolkata, vide its order dated April 19, 2013 stayed the operation of such impugned demand till further order. The Company is of the opinion that the said demand, inter alia, is an alteration of financial terms of the licenses issued in the past and has also been legally advised. Accordingly, no provision in this regard is required.

Note : 2.33 Operating Lease

The Company''s significant leasing arrangements are in respect of operating leases for premises and network sites. These lease agreements provide for cancellation by either parties thereto as per the terms and conditions of the agreements. The Company is a lessee in respect of Optic Fibres and in respect of this lease, lease rent of Rs. 1,141 crore (Previous year Rs. 1,141 crore) including Rs. 760 crore (Previous year Rs. 1,129 crore) not leviable for the year as per the lease agreement, has been recognised on a straight line basis as Bandwidth Charges (Refer Note 2.22) Network Expenses and corresponding amount is provided for.

Note : 2.34

Export Commitments

The Company has obtained licenses/ authorisations under the Export Promotion Capital Goods (EPCG) Scheme for importing capital goods at a concessional rate of customs duty against submission of bonds. Under the terms of the respective licenses/ authorisations, the Company is required to export goods of FOB value equivalent to or more than, eight times the amount of duty saved in respect of such licenses/ authorisations, where export obligation has been refixed by the order of Director General Foreign Trade (DGFT), Ministry of Commerce and Industry, Government of India, as applicable. The Company has fulfilled its export obligation under the aforesaid license as on March 31, 2014 and has submitted the necessary documents to DGFT for availing redemption letter for completion of export obligation amounting to Rs. 334 crore (Previous year Rs. 334 crore).

Note : 2.35

Segment Performance

Disclosure as per Accounting Standard ("AS") 17 "Segment Reporting" is reported in Consolidated Accounts of the Company. Therefore, the same has not been separately disclosed in line with the provision of AS.

Note : 2.37

Exceptional Items

Pursuant to the direction of the Hon''ble High Court of Judicature of Mumbai and option exercised by the Board of the Company, in accordance with and as per the scheme of arrangement approved by the Hon''ble High Court vide order dated July 3, 2009 binding on the Company, expenses and/ or losses, identified by the Board of the Company as being exceptional or otherwise subject to the Accounting treatment prescribed in the Schemes of Arrangement sanctioned by the Hon''ble High Court and comprising of Rs. 333 crore (Previous year Rs. 218 crore) of depreciation consequent to addition of exchange differences on long term borrowing relating to capital assets to the cost of capitalised assets, as also Rs. 54 crore (Previous year Rs. 91 crore) of exchange variation (net), Rs. 254 crore (Previous year Rs. 546 crore) being amortization of Foreign Currency Monetary Items Difference Account (FCMITDA) excluding the portion added to the cost of fixed assets or carried forward as FCMITDA in accordance with Para 46A inserted in to Accounting Standard (AS) 11 "The Effect of Changes in Foreign Exchange Rates" in the context of unprecedented volatility in exchange rate during the year, have been met by withdrawal from corresponding General Reserves, leaving no impact on profit for the year ended March 31, 2014. Such withdrawals have been included/ refected in the Statement of profit and Loss. While the Company has been legally advised that such inclusion in the Statement of profit and Loss is in accordance with Revised Schedule VI of the Companies Act, 1956, the Company has also sought clarifcation from ICAI that such inclusion in the Statement of profit and Loss is not contrary to Revised Schedule VI. Had such write off of expenses and losses not been met from General Reserve, the Company would have refected a profit/(Loss) after tax for the year of Rs. 89 crore (Previous year (Rs. 231 crore)) and the consequential effect of this on the profit after tax for the year would have been of Rs. 641 crore (Previous year Rs. 855 crore).

Note : 2.38

Recovery of Expenses

Expenses under the heads Provision for Employee Costs and Other Expenses are net of recoveries for common cost from Reliance Communications Infrastructure Limited, a Wholly Owned Subsidiary of the Company. Such amounts recovered for the year amounting to Rs. 51 crore (Previous year Rs. 104 crore) for Salaries, Rs. 133 crore (Previous year Rs. 235 crore) for Sales and General and Administration Expenses comprising of Rs. 42 crore (Previous year Rs. 36 crore) for Advertising Expenses, Rs. 91 crore (Previous year Rs. 171 crore) for Customer Acquisition, Commission, Billing and Collection, Webstore expenses, Customer Care and Other General Expenses, Rs. 10 crore (Previous year Rs. 28 crore) for Hire Charges, Rs. 196 crore (Previous year Rs. 246 crore) for Network Expenses and Rs. 371 crore (Previous year Rs. Nil) for Interest Expenses.

Apart from the above, the expenses are net of recoveries from:

Reliance IDC Limited, a Wholly Owned Subsidiary of Reliance Communications Infrastructure Limited, includes Rs. 3 crore (Previous year Rs. 16 crore) for Hire charges, Rs. 21 crore (Previous year Rs. Nil) for Salary, Rs. 1 crore (Previous year Rs. Nil) for Other General and Administration Expenses and Rs. 14 (Previous year Rs. Nil) crore for Interest Expense.

Reliance Infratel Limited, a subsidiary of Reliance Communications Infrastructure Limited for the year includes Rs. 52 crore (Previous year Rs. 67 crore) for Salaries and Rs. 28 crore (Previous year Rs. 45 crore) for Sales and General and Administration Expenses comprising of, Rs. 7 crore (Previous year Rs. 25 crore) for Hire Charges and Rs. 21 crore (Previous year Rs. 20 crore) for Other General and Administration Expenses.

Reliance Big TV Limited, a Wholly Owned Subsidiary of the Company includes Rs. 5 crore (Previous year Rs. 3 crore) for Other General and Administration Expenses include hire charges, Rs. 15 crore (Previous year Rs. 16 crore) for Salaries and Rs. 93 crore (Previous year Rs. Nil) for Interest Expenses.

Reliance Telecom Limited, a Subsidiary of the Company includes Rs. 101 crore (Previous year Rs. 83 crore) for Salary, Rs. 19 crores (Previous year Rs. 29 crore) for Advertisement and Marketing Expenses, Rs. 94 crore (Previous year Rs. 90 crore) for Sales and General and Administration Expenses, Rs. 10 crore towards Network Expenses (Previous year Rs. 14 crore) and Rs. 199 crore (Previous year Rs. Nil) for Interest Expenses.

Reliance Tech Services Private Limited, a Wholly Owned Subsidiary of the Company includes Rs. 12 crore (Previous year Rs. 7 crore) for Salary and Rs. 12 crore (Previous year Rs. 12 crore) for Other General and Administration Expenses including Hire Charges.

Reliance Webstore Limited, a Wholly Owned Subsidiary of the Company includes Rs. 21 crore (Previous year Rs. 16 crore) for Salary, Rs. 67 crore (Previous year Rs. 56 crore) for Sales and General and Administration Expenses comprising of Rs. 5 crore (Previous year Rs. 4 crore) for Hire Charges, Rs. 61 crore (Previous year Rs. 52 crore) for Selling and Marketing expenses and Rs. 1 crore (Previous year Rs. Nil) for Other General and Administration Expenses and Rs. 55 crore (Previous year Rs. Nil) for Interest Expense.

Reliance Infocomm Infrastructure Private Limited, a Wholly Owned Subsidiary of the Company includes Rs. 34,48,272 (Previous year Rs. 8,32,121) for Salary, General and Administration Expenses and Rs. 27 crore (Previous year Rs. Nil) for Interest Expense.

Finance cost is net of recovery of interest cost from respective subsidiaries as mentioned above for the fund used by them for their business.

Network expenses are net of remission of charges of Rs. 618 crore (Previous year Rs. 461 crore) for the defciency in Passive Infrastructure Services by RITL, a subsidiary of the RCIL, pursuant to the Service Level Agreement between the parties.

Note : 2.39

Financial Statements of Subsidiary Companies

The Ministry of Corporate Affairs, Government of India vide its General circular no. 2 and 3, dated February 8, 2011 and February 21, 2011 respectively, has granted general exemption from compliance with Section 212 of the Companies Act, 1956, subject to fulfllment of conditions stipulated in the circular. The Company has satisfed the conditions stipulated in the circular and hence, is entitled to the exemption. As per the circular, key details of each subsidiary is attached in the Consolidated Financial Statements.

Note: 2.40

Employee benefits

Gratuity : In accordance with the applicable Indian laws, the Company provides for the gratuity, a Defined benefit retirement plan (Gratuity Plan) for all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on respective employee''s last drawn salary and for the years of employment with the Company.

The following table sets out the status of the Gratuity Plan as required under Accounting Standard ("AS") 15 (Revised) "Employee benefits".

Provident Fund : The guidance on Implementing ("AS") 15 "Employee benefits" (revised 2005) issued by the ICAI states that the benefits involving employer established Provident Fund, which require interest shortfalls recompensed are to be considered as/ in Defined benefit plans. The employee and employer each make monthly contribution to the plan equal to 12% of the covered employee''s salary. Contributions are made to the trust established by the Company. During the year ended March 31, 2012, the Actuarial Society of India issued the final guidance for measurement of provident fund liabilities. As at March 31, 2014, based on the actuarial valuation, Fair value of plan assets is Rs. 283 crore (Previous year Rs. 296 crore), the present value of Defined benefit obligation is Rs. 283 crore (Previous year Rs. 296 crore). For the year ended March 31, 2014, the Company has contributed Rs. 17 crore (Previous period Rs. 20 crore) towards Provident Fund.

The assumptions made for the above are Discount rate of 9.25%, average remaining tenure of Investment Portfolio is 6 years and guaranteed rate of return is 8.75%.

Note : 2.41

Disclosure under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) Under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) which came into force from October 2, 2006, certain disclosures are required to be made relating to MSME. On the basis of the information and records available with the company, the following disclosures are made for the amounts due to Micro and Small Enterprises.

Note : 2.43

Employee Stock Option Schemes

The Company operates two Employee Stock Option Plans; ESOS Plan 2008 and ESOS Plan 2009, which cover eligible employees of the Company and its Subsidiaries. ESOS Plans are administered through an ESOS Trust. The Vesting of the Options is on the expiry of one year from the date of Grant as per Plan under the respective ESOS(s). In respect of Options granted, the accounting value of Options (based on market price of the share on the date of the grant of the Option) is accounted as deferred employee compensation, which is amortised on a straight line basis over the Vesting Period. Each Option entitles the holder thereof to apply for and be allotted one Equity Share of the Company of Rs. 5 each upon payment of the Exercise Price during the Exercise Period. The maximum Exercise Period is 10 years from the date of Grant of Options.

The Company has established a Trust for the implementation and management of ESOS for the benefit of its present and future employees. Advance of Rs. 387 crore (Previous year Rs. 387 crore) had been granted to the Trust and the said amount had been utilized by the Trust for purchasing 2.13 crore (Previous year 2.13 crore) Equity Shares during the period upto March 31, 2014. (Refer Note 2.01 (5)).

Amortization of compensation includes write back of Rs. 1 crore (Previous year Rs. 2 crore) based on intrinsic value of Options which has been vested under ESOS Plan 2008 and refected in Statement of profit and Loss under Employees benefits Expenses. No amount is chargeable in respect of Options granted under ESOS Plan 2009.

No derivative instruments are acquired for speculation purpose.

In respect of Foreign Currency Swap and Interest Rate Swap transactions, which are linked with LIBOR rates and exchange rate during the period of contract, gains/ losses, if any, are recognised on the settlement day or the reporting day, whichever is earlier, at the rate prevailing on respective day.

Foreign Currency exposures that are not hedged by derivative instruments or otherwise for Loans and Liabilities and assets are $ 333 crore (Previous year $ 383 crore), equivalent to Rs. 19,934 crore (Previous year Rs. 20,762 crore).

Above exposure status does not include the effects of accruals.

The unamortized premium of Buyers'' Credit to be recognized is Rs. 4 crore (Previous year Rs. 2 crore) for one or more subsequent accounting periods.

Note : 2.45

Related Parties

As per Accounting Standard ("AS") 18, ''Related Party Disclosures, prescribed under the Accounting Standard Rules, the disclosures of transactions with the related parties are given below.

A List of Related Parties : where control exists

Sr. Name of the Subsidiary Companies

No. (direct and step down subsidiaries)

1 Reliance WiMax Limited

2 Reliance Digital Home Services Limited

3 Reliance Webstore Limited

4 Reliance Infocomm Infrastructure Private Limited

5 Campion Properties Limited

6 Reliance Big TV Limited

7 Reliance Tech Services Private Limited

8 Reliance Telecom Limited

9 Reliance Communications Infrastructure Limited

10 Reliance IDC Limited (previously Reliance Communication Investment and Leasing Limited)

11 Reliance Infratel Limited

12 Reliance Mobile Commerce Limited

13 Reliance BPO Private Limited

14 Reliance Globalcom Limited

15 Reliance Communications Tamil Nadu Private Limited (w.e.f. November 15, 2013)

16 M. P. Network Private Limited (upto February 10, 2014)

17 Kerala Communications Private Limited (upto February 10, 2014)

18 Reliance Globalcom B.V.

19 Reliance Communications (UK) Limited

20 Reliance Communications (Hong Kong) Limited

21 Reliance Communications (Singapore) Pte. Limited

22 Reliance Communications (New Zealand) Pte Limited

23 Reliance Communications (Australia) Pty Limited

24 Anupam Global Soft (U) Limited

25 Gateway Net Trading Pte Limited

26 Reliance Globalcom Limited, Bermuda

27 FLAG Telecom Singapore Pte. Limited

28 FLAG Atlantic UK Limited

29 Reliance FLAG Atlantic France SAS

30 FLAG Telecom Taiwan Limited

31 Reliance FLAG Pacifc Holdings Limited

32 FLAG Telecom Group Services Limited

33 FLAG Telecom Deutschland GmbH

34 FLAG Telecom Hellas AE

35 FLAG Telecom Asia Limited

36 FLAG Telecom Nederland B.V.

37 Reliance Globalcom (UK) Limited

38 Yipes Holdings Inc.

39 Reliance Globalcom Services Inc.

40 YTV Inc.

41 Reliance Infocom Inc.

42 Reliance Communications Inc.

43 Reliance Communications International Inc.

44 Reliance Communications Canada Inc.

45 Bonn Investment Inc.

46 FLAG Telecom Development Limited

47 FLAG Telecom Development Services Company LLC

48 FLAG Telecom Network Services Limited

49 Reliance FLAG Telecom Ireland Limited

50 FLAG Telecom Japan Limited

51 FLAG Telecom Ireland Network Limited

52 FLAG Telecom Network USA Limited

53 FLAG Telecom Espana Network SAU

54 Reliance Vanco Group Ltd

55 Euronet Spain SA

56 Vanco (Shanghai) Co Ltd.

57 Vanco (Asia Pacifc) Pte. Ltd.

58 Vanco Australasia Pty. Ltd.

59 Vanco Sp Zoo

60 Vanco Gmbh

61 Vanco Japan KK

62 Vanco NV

63 Vanco SAS

64 Vanco South America Ltda

65 Vanco Srl

66 Vanco Sweden AB

67 Vanco Switzerland AG

68 Vanco Deutschland GmbH

69 Vanco BV

70 Vanco Benelux BV

71 Vanco UK Ltd

72 Vanco International Ltd

73 Vanco Row Limited

74 Vanco Global Ltd

75 VNO Direct Ltd

76 Vanco US LLC

77 Vanco Solutions Inc

78 Net Direct SA (Properietary) Ltd.

79 GCX Limited (w.e.f March 26, 2014)

80 Global Cloud Xchange Limited (w.e.f March 26, 2014)

81 Seoul Telenet Inc.

82 FLAG Holdings (Taiwan) Limited

83 Reliance Telecom Infrastructure (Cyprus) Holdings Limited

84 Lagerwood Investments Limited

85 Vanco EpE (Upto April 1, 2013)

86 Reliance Innoventures Private Limited

Individuals Promoters

87 Shri Anil D. Ambani, the person having control during the year

Key Managerial Person

88 Shri Prakash Shenoy, Company Secretary and Manager

B List of Other Related Parties : where there have been transactions Associates

1 Warf Telecom International Private Limited

2 Mumbai Metro Transport Private Limited

Fellow Subsidiaries

3 AAA Communication Private Limited

4 AAA Industries Private Limited

5 ADA Enterprises and Ventures Private Limited

6 Reliance Capital Limited

7 Reliance General Insurance Company Limited

Disclosure in respect of transactions, which are more than 10% of the total transactions of the same type with a related party during year ended March 31, 2014.

1. Fixed assets acquired during the period include Rs. 108 crore from Reliance Tech Services Private Limited. (Previous year - Fixed assets acquired during the year include Rs. 100 crore from Reliance Tech Services Private Limited).

2. Loans and Advances include loans granted during the year of Rs. 3,994 crore to Reliance Communications Infrastructure Limited, Rs. 3,145 crore to Reliance Telecom Limited and repaid /adjusted during the year Rs. 4,765 crore by Reliance Communications Infrastructure Limited, Rs. 3,214 crore by Reliance Telecom Limited. (Previous year - Loans and Advances include loan granted during the year of Rs. 4,256 crore to Reliance Communications Infrastructure Limited, Rs. 1,879 crore to Reliance Telecom Limited and repaid /adjusted during the year Rs. 4,096 crore by Reliance Communications Infrastructure Limited, Rs. 2,066 crore by Reliance Telecom Limited).

3. Trade Receivables include Rs. 460 crore from Reliance Communications Infrastructure Limited, Rs. 337 crore from Reliance Telecom Limited and Rs. 23 crore from Reliance Webstore Limited. (Previous year – Trade Receivables include Rs. 724 crore from Reliance Communications Infrastructure Limited, Rs. 108 crore from Reliance Telecom Limited and Rs. 4 crore from Reliance Webstore Limited).

4. Loans include Rs. 1,216 crore to Reliance Communications Infrastructure Limited, Rs. 1,581 crore to Reliance Telecom Limited and Rs. 2,719 crore to Reliance Infratel Limited and Advances include Rs. 2,086 crore to Reliance Communications Infrastructure Limited, Rs. 8 crore to Reliance Telecom Limited and Rs. 273 crore to Reliance Infratel Limited. (Previous year - Loans include Rs. 1,987 crore to Reliance Communications Infrastructure Limited, Rs. 1,651 crore to Reliance Telecom Limited and Rs. 2,719 crore to Reliance Infratel Limited and Advances include Rs. 1,364 crore to Reliance Communications Infrastructure Limited, Rs. 134 crore to Reliance Telecom Limited and Rs. Nil to Reliance Infratel Limited).

5. Trade Payables include Rs. 63 crore to Reliance Flag Atlantic France SAS, Rs. 58 crore to Reliance Communications Inc, Rs. 239 crore to Reliance Webstore Limited, Rs. Nil to Reliance Infratel Limited, Rs. 108 crore to Reliance Communication (UK) Limited and Rs. 9 crore to Reliance Tech Services Private Limited. (Previous year – Trade Payables include Rs. 116 crore to Reliance Flag Atlantic France SAS, Rs. 425 crore to Reliance Communications Inc, Rs. 130 crore to Reliance Webstore Limited, Rs. 101 crore to Reliance Infratel Limited, Rs. 81 crore to Reliance Communication (UK) Limited and Rs. Nil to Reliance Tech Services Private Limited).

6. Revenue from Operations includes Rs. 382 crore from Reliance Communications Infrastructure Limited, Rs. 620 crore from Reliance Communications Inc. and Rs. 702 crore from Reliance Telecom Limited. (Previous year - Revenue from Operations includes Rs. 1,234 crore from Reliance Communications Infrastructure Limited, Rs. 671 crore from Reliance Communications Inc. and Rs. 750 crore from Reliance Telecom Limited).

7. Expenditure includes Access Charges: Rs. 195 crore to Reliance Communications Inc.and Rs. 277 crore to Reliance Telecom Limited, Network Operation Expenses: Rs. 2,359 crore to Reliance Infratel Limited, Selling and Marketing expenses: Rs. 45 crore to Reliance Webstore Limited and Rs. 131 crore to Reliance Communications Infrastructure Limited, General and Administration Expenses: Rs. 14 crore to Reliance Communications Infrastructure Limited, Rs. 11 crore to Reliance Infocomm Infrastructure Private Limited, Rs. 86 crore to Reliance IDC Limited and Rs. 32 crore to Reliance Tech Services Private Limited and Finance Cost Rs. 14 crore to Reliance Communications Infrastructure Limited (Previous year - Expenditure includes Access Charges: Rs. 214 crore to Reliance Communications Inc.and Rs. 281 crore to Reliance Telecom Limited, Network Operation Expenses: Rs. 1,570 crore to Reliance Infratel Limited, Selling and Marketing expenses: Rs. 43 crore to Reliance Webstore Limited and Rs. 115 crore to Reliance Communications Infrastructure Limited, General and Administration Expenses: Rs. 37 crore to Reliance Communications Infrastructure Limited, Rs. 24 crore to Reliance Infocomm Infrastructure Private Limited, Rs. 70 crore to Reliance IDC Limited, and Rs. 10 crore to Reliance Tech Services Private Limited) and Finance Cost Rs. 15 crore to Reliance Communications Infrastructure Limited).

8. Corporate Guarantee issued includes Rs. 2,476 crore to Reliance Infratel Limited and Rs. 1,810 crore to Reliance Telecom Limited. Assurance/ Letter of comfort which are not in nature of guarantee for financial support to subsidiaries. (Previous year - Corporate Guarantee issued includes Rs. 2,949 crore to Reliance Infratel Limited and Rs. 1,436 crore to Reliance Telecom Limited).

9. Interest Income include Rs. 595 crore receivable from Reliance Infratel Limited. (Previous year - Interest Income includes Rs. 595 crore received from Reliance Infratel Limited).

10. Other Current Assets include Rs. 31 crore of Unbilled revenue of Reliance Communications Inc. Interest Receivable includes Rs. 408 crore from Reliance Infratel Limited, Rs. 199 crore from Reliance Telecom Limited and Rs. 371 crore from Reliance Communications Infrastructure Limited. (Previous year - Other Current Assets include Rs. 51 crore of Unbilled revenue of Reliance Communications Inc. Interest Receivable includes Rs. 482 crore from Reliance Infratel Limited, Rs. Nil from Reliance Telecom Limited and Rs. Nil from Reliance Communications Infrastructure Limited).

11. Interest Accrued on Investment includes Rs. 1,359 crore of Dividend Yield on Preference Share from Reliance Infratel Limited. (Previous year – Interest Accrued on Investment include Rs. 1,005 crore of Dividend Yield on Preference Share from Reliance Infratel Limited).

12. Unearned Income includes Rs. 14 crore from Flag Telecom Ireland Network Limited (Previous Year- Unearned Income includes Rs. 20 crore from Flag Telecom Ireland Network Limited).

13. Prepaid expenses include Rs. Nil from Reliance Telecom Limited and Rs. 25 crore from Reliance FLAG Atlantic France SAS. (Previous year-Prepaid expenses include Rs. 15 crore from Reliance Telecom Limited and Rs. 9 crore from Reliance FLAG Atlantic France SAS).

14. Refer Note 2.38 for Recovery of Expenses and Interest cost from subsidiaries.

15 Dividend paid, during the Previous year of Rs. 30,94,750 to Reliance Innoventures Private Limited, Rs. 18 crore to AAA Communication Private Limted, Rs. 8 crore to AAA Industries Private Limited, Rs. 8 crore ADA Enterprises and Ventures Private Limited and Rs. 1 crore to Reliance Capital Limited.

16. Other Current Liability includes Advance from customer Rs. 106 crore of Reliance Communications Inc and Rs. 170 crore of Reliance Telecom Limited. Other Current Liability also includes Rs. 217 crore to Reliance Infratel Limited for availing passive infrastructure services for 3G operations.(Previous year – Other Current Liability includes Advance from customer Rs. 99 crore of Reliance Communications Inc and Other Current Liability Rs. Nil of Reliance Telecom Limited. Other Current Liability also includes Rs. 217 crore to Reliance Infratel Limited for availing passive infrastructure services for 3G operations).


Mar 31, 2013

Note : 1.01 (Note 2.25 of Annual Accounts)

Previous year

The financial statements has been prepared as per Revised Schedule VI under the Companies Act, 1956. Figures of the previous year have been regrouped and reclassified, wherever required. Amount in abridged financial statements are presented in Rupee crore, except as otherwise stated.

Note : 1.02 (Note 2.26 of Annual Accounts)

Foreign Currency Monetary Items; Long Term

In view of the option allowed pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs (MCA) Government of India, for the year ended on March 31, 201 3, the Company has added Rs. 888 crore (Previous year Rs. 1,499 crore) including Rs. Nil (Previous year Rs. 1 63 crore) regarded as an adjustment to interest cost on account of restating long term monetary items expressed in foreign currency at year end prevailing rates, of exchange differences on long term borrowing relating to the acquisition of depreciable capital assets to the cost of capitalized assets. Further, the Company has accumulated foreign currency variations of Rs. 496 crore (Previous year Rs. 31 5 crore) arising on other long term foreign currency monetary items in FCMITDA and Rs. 546 crore (Previous year Rs. 1 6 crore) has been amortised during the year, leaving balance which will be amortized over the balance period of loans.

In accordance with the notification issued by the Ministry of Corporate Affairs (MCA) on August 9, 201 2, the Company has during the year, added Rs. 543 crore to the cost of capitalised assets and Rs. 232 crore to the FCMITDA by reversing the exchange difference regarded as an adjustment to interest cost on account of restating Long Term Monetary Items expressed in foreign currency at year end prevailing rates in accordance with para 4 (e) of Accounting Standared 1 6 "Borrowing Costs". The said interest was adjusted by withdrawal of an equivalent amount from General Reserve III during the previous year ended March 31, 2012 and hence, it has been credited to General Reserve III.

Note : 1.03 (Note 2.27 of Annual Accounts)

Schemes of Amalgamation and Arrangement of the earlier years

The Company, during the previous years, undertook various Schemes including restructuring of ownership structure of telecom business so as to align the interest of the shareholders. Accordingly, pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1 956 approved by the Hon''ble High Court of respective Judicature, the Company, during the respective years, recorded all necessary accounting effects, along with requisite disclosure in the notes to the accounts, in accordance with the provisions of the said Schemes. Reserves, pursuant to the said Schemes, include:

(i) Rs. 8,047 crore, being Securities Premium Account, which was part of the Security Premium of erstwhile Reliance Infocomm Limited, the transferor company.

(ii) General Reserve I of Rs. 5,538 crore representing the unadjusted balance being the excess of assets over liabilities relatable to Telecommunications Undertaking transferred and vested into the Company.

(iii) General Reserve II of Rs. 2,785 crore representing the unadjusted balance of the excess of assets over liabilities received by the Company relatable to Telecommunications Undertaking transferred and vested into the Company.

(iv) General Reserve III of Rs. 26,330 crore comprises of Rs. 4,1 59 crore transferred to General Reserve from Statement of Profit and Loss and Rs. 22,1 70 crore arising pursuant to Scheme of Amalgamation of erstwhile Reliance Gateway Net Limited and Rs. 1 crore of erstwhile Global Innovative Solutions Private Limited.

(v) Reserve for Business Restructuring of Rs. 1,287 crore representing the unadjusted balance of revaluation of investment in Reliance Communications Infrastructure Limited, the Holding company of Reliance Infratel Limited (RITL) after withdrawing an amount equivalent to writing off Passive Infrastructure assets, transferred to RITL, to the Statement of Profit and Loss. Balance in Reserve for Business Restructuring shall be available to meet the increased depreciation, costs, expenses and losses including on account of impairment of or write down of assets etc,

(vi) Additional depreciation arising on fair value of the assets has been adjusted from General Reserve III and Provision for Business Restructuring.

(vii) The Company had, during the year ended on March 31, 2009, revalued its investments in one of its subsidiaries Reliance Globalcom BV, the Netherlands at then fair value, and credited an amount of Rs. 15,120 crore to General Reserve. On a conservative and prudent basis, and to reflect the said investments at the present valuations, the Company has during the year adjusted a sum of Rs. 10,880 crore in the General Reserve III.

(viii) Premium of Rs. 357 crore paid on redemption of the FCCBs had been charged to Securities Premium Account during the previous year.

(ix) Pursuant to the Scheme of Amalgamation of Reliance Gateway Net Limited (RGNL), on account of the fair valuation, during an earlier year ended on March 31, 2009, opening gross block of fixed assets included increase in Freehold Land by Rs. 225 crore, Buildings by Rs. 1 30 crore and Telecom Licenses by Rs. 14,145 crore.

(x) Also refer note 2,11 "Exceptional Items" below.

Note : 1.04 (Note 2.29 of Annual Accounts)

Provisions

(i) Provisions include, provision for disputed claims of verification of customers Rs. 9 crore (Previous yearRs. 9 crore), others ofRs. 1,206 crore (Previous year Rs. 1,353 crore) and reversal of disputed liabilities of Rs. 147 crore (Previous year Rs. 46 crore).

The aforesaid provisions shall be utilised on settlement of the claims, if any, there against.

(ii) Pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1 956 approved by the Hon''ble High Court of Judicature at Mumbai vide orders dated July 21, 2006 and August 1 0, 2006 (revised) and by Hon''ble High Court of Gujarat vide order dated July 18, 2006, out of the excess of fair value of assets over liabilities, Rs. 3,000 crore was credited to and held as Provision for Business Restructuring (PBR) to meet increased depreciation cost, expenses and losses including on account of impairment or write down of assets which would be suffered by the Company, pursuant to the Scheme or otherwise in course of its business or in carrying out such restructuring of the operations of the Company or its Subsidiaries. The Company has reassessed the requirement for maintaining such PBR and based thereon, reversed Rs. 550 crore during the year as no longer required leaving balance of Rs. 488 crore for being dealt with in accordance with the said Scheme. The said amount on reversal of PBR has been reflected as part of Other Income.

Note : 1.05 (Note 2.30 of Annual Accounts)

Contingent Liabilities and Capital Commitment (as represented by the Management)

(Rs. in Crore)

As at As at March 31. 2013 March 31, 2012

(i) Estimated amount of contracts remaining to be executed on capital accounts and 199 294 not provided for

(ii) Disputed Liabilities in Appeal

- Sales Tax and VAT 23 18

- Excise and Service Tax 2 2

- Entry Tax and Octroi 32 28

- Other Litigations 1,078 373

(iii) Guarantees given by the Company on behalf of its Subsidiaries 5,065 5,472

(iv) Guarantees given by the Company on behalf of other companies for business purpose 3 51

(v) License Fees

The Hon''ble Supreme Court of India, vide its judgment dated October 11, 2011, has set aside the Order of the Hon''ble Telecom Disputes Settlement and Appellate Tribunal (TDSAT) dated August 30, 2007 and allowed time to the licensees to raise their disputes before the Hon''ble TDSAT w.r.t. the demands already raised by Department of Telecommunications (DoT). The Hon''ble Supreme Court of India, in the meanwhile, also restrained DoT from enforcing its demands already raised. Subsequently, Hon''ble TDSAT granted all licensees/ operators the liberty to file additional affidavits thereby bringing on record the material facts including the subsequent events with respect to the petitions already pending before Hon''ble TDSAT which got revived post AGR judgment of Hon''ble Supreme Court of India dated October 11, 2011. On April 12, 201 2, all the petitions (both old and new of all the operators including the Company''s) were heard and interim order of protection, earlier passed by Hon''ble TDSAT were also extended to the new AGR petitions. The matter is now pending before Hon''ble TDSAT. Accordingly no additional provision is required in this regard.

(vi) Access Deficit Charges (ADC)

The Hon''ble TDSAT and Hon''ble Supreme Court of India vide its judgment dated January 17, 2006 and April 30, 2008 respectively upheld the circular of the Bharat Sanchar Nigam Limited (BSNL) dated January 14, 2005 whereby and where under the Company''s Fixed Wireless Phone (FWP) service was declared as limited mobile service. The period of claim, which was raised before the Hon''ble Supreme Court of India was for the period from November 14, 2004 to August 26, 2005. As directed by the Hon''ble Supreme Court on April 30, 2008, the Company moved before the Hon''ble TDSAT for quantification of ADC for aforesaid period. The Hon''ble TDSAT vide its judgment dated April 17, 2012 confirmed the liability of the Company for the said period and for subsequent periods. The Company already has an adequate provision of Rs. 540 crore in the books for the liability which is determined to be payable. Further course of action including the financial impact, if any, for the balance amount, which is under dispute and shall be determined on completion of reconciliation with BSNL.

(vii) Special Audit

Pursuant to the Telecom License Agreement, DoT directed audit of various Telecom companies including of the Company. The Special Auditors appointed by DoT were required to verify records of the Company for the years ended March 31, 2007 and March 31, 2008 relating to license fees and revenue share. The Company has received show cause notices dated January 31, 2012 and subsequently received demand notice dated November 8, 2012 based on report of the Special Audit directed by DoT relating to alleged shortfall of license fees of Rs. 300 crore and interest thereon as applicable. The Company has challenged the said notices, inter alia demanding license fee on non telecom revenue based on Special Audit Report before the Hon''ble TDSAT and also before the Hon''ble High Court of Kerala. Both the Courts have stayed the operation of such impugned demand during the pendency of the Petitions before them. The Company is confident that based on advice and, inter alia, on current understanding of the regulation by the industry and judicial pronouncements directly applicable to the issues raised in the special audit report, there shall not be any liability in this regard and hence, no provision is required in the accounts of the Company.

(viii) Spectrum Charges

Department of Telecommunication (DoT) has, during the year, issued demand on the Company for Rs. 1,758 crore towards levy of one time Spectrum Charges, being the prospective charges for holding CDMA Spectrum beyond 2.5 MHz for the period from January 1, 201 3 till the expiry of the initial terms of the Licenses. Based on a petition filed by the Company, the Hon''ble High Court of Kolkata, vide its order dated April 1 9, 201 3, has stayed the operation of the impugned demand till further order. The Company is of the opinion that the said demand, inter alia, is an alteration of financial terms of the licenses issued in the past and has also been legally advised! Accordingly, no provision in this regard is required.

Note : 1.06 (Note 2.32 of Annual Accounts)

Operating Lease

The Company''s significant leasing arrangements are in respect of operating leases for premises and network sites. These lease agreements provide for cancellation by either parties thereto as per the terms and conditions of the agreements. The Company is a lessee in respect of Optic Fibers and in respect of this lease, lease rent of Rs. 1,141 crore (Previous year Rs. 1,1 41 crore) including Rs. 1,129 crore (Previous year Rs. 1,1 29 crore) not leviable for the year as per the lease agreement, has been recognised on a straight line basis as Network Expenses and corresponding amount is provided for.

Note : 1.07 (Note 2.34 of Annual Accounts)

Export Commitments

The Company has obtained licenses/ authorisations under the Export Promotion Capital Goods (EPCG) Scheme for importing capital goods at a concessional rate of customs duty against submission of bonds. Linder the terms of the respective licenses/ authorisations, the Company is required to export goods of FOB value equivalent to or more than, eight times the amount of duty saved in respect of such licenses/ authorisations, where export obligation has been refixed by the order of Director General Foreign Trade (DGFT), Ministry of Commerce and Industry, Government of India, as applicable. The Company has fulfilled its export obligation under the aforesaid license as on March 31, 2013 and has submitted the necessary documents to DGFT for availing redemption letter for completion of export obligation amounting to Rs. 334 crore (Previous year Rs. 334 crore).

Note : 1.08 (Note 2.35 of Annual Accounts)

Segment Performance

Disclosure as per Accounting Standard ("AS") 1 7 "Segment Reporting" is reported in Consolidated Accounts of the Company. Therefore, the same has not been separately disclosed in line with the provision of AS.

Note : 1.09 (Note 2.37 of Annual Accounts)

Exceptional Items

Pursuant to the direction of the Hon''ble High Court of Judicature of Mumbai and option exercised by the Board of the Company, in accordance with and as per the scheme of arrangement approved by the Hon''ble High Court vide order dated July 3, 2009 binding on the Company, expenses and/ or losses, identified by the Board of the Company as being exceptional or otherwise subject to the Accounting treatment prescribed in the Schemes of Arrangement sanctioned by the Hon''ble High Court and comprising of Rs. Nil (Previous year Rs. 268 crore) of debts due and subsidy claimed from the Government, Rs. Nil (Previous year Rs. 775 crore) regarded as an adjustment to interest cost, on account of restating Long Term Monetary Items expressed in foreign currency at year end prevailing rates, Rs. 218 crore (Previous year Rs. Nil) of depreciation consequent to addition of exchange differences on long term borrowing relating to capital assets to the cost of capitalised assets, as also Rs. 91 crore (Previous year Rs. 273 crore) of net losses on settlement of items recovered and/ or discharged in foreign currency, Rs. 546 crore (Previous year Rs. 1 6 crore) (Refer Note 2.02) being amortization of Foreign Currency Monetary Items Translation Difference Account (FCMITDA) excluding the portion added to the cost of fixed assets or carried forward as FCMITDA in accordance with Para 46 A inserted into Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates" in context of unprecedented volatility in exchange rates during the year, have been met by withdrawal from corresponding General Reserves, leaving no impact on profit for the year ended March 31, 201 3. Such withdrawals have been included/ reflected in the Statement of Profit and Loss. While the Company has been legally advised that such inclusion in the Statement of Profit and Loss is in accordance with Revised Schedule VI of the Companies Act, 1 956, the Company has also sought clarification from the ICAI that such inclusion in the Statement of Profit and Loss is not contrary to Revised Schedule VI. Had such write off of expenses and losses not been met from General Reserve, the Company would have reflected a loss after tax for the year of Rs. 231 crore (Previous year Rs. 1,1 76 crore) and the consequential effect of this on the profit after tax for the year would have been of Rs. 855 crore (Previous year Rs. 1,332 crore).

Note : 1.10 (Note 2.38 of Annual Accounts)

Recovery of Expenses

Expenses under the heads Provision for Employee Costs and Other Expenses are net of recoveries for common cost from Reliance Communications Infrastructure Limited, a Wholly Owned Subsidiary of the Company. Such amounts recovered for the year amounting toRs. 104 crore (Previous year Rs. 84 crore) for Salaries, Rs. 235 crore (Previous year Rs. 409 crore) for Sales and General Administration Expenses comprising of Rs. 36 crore (Previous year Rs. 46 crore) for Advertising Expenses, Rs. 1 71 crore (Previous year Rs. 305 crore) for Customer Acquisition, Commission, Billing and Collection, Webstore expenses and Customer Care, Rs. 28 crore (Previous yearRs. 58 crore) for Hire Charges and Rs. 246 crore (Previous yearRs. Nil) for Network Expenses. Similarly, the amount recovered from Reliance Infratel Limited, a subsidiary of Reliance Communications Infrastructure Limited for the year includes Rs. 67 crore (Previous year Rs. 26 crore) for Salaries and Rs. 45 crore (Previous year Rs. 67 crore) for Sales and General Administration Expenses comprising of, Rs. 25 crore (Previous year Rs. 22 crore) for Hire Charges and Rs. 20 crore for Other General Administration Expenses (Previous year Rs. 45 crore). Similarly, the amount recovered from Reliance Big TV Limited, a Wholly Owned Subsidiary of the Company includes Rs. 3 crore (Previous year Rs. 4 crore) for Hire Charges and Rs. 1 6 crore (Previous year Rs. 26 crore) for Salaries. Similarly, the amount recovered from Reliance Telecom Limited, a Subsidiary of the Company includes Rs. 83 crore (Previous year Rs. 93 crore) for Salary, Rs. 29 crores (Previous year Rs. 14 crore) for Advertisement and marketing expenses, Rs. 90 crore (Previous year Rs. 111 crore) for General Administration Expenses and Rs. 1 4 crore towards Network Charges (Previous year Rs. 7 crore). Similarly, the amount recovered from Reliance Tech Services Private Limited, a Subsidiary of the Company includes Rs. 7 crore (Previous year Rs. Nil) for Salary and Rs. 12 crore (Previous year Rs. Nil) for Hire Charges. Similarly, the amount recovered from Reliance Webstore Limited (RWSL), a Wholly Owned Subsidiary of the Company includes Rs. 1 6 crore (Previous year Rs. Nil) for Salary and Rs. 56 crore (Previous year Rs. Nil) for Sales and General Administrative Expenses comprising of Rs. 4 crore (Previous year Rs. Nil) for Hire Charges, Rs. 10 crore (Previous year Rs. Nil) for Advertisement expenses, Rs. 24 crore (Previous year Rs. Nil) for Commission Expenses and Rs. 18 crore for Selling and Marketing expenses. Similarly, the amount recovered from Reliance Infocomm Infrastructure Private Limited, a Wholly Owned Subsidiary of the Company includes Rs. 8,32,1 21 (Previous year Rs. Nil) for Salary. Similarly, the amount recovered from Reliance IDC Limited, a Wholly Owned Subsidiary of the RCIL, includes Rs. 1 6 crore (Previous year Rs. Nil) for Hire charges.

Network expenses is net of remission of charges of Rs. 461 crore (Previous year Rs. 821 crore) for the deficiency in Passive Infrastructure Services by RITL, a subsidiary of the RCIL, pursuant to the Service Level Agreement between the parties.

Note : 1.11 (Note 2.41 of Annual Accounts)

Disclosure under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED)

Under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) which came into force from October 2, 2006, certain disclosures are required to be made relating to MSME. On the basis of the information and records available with the company, the following disclosures are made for the amounts due to Micro and Small Enterprises.

Note : 1.12 (Note 2.43 of Annual Accounts)

Employee Stock Option Scheme

The Company operates two Employee Stock Option Plans; ESOS Plan 2008 and ESOS Plan 2009, which cover eligible employees of the Company and its Subsidiaries. ESOS Plans are administered through an ESOS Trust. The Vesting of the Options is on the expiry of one year from the date of Grant as per Plan under the respective ESOS(s). In respect of Options granted, the accounting value of Options (based on market price of the share on the date of the grant of the Option) is accounted as deferred employee compensation, which is amortised on a straight line basis over the Vesting Period. Each Option entitles the holder thereof to apply for and be allotted one Equity Share of the Company of Rs. 5 each upon payment of the Exercise Price during the Exercise Period. The maximum Exercise Period is 10 years from the date of Grant of Options.

The Company has established a Trust for the implementation and management of ESOS for the benefit of its present and future employees. Advance of Rs. 387 crore (Previous year Rs. 389 crore) has been granted to the Trust and the said amount has been utilized by the Trust for purchasing 2.1 3 crore (Previous year 2.13 crore) Equity Shares during the period upto March 31, 2013.

Amortization of compensation includes write back of Rs. 2 crore (Previous year Rs. 5 crore) based on intrinsic value of Options which has been vested under ESOS Plan 2008 and reflected in Statement of Profit and Loss under Employees Benefit Expenses. No amount is chargeable in respect of Options granted under ESOS Plan 2009.


Mar 31, 2012

(1) The Company has only one class of equity shares having a par value of Rs. 5 per share. Each holder of equity shares is entitled 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. The distribution will be in proportion to the number of equity shares held by the shareholder.

During the year ended March 31, 2012, the amount of per share dividend recognized as distributable to equity shareholders is Rs. 0.25 (March 31, 2011: Rs. 0.50 ). The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

(2) The Company, during the past years, undertook various Schemes including restructuring of ownership structure of telecom business so as to align the interest of the shareholders. Accordingly, pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon'ble High Court of respective Judicature, the Company, during the respective years, recorded all necessary accounting effects, alongwith requisite disclosure in the notes to accounts, the cumulative effects of the Schemes in case of Equity Share Capital of the Company due to allotment of equity shares as fully paid up without payment being received in cash have been disclosed herein below.

(3) The Company is no longer required to issue 8.91 crore equity shares of Rs. 5 each as required on conversion of Foreign Currency Convertible Bonds (FCCBs) due to its redemption during the year (Refer Note 2.26).

1.01.1 Debentures and Term Loans

The Company, on February 7, 2012, allotted, 1,500, 11.25% and 5,000, 11.60% Secured, Redeemable, Non Convertible Debentures ("NCDs") of the face value of Rs. 1,00,00,000 each and Rs. 10,00,000 each respectively, aggregating to Rs. 2,000 crore. Redemption of NCDs of Rs. 1,500 crore shall be in four annual equal installments starting at the end of fourth year from the date of allotment thereof and NCDs of Rs. 500 crore shall be at the end of 5th year from the date of allotment thereof. During the earlier year, the Company, on March 2, 2009, allotted, 3,000, 11.20% Secured Redeemable, Non Convertible Debentures ("NCDs") of the face value of Rs. 1,00,00,000 each, aggregating to Rs. 3,000 crore to be redeemed at the end of 10th year from the date of allotment thereof.

11.20% Secured Redeemable, Non Convertible Debentures and 11.60% Secured, Redeemable, Non Convertible Debentures along with foreign currency loans and rupee loans ("Secured Loans") have been secured by first pari passu charge on the whole of the movable plant and machinery, of the Company including (without limitations) tower assets and optic fiber cables, if any (whether attached or otherwise), capital work in progress (pertaining to movable fixed assets) both present and future including all the rights, title, interest, benefits, claims and demands in respect of all insurance contracts relating thereto of the RCOM Group ("the Borrower Group"); comprising of the Company and its subsidiary companies namely; Reliance Telecom Limited (RTl), Reliance Infratel Limited (RITL) and Reliance Communications Infrastructure Limited (RCIL) in favour of the Security Trustee for the benefit of the NCDs Holders and the Lenders of the said Secured Loans. The said loans (Refer Note 2.03.2 (b) (vi)) also include guaranteed. The Company, for the benefit of the Lenders of foreign currency loans, has apart from the above, also assigned 20 Telecom Licenses for services under Unified Access Services (UAS), National Long Distance (NLD) and International Long Distance (ILD) by execution of Tripartite Agreements with Department of Telecommunications (DoT) and IDBI Bank, being the agent acting on behalf of the Lenders.

Assignment of aforesaid Telecom Licenses of the Company in favour of 11.60%, 5,000 Secured Redeemable, Non Convertible Debentures aggregating to Rs. 500 crore and secured foreign currency loans aggregating to Rs. 4,707 crore raised during the year is pending to be executed. Security on the above assets of the Borrower Group on first pari passu basis including assignment of Telecom Licenses of the Company for 1,500, 11.25% Secured Redeemable, Non Convertible Debentures aggregating to Rs. 1,500 crore is pending for execution. Secured foreign currency loans and rupee loans shall be additionally secured by way of a pledge over the shares held by the Company in its subsidiaries; RTL and RCIL, which is pending to be created on first pari passu basis for necessary consent from the existing Secured Lenders.

1.02.1 Cash Credit and Rupee Loans from Banks

The Company and its subsidiaries had during the earlier year, also availed Short Term Borrowings ("Secured Short Term Borrowings") which have been secured by way of second pari passu charge on plant and machinery, including (without limitations) tower assets and optic fiber cables, if any (whether attached or otherwise), capital work in progress (pertaining to movable fixed assets), both present and future, of the Borrower Group; comprising of the Company and its subsidiary companies namely; RTL, RITL and RCIL in favour of the Security Trustee for the benefit of Secured Short Term Lenders.

Working capital (Cash Credit) facilities shall be secured by first pari passu charge over current assets comprising of Stock and receivables of the Company in favour of the working capital lenders, which is pending to be created.

1.3.1 Capital Work in Progress includes:

(a) Rs. 155 crore (Previous year Rs. 615 crore) on account of project development expenditure.

(b) Rs. 57 crore (Previous yearRs. 211 crore) on account of materials at site.

(c) Rs. Nil (Previous year Rs. 7,237 crore) relating to 3G Spectrum fees paid to Department of Telecommunications (DoT).

1.3.2 Transfer of title of certain Land and Buildings received from Reliance Industries Limited pursuant to the Scheme of Arrangement and from Reliance Communications Infrastructure Limited pursuant to scheme of demerger of the Network division are under process.

1.3.3 Pursuant to the Scheme of Amalgamation of Reliance Gateway Net Limited (RGNL), on account of the fair valuation, during an earlier year ended on March 31, 2009, opening gross block of fixed assets included increase in Freehold Land by Rs. 225 crore, Buildings by Rs. 1 30 crore and Telecom Licenses by Rs. 14,145 crore and pursuant to the Scheme of Arrangement, reduction in plant and machinery, on account of transfer of Optic Fiber Undertaking to Reliance Infratel Limited by Rs. 5,078 crore (gross) and accumulated depreciation by Rs. 451 crore.

1.3.4 Balance useful life as at March 31, 2012 is 11 years for Indefeasible Right of Connectivity (IRC), 9 years for 2G Telecom licences and 19 years for 3G Telecom Licences.

1.3.5 Refer Note 2.03.1 and 2.06.1 for Security in favour of the Lenders.

1.3.6 Addition in Plant and Machinery includes Rs. 1,336 crore (net loss) (Previous year Rs. Nil) of exchange difference during the year. Out of this, Rs. 16 crore has been amortised during the year.

1.3.7 Additions in Intangible Assets-Telecom licenses includes Rs. 163 crore (net loss) (Previous year Rs. Nil) on account of exchange difference in the nature of borrowing cost as per para 4 (e) of Accounting Standard (AS) 16, "Borrowing Cost" and Rs. 489 crore of interest costs out of which Rs. 134 crore pertains to current year and Rs. 355 crore to Previous year.

Note : 1.4

Previous year

The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act 1956, the financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year's figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year's figures does not impact recognition and measurement principles followed for preparation of financial statements. Amount in financial statements are presented in Rupees crore, except as otherwise stated.

Note : 1.5

Foreign Currency Convertible Bonds (FCCBs)

(i) The Company issued FCCBs in two tranches; 5,00,000 FCCBs for 5 Years, 4.65%, USD 500 million issued on May 9, 2006 and 10,000 FCCBs for 5 Years, 4.95%, USD 1000 million issued on February 28, 2007. Pursuant to the exercise of an Option by the FCCB holders and in accordance with the terms and conditions thereof, the Company, during the earlier years, allotted 1,87,44,801 fully paid equity shares of Rs. 5 each at a pre determined premium of Rs. 475.68 per share against 2,03,051 FCCBs and 6,67,090 fully paid equity shares of Rs.5 each at a pre determined premium of Rs. 656.23 per share against 100 FCCBs respectively.

(ii) During the earlier years, the Company bought back and cancelled 647 nos. of 5 Year, 4.95%, FCCBs of the face value of USD 1,00,000 each, as per approval of the Reserve Bank of India, at a discount to the face value, resulting in a saving of Rs. 101 crore then accounted.

(iii) In accordance with the terms of issue of respective FCCBs, the Company, on due date, redeemed all outstanding 2,96,949 FCCBs aggregating USD 296.95 million on May 9, 2011 and balance outstanding 9,253 FCCBs aggregating USD 925.30 million on February 27, 201 2. As a result, the Company is not required to allot 8.91 crore equity shares of Rs. 5 each arising out of conversion of the said FCCBs. Premium of USD 76.73 million and USD 256.22 million respectively, for the entire tenor, paid on redemption of the respective FCCBs has been charged to Securities Premium Account. This includes an amount of USD 1.79 million and USD 51.78 million respectively pertaining to the year ended March 31, 2012.

Note : 1.6

Foreign Currency Monetary Items; Long Term

In view of the Option allowed pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs (MCA), Government of India, for the year ended on March 31, 2012, the Company has added Rs. 1,336 crore of exchange differences on long term borrowing relating to the acquisition of depreciable capital assets to the cost of capitalised assets. Further, the Company has accumulated foreign currency variations of Rs. 315 crore arising on other long term foreign currency monetary items in "Foreign Currency Monetary Item Translation Difference Account", out of which, Rs. 16 crore has been amortised during the year, leaving balance which will be amortised over the balance period of loans.

Note : 1.7

Schemes of Amalgamation and Arrangement of the earlier years

The Company, during the previous years, undertook various Schemes including restructuring of ownership structure of telecom business so as to align the interest of the shareholders. Accordingly, pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon'ble High Court of respective Judicature, the Company, during the respective years, recorded all necessary accounting effects, along with requisite disclosure in the notes to the accounts, in accordance with the provisions of the said Schemes. The cumulative effects of the Schemes in case of Equity Share Capital of the Company have been disclosed below the respective Notes to the Accounts. Reserves, pursuant to the said Schemes, include:

(i) Rs. 8,581 crore, being Securities Premium Account, which was part of the Security Premium of erstwhile Reliance Infocomm Limited (RIC), the transferor company.

(ii) General Reserve I of Rs. 5,538 crore representing the unadjusted balance being the excess of assets over liabilities relatable to Telecommunications Undertaking transferred and vested into the Company.

(iii) General Reserve II of Rs. 2,785 crore representing the unadjusted balance of the excess of assets over liabilities received by the Company relatable to Telecommunications Undertaking transferred and vested into the Company.

(iv) General Reserve III of Rs. 28,839 crore comprises of Rs. 4,159 crore transferred to General Reserve from Statement of Profit and Loss and Rs. 24,679 crore arising pursuant to Scheme of Amalgamation of erstwhile Reliance Gateway Net Limited and Rs. 1 crore of erstwhile Global Innovative Solutions Private Limited.

(v) Reserve for Business Restructuring of Rs. 1,287 crore representing the unadjusted balance of revaluation of investment in Reliance Communications Infrastructure Limited, the holding company of Reliance Infratel Limited after withdrawing an amount equivalent to writing off Passive Infrastructure assets, transferred to Reliance Infratel Limited, to the Statement of Profit and Loss. Balance in Reserve for Business Restructuring shall be available to meet the increased depreciation, costs, expenses and losses including on account of impairment of or write down of assets etc.

(vi) Additional depreciation arising on fair value of the assets has been adjusted from General Reserve III and Provision for Business Restructuring.

(vii) Also refer note 2.38 "Exceptional Items" below.

Note : 1.8

Provisions

Provisions include, provision for disputed claims of verification of customers Rs. 9 crore (Previous year Rs. 9 crore), others of Rs. 1,353 crore (Previous year Rs. 1,399 crore), and reversal of disputed liabilities of Rs. 46 crore (Previous year Rs. 102 crore).

The aforesaid provisions shall be utilised on settlement of the claims, if any, there against.

Note : 1.9

Contingent Liabilities and Capital Commitment (as represented by the Management)

(Rs. in Crore)

As at As at March 31, 2012 March 31, 2011

(i) Estimated amount of contracts remaining to be executed on capital accounts (net of 294 357 advances) and not provided for

(ii) Disputed Liabilities in Appeal

- Sales Tax and VAT 18 12

- Excise and Service Tax 2 2

- Entry Tax and Octroi 28 23

- Other Litigations 31 27

- Interest on ADC on FWP/ T 342 160

(iii) Guarantees given by the Company on behalf of its Subsidiaries 5,472 1,116

(iv) Guarantees given by the Company on behalf of other companies for business purpose 51 421

(v) License Fees

The Hon'ble Supreme Court, vide its judgment dated October 11, 2011, has set aside the Order of Telecom Disputes Settlement and Appellate Tribunal (TDSAT) dated August 30, 2007 and allowed two months' time to the licencees to raise their disputes before the Hon'ble TDSAT w.r.t. the demands already raised by Department of Telecommunications (DoT). The Hon'ble Supreme Court, in the meanwhile, also restrained DoT from enforcing its demands already raised. By Order dated December 15, 2011, the Hon'ble TDSAT granted all licensees/ operators the liberty to file additional affidavits thereby bringing on record the material facts including the subsequent events with respect to the petitions already pending before the Hon'ble TDSAT, which have been revived pursuant to the aforesaid judgement of the Hon'ble Supreme Court. On April 12, 2012, all the petitions (both old and new of all the operators including of the Company) were heard and an interim order of protection, earlier passed was extended to the new AGR petitions. The matter is pending for further hearing/ orders scheduled before the Hon'ble TDSAT on July 2, 2012.

(vi) Access Deficit Charges (ADC)

The Hon'ble TDSAT and the Hon'ble Supreme Court, vide their judgments dated January 17, 2006 and April 30, 2008 respectively upheld the circular of Bharat Sanchar Nigam Limited (BSNL) dated January 14, 2005 whereby and whereunder the Company's fixed wireless phone (FWP) service was declared as limited mobile service. The period of claim, which was raised before the Hon'ble Supreme Court, was from November 14, 2004 to August 26, 2005. As directed by the Hon'ble Supreme Court, on April 30, 2008, the Company moved before the Hon'ble TDSAT for quantification of ADC for aforesaid period. The Hon'ble TDSAT vide its judgement dated April 17, 2012 confirmed the liability of the Company for the said period and for subsequent periods. The Company already has an adequate provision of Rs. 540 crore in the books for the liability which has been determined to be payable. Further course of action including the financial impact, if any, for the balance amount, which is under dispute shall be determined on completion of reconciliation with BSNL.

(vii) Special Audit

Pursuant to the Telecom License Agreement, DoT directed audits of various Telecom companies including of the Company. The Special Auditors appointed by DoT were required to verify records of the Company and some of its subsidiaries for the years ended March 31, 2007 and March 31, 2008 relating to license fees and revenue share. The Company and its subsidiary have received show cause notices dated January 31, 2012 based on report of the Special Audit directed by DoT relating to alleged shortfall of license fees and revenue share of Rs. 300 crore and interest thereon as applicable. The Company has submitted its reply to DoT towards show cause notice. The Company is confident that based on advice and, inter alia, on current understanding of the regulation by the industry and judicial pronouncements directly applicable to the issues raised in the special audit report, there shall not be any liability in this regard and hence, no provision is required in the accounts of the Company.

Note : 1.10 Operating Lease

The Company's significant leasing arrangements are in respect of operating leases for premises and network sites. These lease agreements provide for cancellation by either parties thereto as per the terms and conditions of the agreements. The Company is a lessee in respect of Optic Fibres and in respect of this lease, lease rent of Rs. 1,141 crore, (Previous year Rs. 1,141 crore) including Rs. 1,129 crore (Previous year Rs. 1,129 crore) not leviable for the year as per the lease agreement, has been recognised on a straight line basis as Network Expenses and corresponding amount is included in Long Term Provisions.

Note : 1.11 Export Commitments

The Company has obtained licenses/ authorisations under the Export Promotion Capital Goods (EPCG) Scheme for importing capital goods at a concessional rate of customs duty against submission of bonds. Under the terms of the respective licenses/ authorisations, the Company is required to export goods of FOB value equivalent to or more than, eight times the amount of duty saved in respect of such licenses/ authorisations, where export obligation has been refixed by the order of Director General Foreign Trade (DGFT), Ministry of Commerce and Industry, Government of India, as applicable. The Company has fulfilled its export obligation under the aforesaid license as on March 31, 2012 and has submitted necessary documents to DGFT for availing redemption letter for completion of export obligation amounting to Rs. 334 crore (Previous year Rs. 334 crore).

Note : 1.12

Segment Performance

Disclosure as per Accounting Standard ("AS") 17 "Segment Reporting" is reported in Consolidated Accounts of the Company. Therefore, the same has not been separately disclosed in line with the provision of AS.

Note : 1.13 Exceptional Items

Pursuant to the direction of the Hon'ble High Court of Judicature of Mumbai and Option exercised by the Board of the Company, in accordance with and as per the Scheme of Arrangement approved by the Hon'ble High Court vide order dated July 3, 2009 binding on the Company, expenses and/ or losses, identified by the Board of the Company as being exceptional or otherwise subject to the Accounting treatment prescribed in the said Scheme and comprising of Rs. 268 crore of debts due including, in particular, debts due from telecom operators whose licences are under cancellation pursuant to the directions of the Hon'ble Supreme Court in its order dated February 2, 2012 in the matter of Centre for Public Interest Litigation and others vs. Union of India and others and subsidy claimed from the Government, Rs. 849 crore unrealised net losses, including Rs. 775 crore regarded as an adjustment to interest cost, on account of restating Long Term monetary items expressed in foreign currency at year end prevailing rates, as also Rs. 199 crore of net realised losses on settlement of items recovered and/ or discharged in foreign currency, and Rs. 16 crore (Refer Note 2.27) as the amortised portion of FCMITDA, in accordance with Para 46A of Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates" in context of unprecedented volatility in exchange rates during the year, have been met by corresponding withdrawal from General Reserve, leaving no impact on profit for the year ended March 31, 2012. Such withdrawals have been included/ reflected in the Statement of Profit and Loss.

While the Company has been legally advised that such inclusion in the Statement of Profit and Loss is in accordance with Revised Schedule VI of the Companies Act, 1 956, the Company is also seeking clarification from the ICAI that such inclusion in the Statement of Profit and Loss is not contrary to Revised Schedule VI.

Had such write off of expenses and losses not been met from General Reserve, the Company would have reflected a Loss after tax of Rs. 1,176 crore and the consequential effect of this on the profit after tax for the year would have been Rs. 1,332 crore.

Note : 1.14

Recovery of Expenses

Expenses under the heads Provision for Employee Costs and Other Expenses are net of recoveries for common cost from Reliance Communications Infrastructure Limited, a Wholly Owned Subsidiary of the Company. Such amounts recovered for the year amounting to Rs. 84 crore (Previous year Rs. 200 crore) for Salaries, Rs. 409 crore (Previous year Rs. 435 crore) for Sales and General Administration Expenses comprising of Rs. 46 crore (Previous year Rs. 35 crore) for Advertising Expenses, Rs. 305 crore (Previous year Rs. 327 crore) for Customer Acquisition, Commission, Billing and Collection, Webstore Expenses and Customer Care, Rs. 58 crore (Previous year Rs. 73 crore) for Hire Charges. Similarly, the amount recovered from Reliance Infratel Limited, a subsidiary of Reliance Communications Infrastructure Limited for the year includes Rs. 26 crore (Previous year Rs. 84 crore) for Salaries and Rs. 67 crore (Previous year Rs. 36 crore) for Sales and General Administration Expenses comprising of, Rs. 22 crore (Previous year Rs. 1 crore) for hire charges and Rs. 45 crore for other General Administration Expenses (Previous year Rs. 35 crore). Similarly, the amount recovered from Reliance Big TV Limited, a Wholly Owned Subsidiary of the Company includes Rs. 4 crore (Previous year Rs. 5 crore) for Hire Charges and Rs. 26 crore (Previous year Rs. 26 crore) for Salaries. Similarly, the amount recovered from Reliance Telecom Limited, a Wholly Owned Subsidiary of the Company includes Rs. 93 crore (Previous year Rs. Nil) for Salary, Rs. 14 crore (Previous year Rs. Nil) for Advertisement and Marketing Expenses, Rs. 111 crore (Previous year Rs. Nil) for General Administrative Expenses and Rs. 7 crore (Previous year Rs. Nil) towards Network Charges. Network Expenses is net of remission of charges of Rs. 821 crore, including Rs. 476 crore of the Previous year, for the deficiency in Passive Infrastructure Services by Reliance Infratel Limited, a subsidiary of the Company pursuant to the Service Level Agreement between the parties.

Note : 1.15

Financial Statements of Subsidiary Companies

The Ministry of Corporate Affairs, Government of India vide its General circular no. 2 and 3, dated February 8, 2011 and February 21, 2011 respectively, has granted general exemption from compliance with Section 212 of the Companies Act, 1956, subject to fulfilment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence, is entitled to the exemption. As per the circular, key details of each subsidiary is attached in the Consolidated Financial Statements.

Note : 1.16

Employee Benefits

Gratuity : In accordance with the applicable Indian laws, the Company provides for the gratuity, a defined benefit retirement plan (Gratuity Plan) for all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on respective employee's last drawn salary and for the years of employment with the Company

The following table sets out the status of the Gratuity Plan as required under Accounting Standard ("AS") 15 (Revised) "Employee Benefits",

Provident Fund : The guidance on Implementing ("AS") 15 "Employee Benefits" (revised 2005) issued by the ICAI states that the benefits involving employer established Provident Fund, which require interest shortfalls to be recompensed are to be considered as/ in defined benefit plans. The employee and employer each make monthly contribution to the plan equal to 12% of the covered employee's salary. Contributions are made to the trust established by the Company. During the year ended March 31, 2012, the Actuarial Society of India issued the final guidance for measurement of provident fund liabilities. As at March 31, 2012, Fair value of plan assets is Rs. 294 crore, the present value of defined benefit obligation is Rs. 296 crore. Accordingly, based on such actuarial valuation, the Company has charged Rs. 2 crore (Previous year Rs. Nil), being shortfall in interest, during the year. For the year ended March 31, 2012, the Company has contributed Rs. 22 crore (Previous year Rs. 25 crore) towards Provident Fund. The Employee Benefits as disclosed herein pertain to the Company.

The assumptions made for the above are Discount rate of 8.50%, average remaining tenure of Investment Portfolio is 7 years and guaranteed rate of return is 8.25%.

Note : 1.17

Employee Stock Option Schemes

The Company operates two Employee Stock Option Plans; ESOS Plan 2008 and ESOS Plan 2009, which cover eligible employees of the Company, the Holding Company and its Subsidiaries. ESOS Plans are administered through an ESOS Trust. The Vesting of the Options is on the expiry of one year from the date of Grant as per Plan under the respective ESOS(s). In respect of Options granted, the accounting value of Options (based on market price of the share on the date of the grant of the Option) is accounted as deferred employee compensation, which is amortised on a straight line basis over the Vesting Period. Each Option entitles the holder thereof to apply for and be allotted one Equity Share of the Company of Rs. 5 each upon payment of the Exercise Price during the Exercise Period. The maximum Exercise Period is 10 years from the date of Grant of Options.

The Company has established a Trust for the implementation and management of ESOS for the benefit of its present and future employees. Advance of Rs. 389 crore (Previous year Rs. 389 crore) has been granted to the Trust and Rs. 391 crore (Previous year Rs. 391 crore) has been utilised by the Trust for purchasing 2.13 crore (Previous year 2.13 crore) equity shares during the period upto March 31, 2012.

Amortization of compensation includes write back of Rs. 5 crore (Previous year Rs. 7 crore) based on intrinsic value of Options which have been vested under ESOS Plan 2008 and reflected in Statement of Profit and Loss under Employee Benefit Expenses. No amount is chargeable in respect of Options granted under ESOS Plan 2009.

No derivative instruments are acquired for speculation purpose.

In respect of Foreign Currency Swap and Interest Rate Swap transactions, which are linked with LIBOR rates and exchange rate during the period of contract, gains/ losses, if any, are recognised on the settlement day or the reporting day, whichever is earlier, at the rate prevailing on respective day.

Foreign Currency exposures that are not hedged by derivative instruments or otherwise for Loans/ Liabilities and assets are USD 428 crore (Previous year USD 457 crore), equivalent to Rs. 21,770 crore (Previous year Rs. 20,371 crore).

Above exposure status does not include the effects of accruals.

The unamortised premium of Buyers' Credit to be recognized is Rs. 2 crore (Previous year Rs. 18,86,127) for one or more subsequent accounting periods.

Disclosure in respect of transactions, which are more than 10% of the total transactions of the same type with a related party during the year ended March 31, 2012

1. Fixed assets acquired during the year include Rs. 86 crore from Reliance Tech Services Private Limited, Rs. 36 crore from Reliance Infratel Limited and Rs. 16 crore from Alcatel-Lucent Managed Solutions India Private Limited (Previous Year - Fixed assets acquired during the year include Rs. 34 crore from Reliance Tech Services Private Limited and Rs. 32 crore from Reliance Infratel Limited and Rs. 28 crore from Alcatel-Lucent Managed Solutions India Private Limited).

2. Loans and Advances include loans granted during the year of Rs. 12,772 crore to Reliance Communications Infrastructure Limited, Rs. 2,509 crore to Reliance Telecom Limited, and repaid/ adjusted during the year Rs. 12,474 crore by Reliance Communications Infrastructure Limited, Rs. 2,137 crore by Reliance Telecom Limited and Rs. Nil by Reliance Infratel Limited. (Previous year - Loans and Advances include loan granted during the year of Rs. 5,945 crore to Reliance Communications Infrastructure Limited, Rs. 21,291 crore to Reliance Telecom Limited, and repaid during the year Rs. 6,033 crore by Reliance Communications Infrastructure Limited, Rs. 23,395 crore by Reliance Telecom Limited and Rs. 3,549 crore by Reliance Infratel Limited.

3. Sundry Debtors include Rs. 230 crore from Reliance Telecom Limited, Rs. 127 crore from Reliance Webstore Limited, Rs. 34 crore from Reliance Communications Inc, Rs. 39 crore from Reliance Communications Infrastructure Limited (Previous year - Sundry Debtors include Rs. 31 crore Reliance Telecom Limited, Rs. 11 crore from Reliance Webstore Limited, Rs. 277 crore from Reliance Communications Inc. and Rs. 115 crore from Reliance Communications Infrastructure Limited).

4. Loans given include Rs. 1,827 crore to Reliance Communications Infrastructure Limited, Rs. 1,839 crore to Reliance Telecom Limited, Rs. 2,719 crore to Reliance Infratel Limited and Advances include Rs. Nil to Reliance Communications Infrastructure Limited, Rs. 44 crore to Reliance Telecom Limited, Rs. 23 crore to Reliance Webstore Limited (Previous year - Loans given include Rs. 1,529 crore to Reliance Communications Infrastructure Limited, Rs. 1,467 crore to Reliance Telecom Limited, Rs. 2,719 crore to Reliance Infratel Limited and Advances include Rs. 1,431 crore to Reliance Communications Infrastructure Limited, Rs. Nil to Reliance Telecom Limited and Rs. Nil to Reliance Webstore Limited).

5. Sundry Creditors include Rs. 39 crore to Reliance Flag Atlantic France SAS, Rs. 69 crore to Reliance Communications (UK) Limited, Rs. 7 crore to Reliance Infratel Limited, Rs. 78 crore to Reliance Tech Services Private Limited, Rs. 64 crore to Alcatel-Lucent Managed Solutions India Private Limited, (Previous year - Sundry Creditors include Rs. 108 crore to Reliance Flag Atlantic France SAS, Rs. 53 crore to Reliance Communications (UK) Limited, Rs. 61 crore to Reliance Infratel Limited, Rs. 55 crore to Reliance Tech Services Private Limited and Rs. 79 crore to Alcatel-Lucent Managed Solutions India Private Limited).

Sundry Creditors also includes Rs. 217 crore to Reliance Infratel Limited for availing passive infrastructure services for 3G Operations. (Previous Year - Sundry Creditors also includes Rs. 217 crore to Reliance Infratel Limited for availing passive infrastructure services for 3G Operations).

6. Other Current Assets includes Rs. 51 crore of Unbilled revenue of Reliance Communications Inc., Interest Receivable includes Rs. 892 crore from Reliance Infratel Limited and Rs. 16 crore Deposit to Alcatel-Lucent Managed Solutions India Private Limited.

(Previous year - Rs. 50 crore of Unbilled revenue of Reliance Communications Inc, Interest Receivable includes Rs. 670 crore from Reliance Infratel Limited, and Rs. 16 crore Deposit to Alcatel-Lucent Managed Solutions India Private Limited).

7. Investments include conversion of Loans into Preference Shares during the year Rs. Nil of Reliance Infratel Limited and conversion of Preference Shares of Rs. Nil of Reliance Globalcom BV into equity shares. Redemption of Preference Shares during the year includes Rs. Nil of Reliance Globalcom BV and Rs. 223 crore of Reliance Globalcom Limited Bermuda (Previous year- Investments include conversion of Loans into Preference Shares Rs. 2,500 crore of Reliance Infratel Limited and conversion of Preference Shares of Rs. 2,276 crore of Reliance Globalcom BV into equity shares. Redemption of Preference Shares includes Rs. 1,528 crore of Reliance Globalcom BV and Rs. 764 crore of Reliance Globalcom Limited Bermuda).

8. Unearned Income includes Rs. 14 crore from Reliance Flag Telecom Ireland Network Limited and Rs. 5 crore from Reliance FLAG Atlantic France SAS. (Previous Year- Unearned Income includes Rs. 15 crore from Flag Telecom Ireland Network Limited and Rs. 4 crore from Reliance FLAG Atlantic France SAS.)

9. Prepaid expenses includes Rs. 10 crore from Reliance FLAG Atlantic France SAS and Rs. 87 crore from Reliance Telecom Limited. (Previous year-Prepaid expense includes Rs. 10 crore from Reliance FLAG Atlantic France SAS and Rs. Nil from Reliance Telecom Limited).

10. Financial Guarantee issued includes Rs. Nil to Reliance Globalcom BV (Previous year - Rs. 70 crore to Reliance Globalcom BV).

11. Corporate Guarantee issued includes Rs. 3,508 crore to Reliance Infratel Limited and Rs. 1,463 crore to Reliance Telecom Limited. (Previous year - Corporate Guarantee issued includes Rs. 189 crore to Reliance Infratel Limited and Rs. 749 crore to Reliance Telecom Limited).

12. Turnover includes Rs. 1,182 crore from Reliance Communications Infrastructure Limited, Rs. 601 crore from Reliance Communications Inc., Rs. 721 crore from Reliance Telecom Limited. (Previous year - Turnover includes Rs. 845 crore from Reliance Communications Infrastructure Limited, Rs. 488 crore from Reliance Communications Inc. and Rs. 666 crore from Reliance Telecom Limited).

13. Other Income includes Sale of Capital inventories of Rs. Nil to Reliance Webstore Limited (Previous Year - Rs. 95 crore to Reliance Webstore Limited)

14. Interest income includes Rs. 596 crore received from Reliance Infratel Limited (Previous year - Interest income includes Rs. 595 crore received from Reliance Infratel Limited).

15. Expenditure includes Access Charges: Rs. 173 crore to Reliance Communications Inc. and Rs. 274 crore to Reliance Telecom Limited, Network Operation Expenses: Rs. 1,178 crore to Reliance Infratel Limited and Rs. 180 crore to Alcatel-Lucent Managed Solutions India Private Limited. Selling and Marketing expenses: Rs. 136 crore to Reliance Communications Infrastructure Limited and Rs. 38 crore to Reliance Webstore Limited. General and Administrative Expenses: Rs. 209 crore to Reliance Communications Infrastructure Limited, Rs. 51 crore to Reliance Infocomm Infrastructure Private Limited and Rs. 40 crore to Reliance Tech Services Private Limited. (Previous year - Expenditure includes Access Charges: Rs. 126 crore to Reliance Communications Inc., Rs. 240 crore to Reliance Telecom Limited, Network Operation Expenses: Rs. 3,551 crore to Reliance Infratel Limited. Selling and Marketing expenses: Rs. 151 crore to Reliance Communications Infrastructure Limited and Rs. 117 crore to Reliance Webstore Limited. General and Administrative Expenses: Rs. 226 crore to Reliance Communications Infrastructure Limited, Rs. 41 crore to Reliance Infocomm Infrastructure Private Limited and Rs. 21 crore to Reliance Tech Services Private Limited).

16. Expenses under the heads Provision for Employee Costs and Other Expenses are net of recoveries for common cost from Reliance Communications Infrastructure Limited, a Wholly Owned Subsidiary of the Company. Such amounts recovered for the year amounting to Rs. 84 crore for Salaries, Rs. 409 crore for Sales and General Administration Expenses comprising of Rs. 46 crore for Advertising Expenses, Rs. 305 crore for Customer Acquisition, Commission, Billing and Collection, Webstore expenses and Customer Care, Rs. 58 crore for Hire Charges. Similarly, the amount recovered from Reliance Infratel Limited, a subsidiary of RCIL for the year includes Rs. 26 crore for Salaries and Rs. 67 crore for Sales and General Administration Expenses comprising of Rs. 22 crore for Hire Charges and Rs. 45 crore for Other General Administration Expenses. Similarly, the amount recovered from Reliance Big TV Limited, a Wholly Owned Subsidiary of the Company includes Rs. 4 crore for Hire Charges and Rs. 26 crore for Salaries. Similarly, the amount recovered from Reliance Telecom Limited, a Wholly Owned Subsidiary of the Company includes Rs. 93 crore for Salary, Rs. 14 crore for Advertisement and Marketing Expenses, Rs. 111 crore for General Administration Expenses and Rs. 7 crore towards Network charges (Previous Year - Expenses under the heads Provision for Employee Costs and Other Expenses are net of recoveries for common cost from Reliance Communications Infrastructure Limited, a Wholly Owned Subsidiary of the Company. Such amounts recovered Rs. 200 crore for Salaries, Rs. 435 crore for Sales and General Administration Expenses comprising of Rs. 35 crore for Advertising Expenses, Rs. 327 crore for Customer Acquisition, Commission, Billing and Collection, Webstore expenses and Customer Care, Rs. 73 crore for Hire Charges. Similarly, the amount recovered from Reliance Infratel Limited, a subsidiary of RCIL includes Rs. 84 crore for Salaries and Rs. 36 crore for Sales and General Administration Expenses comprising of Rs. 1 crore for Hire Charges and Rs. 35 crore for Other General Administration Expenses. Similarly, the amount recovered from Reliance Big TV Limited, a Wholly Owned Subsidiary of the Company includes Rs. 5 crore for Hire Charges and Rs. 26 crore for Salaries. Similarly, the amount recovered from Reliance Telecom Limited, a Wholly Owned Subsidiary of the Company includes Rs. Nil for Salary, Rs. Nil for Advertisement and Marketing Expenses, Rs. Nil for General Administration Expenses and Rs. Nil towards Network charges).


Mar 31, 2011

1 Previous year

Figures of the Previous year have been regrouped and reclassified, wherever required. Previous year's figures are not comparable on account of the effects of the Scheme considered during the year.

2 Foreign Currency Convertible Bonds (FCCBs)

(i) The Company issued FCCBs in two tranches; 5,00,000 FCCBs for 5 years, 4.65%, USD 500 million issued on May 9, 2006 and 10,000 FCCBs for 5 years, 4.95%, USD 1,000 million issued on February 28, 2007. Pursuant to the exercise of an option by the FCCB Holders and in accordance with the terms and conditions thereof, the Company, during the earlier years, allotted 1,87,44,801 fully paid Equity Shares of Rs. 5 each at a pre determined premium of Rs. 475.68 per share against 2,03,051 FCCBs and 6,67,090 fully paid Equity Shares of Rs. 5 each at a pre determined premium of Rs. 656.23 per share against 100 FCCBs respectively.

(ii) During the earlier years, the Company has bought back and cancelled 647 nos. of 5 year, 4.95%, FCCBs of the face value of USD 1,00,000 each, as per approval of the Reserve Bank of India, at a discount to the face value.

Out of total FCCBs issued, 2,96,949 (Previous year 2,96,949) FCCBs and 9,253 (Previous year 9,253) FCCBs from the respective tranches were outstanding as on March 31, 2011.

(iii) Subsequent to the date of Balance sheet, i.e. March 31, 2011, in accordance with the terms of issue of 5,00,000 FCCBs for 5 years, 4.65%, USD 500 million issued on May 9, 2006, the Company has redeemed all outstanding FCCBs by making payment on due date i.e. May 9, 2011. As a result, the Company is not required to allot 2,74,13,085 Equity Shares of Rs. 5 each arising out of conversion of the said FCCBs.

(iv) In the event, if the outstanding FCCBs are fully converted into Equity Shares, the Equity Share Capital of the Company would increase by approximately 6.17 crore (Previous year 8.91 crore) Equity Shares of Rs. 5 each.

(v) In case of the above mentioned FCCBs, on and at anytime after February 28, 2010 on and prior to the maturity date, the Company may, subject to certain terms and conditions as per the offering memorandum, redeem the FCCBs in whole and not in part at their Early Redemption amount, provided that no such redemption may be made unless the aggregate value (as defined in the terms and conditions) on each trading day during the periods of not less than 30 consecutive trading days, ending not earlier than 14 days prior to the date upon which notice of such redemption is given, was at least 130 percent of the early redemption amount.

(vi) FCCBs amount includes Rs. 1,245.87 crore (Previous year Rs. 942.32 crore), being the premium on redemption of FCCBs computed on pro rata basis for the period up to March 31, 2011.

3 Foreign Exchange

During the year, loss of Rs. 105.36 crore (Previous year Rs. Nil) arising out of marking related Derivative Contracts to market has been recognized in the profit and Loss Account, in compliance with the announcement dated March 29, 2008 by the Institute of Chartered Accountants of India (ICAI) regarding Accounting for Derivatives.

4 Schemes of Amalgamation and Arrangement of the earlier years

The Company, during the past years, undertook various Schemes including restructuring of ownership structure of telecom business so as to align the interest of the shareholders. Accordingly, pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon'ble High Courts of respective judicature, the Company, during the respective years, recorded all necessary accounting effects, along with requisite disclosure in the notes to the accounts, in accordance with the provisions of the said Schemes. The cumulative effects of the Schemes in case of Equity Share Capital of the Company have been disclosed below the respective Schedule to the Accounts. Reserves, pursuant to the said Schemes, include:

(i) Rs. 8,882.62 crore, being Securities Premium Account, which was part of the Security Premium of erstwhile Reliance Infocomm Limited (RIC), the transferor company.

(ii) General Reserves I of Rs. 5,538.00 crore representing the unadjusted balance being the excess of assets over liabilities relatable to Telecommunications Undertaking transferred and vested into the Company.

(iii) General Reserves II ofRs. 2,785.21 crore representing the unadjusted balance of the excess of assets over liabilities received by the Company relatable to Telecommunications Undertaking transferred and vested into the Company.

(iv) General Reserve III ofRs. 30,229.81 crore comprises ofRs. 4,375.43 crore transferred to General Reserve from the profit and Loss Account and Rs. 25,854.38 crore arising pursuant to Scheme of Amalgamation of Reliance Gateway Net Limited.

(v) Reserve for Business Restructuring of Rs. 1,287.10 crore representing the unadjusted balance of revaluation of investment in Reliance Communications Infrastructure Limited (RCIL), the Holding Company of Reliance Infratel Limited (RITL) after withdrawing an amount equivalent to writing off Passive Infrastructure assets, transferred to RITL, to the profit and Loss Account. Balance in Reserve for Business Restructuring shall be available to meet the increased depreciation, costs, expenses and losses including on account of impairment of or write down of assets etc.

(vi) Additional depreciation arising on fair value of the assets has been adjusted from General Reserve III and Provision for Business Restructuring.

5 Scheme of Amalgamation and Arrangement

Pursuant to the Scheme of Amalgamation ("the Scheme") under Sections 391 to 394 of the Companies Act, 1956 sanctioned by the Hon'ble High Court of Bombay vide Order dated April 29, 2011 and filed with the Registrar of Companies (RoC) on May 25, 2011, Global Innovative Solutions Private Limited (GISPL), a Wholly Owned Subsidiary of the Company, engaged in allied telecommunication activities, has been amalgamated into the Company with effect from the Appointed Date as on April 1, 2010.

As per the said Scheme:

(i) All the assets and liabilities as appearing in the books of GISPL as on the Appointed Date have been recorded in the books of the Company at their respective book values and inter company balances have been cancelled.

(ii) Excess of assets over liabilities of Rs. 1.002 crore has been credited to General Reserve III of the Company.

(iii) The Company's investment in the share capital of GISPL amounting to Rs. 1.00 crore has been written off to the profit and Loss Account and an equivalent amount has been withdrawn from General Reserve III.

Had the Scheme not prescribed this treatment, Rs. 0.002 crore would have been credited to Capital Reserve as required by the Purchase Method prescribed by Accounting Standard (AS) 14 "Accounting for Amalgamation".

6 Depreciation on Electronic Equipments

During the previous year, the Company had carried out technical/ technology assessment to determine the useful life of some of its telecommunications equipments. The useful life of such telecommunications equipments had been re-assessed and ascertained as 18 years, impacting the provision of depreciation of these assets for the year ended on March 31, 2010. As a result, depreciation charge was lower and profits for the previous year was higher by Rs. 771.00 crore. The accounting treatment so determined has been fully in accordance with the applicable provisions of the Companies Act, 1956.

8 Provisions

(i) Provisions include, provision for disputed claims of verification of customers Rs. 9.04 crore (Previous year Rs. 9.04 crore) and others of Rs. 1,398.75 crore (Previous year Rs. 1,650.88 crore) net of payment of Rs. 150 crore to Department of Telecommunications (DoT) in relation to the matter pertaining to Home Country Direct (HCD) Calls and Provision for Commission to Non Executive Directors of Rs. Nil (Previous year Rs. 0.60 crore).

(ii) During the year, an amount of Rs. Nil (Previous yearRs. 140.00 crore) relating to Roll out obligations, Rs. 102.13 crore (Previous year Rs. 50.52 crore) relating to disputed liablities have been reversed and provided an amount of Rs. Nil (Previous year Rs. 5.64 crores) towards disputed interconnect usage charges. Further, the Company paid Rs. 0.60 crore (Previous yearRs. 0.60 crore) towards commission to Non Executive Directors for the financial year 2009-10.

(iii) Also refer Note 2 (vi) above.

The aforesaid provisions shall be utilised on settlement of the claims, if any, thereagainst.

9 Contingent Liabilities and Capital Commitment (as represented by the Management)

(Rs. in crore)

As at As at March 31, 2011 March 31, 2010

(i) Estimated amount of contracts remaining to be 356.78 220.22 executed on capital accounts (net of advances) and not provided for

(ii) Disputed Liabilities in Appeal

- Sales Tax and VAT 12.48 52.05

- Excise and Service Tax 2.08 2.08

- Entry Tax and Octroi 23.30 1.55

- Other Litigations 27.19 0.30

- Interest on ADC on FWP/T 160.40 -

(iii) Guarantees given by the Company on behalf of its 1,116.14 2,536.64 Subsidiaries

(iv) Guarantees given by the Company on behalf of other 420.64 461.99 companies for business purpose

10 Deferred Tax Assets and Liabilities

The Company being in the business of Telecommunication Services, Broadband Network and Internet services, are eligible for deduction u/s 80IA (Tax Holiday) of the Income tax Act, 1961. Since the Deferred Tax Liability in respect of timing difference is expected to reverse during Tax Holiday Period, the same is not recognised in books of accounts as at March 31, 2011 as per the Accounting Standard (AS) 22 of "Accounting for Taxes on Income" as referred to in Accounting Standard Rules. Following the principle of prudence, the Company has not recognised Deferred Tax Asset in respect of debits for equalised lease rentals.

16 Operating Lease

The Company's significant leasing arrangements are in respect of operating leases for premises and network sites. These lease agreements provide for cancellation by either parties thereto as per the terms and conditions of the agreements. The Company is a lessee in respect of Optic Fibres and in respect of this lease, lease rent of Rs.1,141.00 crore, (Previous year Rs.1,141.00 crore) including Rs. 1,129.00 crore (Previous year Rs.1,129.00 crore) not leviable for the year as per the lease agreement, has been recognised on a straight line basis as Network Expenses and corresponding amount is included in Sundry Creditors.

18 Export Commitments

The Company has obtained licenses/ authorisations under the Export Promotion Capital Goods (EPCG) Scheme for importing capital goods at a concessional rate of customs duty against submission of bonds. Under the terms of the respective licenses/ authorisations, the Company is required to export goods of FOB value equivalent to or more than, eight times the amount of duty saved in respect of such licenses/ authorisations, where export obligation has been refixed by the order of Director General Foreign Trade (DGFT), Ministry of Commerce and Industry, Government of India, as applicable. The Company has fulfilled its export obligation under the aforesaid licenses as on March 31, 2011 and has submitted the necessary documents to DGFT for availing redemption letter for completion of export obligation amounting to Rs. 334.00 crore (Previous year Rs. 494.40 crore).

19 Segment Performance

Disclosure as per Accounting Standard (AS) 17 "Segment Reporting" is reported in Consolidated Accounts of the Company. Therefore, the same has not been separately disclosed in line with the provision of AS.

20 Employee benefits

Gratuity : In accordance with the applicable Indian laws, the Company provides for the gratuity, a defined benefit retirement plan (Gratuity Plan) for all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on respective employee's last drawn salary and for the years of employment with the Company.

Provident Fund : The guidance on implementing Accounting Standards ("AS") 15 "Employee benefits" (revised 2005) issued by the ICAI states that the benefits involving employer established Provident Fund, which require interest shortfalls to be recompensed are to be considered defined benefit plans. The actuary of the Company has expressed his inability to reliably measure provident fund liabilities as the guidance note from The Institute of Actuaries of India is yet to be issued. Accordingly, the Company is unable to provide the related information.

21 Disclosure under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED)

Under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) which came into force from October 2, 2006, certain disclosures are required to be made relating to MSME. On the basis of the information and records available with the Company, the following disclosures are made for the amounts due to the Micro and Small Enterprises.

24 Employee Stock Option Scheme

The Company operates two Employee Stock Option Plans; ESOS Plan 2008 and ESOS Plan 2009, which cover eligible employees of the Company the Holding Company and its Subsidiaries. ESOS Plans are administered through an ESOS Trust. The Vesting of the Options is on the expiry of one year from the date of Grant as per Plan under the respective ESOS(s). In respect of Options granted, the accounting value of Options (based on market price of the share on the date of the grant of the option) is accounted as deferred employee compensation, which is amortised on a straight line basis over the Vesting Period. Each Option entitles the holder thereof to apply for and be allotted one Equity Share of the Company of Rs. 5 each upon payment of the Exercise Price during the Exercise Period. The maximum Exercise Period is 10 years from the date of Grant of Options.

The Company has established a Trust for the implementation and management of ESOS for the benefit of its present and future employees. Advance of Rs. 388.77 crore (Previous year Rs. 331.16 crore) has been granted to the Trust and Rs. 390.95 crore (Previous year Rs. 331.00 crore) has been utilised by the Trust for purchasing 2.13 crore (Previous year 1.67 crore) Equity Shares during the period upto March 31, 2011.

Amortization of compensation includes write back of Rs. 6.73 crore (Previous year Rs. 6.65 crore) based on intrinsic value Options which have been vested under ESOS Plan 2008 and reflected as Exceptional Item in profit and Loss Account. No amount is chargeable in respect of Options granted under ESOS Plan 2009.

25 Exceptional Items

Amortization of compensation is net of write back of charges of Rs. 6.73 crore (Previous yearRs. 6.65 crore) based on intrinsic value of Options, which have lapsed under ESOS Plan 2008 as mentioned in Note 24 above and Stamp Duty of Rs. Nil (Previous year Rs. 25 crore) paid by the Company on conveyancing of the assets pursuant to the Schemes approved by the Hon'ble High Court.

26 Recovery of Expenses

Expenses under the heads Provision for Employees Cost and Other Expenses are net of recoveries for common cost from Reliance Communications Infrastructure Limited (RCIL), a Wholly Owned Subsidiary of the Company. Such amounts recovered for the year amount to Rs. 200.44 crore (Previous year Rs. 116.86 crore) for Salaries, Rs. 434.61 crore (Previous year Rs. 506.91 crore ) for Sales and General Administration Expenses comprising of Rs. 34.87 crore (Previous year Rs. 81.00 crore) for Advertising Expenses, Rs. 326.96 crore (Previous year Rs. 339.62 crore) for Customer Acquisition, Commission, Billing and Collection, Webstore expenses and Customer Care, Rs. 72.78 crore (Previous year Rs. 86.29 crore) for Hire Charges. Similarly, the amount recovered from Reliance Infratel Limited (RITL), a subsidiary of RCIL for the year includes Rs. 88.09 crore (Previous year Rs. 17.75 crore) for Salaries and Rs. 26.54 crore (Previous year Rs. 35.76 crore) for Sales and General Administration Expenses. The Company has also collected interest, equivalent to its cost of funds, from RITL and Reliance Telecom Limited (RTL) amounting to Rs. 594.63 crore (Previous yearRs. 250.55 crore) and Rs. 47.85 crore (Previous yearRs. 230.96 crore) respectively for the year ended March 31, 2011. Similarly, the amount recovered from Reliance Big TV Limited (RBTV), a Wholly Owned Subsidiary of the Company includes Rs. 4.53 crore (Previous yearRs. Nil) for Hire Charges and Rs. 26.08 crore (Previous yearRs. 37.11 crore) for Salaries.

27 Debenture Redemption Reserve

In view of the loss during the year, the Company has not created Debenture Redemption Reserve of Rs. 74.96 crore in terms of Section 117 (C) of the Companies Act, 1956. The Company shall create such reserve out of profit, if any in future years.

28 General Reserve

The Company, during the year, transferred Rs. 216.19 crore, out of the balance of Rs. 4,375.43 crore in General Reserve III created by transfer from profit and Loss Account in earlier years, pursuant to Section 205A (3) of the Companies Act, 1956 and the Companies (Declaration of Dividend out of Reserves) Rules, 1975 and proposed dividend out of the accumulated profits of the previous years.

29 License Fees

The Company accounts for its liabilities in respect of Licence Fees payable for its Telecom as well as Direct To Home (DTH) businesses by way of Revenue Share to be computed on the Gross Revenue of the Company after taking into account the decision of Telecom Disputes Settlement And Appellate Tribunal (TDSAT) dated August 30, 2007 specifying that revenues not related to unified Access Services (UAS) and Other Licences under which the Company operates are not to be included in the computation of Revenue Share. The TDSAT has, by its decision dated March 26, 2009 and May 7, 2010 applied the said decision dated August 30, 2007 to the Company. The decision of the TDSAT is the subject matter of Appeal pending before the Supreme Court. No provision is considered necessary in this regard.

30 Special Audit

Pursuant to the Telecom License Agreement, Department of Telecommunications (DoT) directed audits of various Telecom companies including of the Company. The Special Auditors appointed by DoT were required to verify records of the Company and some of its subsidiaries for the years ended March 31, 2007 and March 31, 2008 relating to license fees and revenue share. The report of the Special Auditor's alleging a shortfall of license fee and revenue share of Rs. 316.00 crore is mala fide and is in the Company's opinion biased and full of errors and inaccuracies. Criminal complaints filed by the Company against the wrongful leaking of the Report are being investigated by the Police. The ICAI is investigating the professional and other misconduct of the Special Auditor. The Company has also made presentations and representations to DoT on the observations of the Special Auditor. The Company is advised that based, inter alia, on current understanding of the regulation by the industry and judicial pronouncements directly applicable to the issues raised in the special audit report, all of which have not been properly considered nor appreciated in the Report, no provision is required in the accounts of the Company.

31 Financial Statements of Subsidiary Companies

The Ministry of Corporate Affairs, Government of India vide its General circular no. 2 and 3 dated February 8, 2011 and February 21, 2011, has granted general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitiled to the exemption. Necessary information relating to subsidiaries has been included in the Consolidated Financial Statements.

32 Related Parties

As per Accounting Standard (AS) 18, 'Related Party Disclosures' prescribed under the Accounting Standard Rules, the disclosures of transactions with the related parties are given below.

A List of Related Parties : where control exists

Sr. Name of the Subsidiary Companies (direct and step No. down subsidiaries)

1 Reliance WiMax Limited

2 Reliance Digital Home Services Limited

3 Reliance Webstore Limited

4 Reliance Infocomm Infrastructure Private Limited

5 Campion Properties Limited

6 Reliance Big TV Limited

7 Reliance Tech Services Private Limited

8 Reliance Telecom Limited

9 Reliance Communications Infrastructure Limited

10 Reliance Communications Investment and Leasing Limited

11 Reliance Infratel Limited

12 Netizen Rajasthan Limited

13 Reliance Globalcom BV

14 Reliance Communications (UK) Limited

15 Reliance Communications (Hong Kong) Limited

16 Reliance Communications (Singapore) Pte. Limited

17 Reliance Communications (New Zealand) Pte. Limited

18 Reliance Communications (Australia) Pty. Limited

19 Anupam Global Soft (U) Limited

20 Gateway Net Trading Pte. Limited

21 Reliance Globalcom Limited

22 FLAG Telecom Singapore Pte. Limited

23 FLAG Atlantic UK Limited

24 Reliance FLAG Atlantic France SAS

25 FLAG Telecom Taiwan Limited

26 Reliance FLAG Pacific Holdings Limited

27 FLAG Telecom Group Services Limited

28 FLAG Telecom Deutschland GmbH

29 FLAG Telecom Hellas AE

30 FLAG Telecom Asia Limited

31 FLAG Telecom Nederland BV

32 Reliance Globalcom (UK) Limited

33 Yipes Holdings Inc.

34 Reliance Globalcom Services Inc.

35 YTV Inc.

36 Reliance Infocom Inc.

37 Reliance Communications Inc.

38 Reliance Communications International Inc.

39 Reliance Communications Canada Inc.

40 Bonn Investment Inc.

41 FLAG Telecom Development Limited

42 FLAG Telecom Development Services Company LLC

43 FLAG Telecom Network Services Limited

44 Reliance FLAG Telecom Ireland Limited

45 FLAG Telecom Japan Limited

46 FLAG Telecom Ireland Network Limited

47 FLAG Telecom Network USA Limited

48 FLAG Telecom Espana Network SAU

49 Reliance Vanco Group Limited

50 Euronet Spain SA

51 Net Direct SA (Properietary) Limited (Under liquidation)

52 Vanco (Shanghai) Co. Limited

53 Vanco (Asia Pacific) Pte. Limited

54 Vanco Australasia Pty. Limited

55 Vanco EpE

56 Vanco Sp Zoo

57 Vanco Euronet Sro (Under liquidation)

58 Vanco Gmbh

59 Vanco Japan KK

60 Vanco Net Direct Limited, Ireland (Struck off w.e.f. April 8, 2011)

61 Vanco NV

62 Vanco SAS

63 Vanco South America Ltda

64 Vanco Srl

65 Vanco Sweden AB

66 Vanco Switzerland AG

67 Vanco Deutschland GmbH

68 Vanco BV

69 Vanco Benelux BV

70 Vanco UK Limited

71 Vanco International Limited

72 Vanco Row Limited

73 Vanco Global Limited

74 WANcom Gmbh

75 VNO Direct Limited

76 Vanco US LLC

77 Vanco Solutions Inc

78 Reliance WiMAX World BVI

79 Reliance WiMAX World BV

80 Reliance WiMAX World Limited

81 Reliance WiMAX World LLC

82 Reliance WiMAX Congo Brazzaville BV

83 Interconnect Brazzaville S. A.

84 Reliance WiMAX Guinea BV

85 Acess Guinea SARL

86 Reliance WiMAX Sierra Leone BV

87 Equatorial Communications Limited

88 Reliance WiMAX Cameroon BV

89 Equatorial Communications SARL

90 Reliance WiMax D.R.C. BV

91 Reliance WiMax Gambia BV

92 Reliance WiMax Mauritius BV

93 Reliance WiMax Mozambique BV

94 Reliance WiMax Niger BV

95 Reliance WiMax Zambia BV

96 Access Bissau LDA

97 Reliance Mobile Commerce Limited (w.e.f December 6, 2010)

98 Seoul Telenet Inc. (Board Control)

99 FLAG Holdings (Taiwan) Limited (Board Control)

100 Reliance Telecom Infrastructure (Cyprus) Holdings Limited (Board Control)

101 Lagerwood Investments Limited (Board Control)

102 Flag Pacific Limited (Upto March 25, 2011)

103 FLAGWEB Limited (Upto March 25, 2011)

104 Flag Telecom Servizi Italia SpA (Upto January 21, 2011)

105 Flag Telecom Belgium Network SA (Upto March 29, 2011)

106 FLAG Telecom Taiwan Services Limited (Upto October 18, 2010)

107 RCOM Malaysia SDN.BHD (Upto March 29, 2011)

108 Vanco Aps (Upto March 29, 2011)

109 Vanco Hongkong Solutions Limited (Upto March 29, 2011)

110 Yipes Systems Inc. (Upto March 25, 2011)

111 FLAG Access India Private Limited, India (Upto March 23, 2011)

112 Vanco Net Direct Limited, UK (Upto March 29, 2011)

113 Matrix Innovations Limited (Upto April 1, 2010)

114 Reliance Global IDC Limited (Upto January 1, 2011)

115 Global Innovative Solutions Private Limited (Upto April 1, 2010)

Joint Venture

116 Alcatel Lucent Managed Solutions India Private Limited

Holding Company

117 Reliance Innoventures Private Limited

Individuals Promoters

118 Shri Anil D. Ambani, the person having control during the year

Key Managerial Personnel

119 Shri Hasit Shukla

B List of Other Related Parties where there have been transactions Associate Companies

1 Warf Telecom International Private Limited

2 Mumbai Metro Transport Private Limited

Fellow Subsidairies

3 Reliance Capital Limited

4 Reliance General Insurance Company Limited

Disclosure in respect of transactions, which are more than 10% of the total transactions of the same type with a related party during the year ended March 31, 2011

1 Fixed assets acquired during the year include Rs. 34.28 crore from Reliance Tech Services Private Limited, Rs. 31.65 crore from Reliance Infratel Limited and Rs. 27.82 crore from Alcatel Lucent Managed Solutions India Private Limited, a JV (Previous year - Fixed assets acquired include Rs. 38.97 crore from Reliance Tech Services Private Limited and Rs. 238.94 crore from Reliance Infratel Limited. The Company transferred fixed assets pertaining to passive infrastructure of Rs. 452.19 crore and Capital Work-in-Progress of Rs. 436.89 crore to Reliance Infratel Limited).

2 Loans and Advances include loans granted during the year of Rs. 5,944.99 crore to Reliance Communications Infrastructure Limited, Rs. 230.51 crore to Reliance Webstore Limited, Rs. 479.88 crore to Reliance Big TV Limited, Rs. 69.25 crore to Reliance Infocomm Infrastructure Private Limited, Rs. 144.49 crore to Reliance Tech Services Private Limited, Rs. 21,291.04 crore to Reliance Telecom Limited, Rs. 26.66 crore to Campion Properties Limited, Rs. 326.11 crore to Reliance Infratel Limited and repaid /adjusted during the year Rs. 6,033.12 crore by Reliance Communications Infrastructure Limited, Rs. 23,394.91 crore by Reliance Telecom Limited, Rs. 3,549.35 crore by Reliance Infratel Limited, Rs. 125.01 crore by Reliance Tech Services Private Limited, Rs. 208.98 crore by Reliance Infocomm Infrastructure Private Limited, Rs. 206.70 crore by Reliance Webstore Limited and Rs. 429.31 crore by Reliance Big TV Limited (Previous year - Loans and Advances include, loan granted Rs. 15,496.03 crore to Reliance Communications Infrastructure Limited, Rs. 137.18 crore to Reliance Webstore Limited, Rs. 802.66 crore to Reliance Infratel Limited, Rs. 326.13 crore to Reliance Big TV Limited, Rs. 56.37 crore to Reliance Infocomm Infrastructure Private Limited, Rs. 57.24 crore to Reliance Tech Services Private Limited, Rs. 25,485.59 crore to Reliance Telecom Limited, Rs. 23.80 crore to Campion Properties Limited and repaid during the year Rs. 15,506.48 crore by Reliance Communications Infrastructure Limited, Rs. 289.82 crore by Reliance Webstore Limited, Rs. 195.08 crore by Reliance Big TV Limited, Rs. 29,794.00 crore by Reliance Telecom Limited, Rs. 1,835.69 crore by Reliance Infratel Limited, Rs. 45.60 crore by Reliance Tech Services Private Limited, Rs.10.14 crore by Gateway Net Trading Pte. Limited and Rs. 278.30 crore by Reliance Infocomm Infrastructure Limited).

3 Sundry Debtors include Rs. 276.93 crore from Reliance Communications Inc., Rs. 12.95 crore from Reliance Flag Atlantic France SAS Rs. 115.2 crore from Reliance Communications Infrastructure Limited, Rs. 20.20 crore from Reliance Communications International Inc., Rs. 2.08 crore from Reliance Communications Canada Inc., Rs. 31.33 crore from Reliance Telecom Limited, Rs. 48.46 crore from Reliance Big TV Limited , Rs. 10.51 crore from Reliance Webstore Limited. (Previous year - Sundry Debtors include Rs. 303 crore from Reliance Communications, Inc., Rs. 14.20 crore from Reliance Flag Telecom Ireland Network Limited, Rs. 46.08 crore from Reliance Communications Infrastructure Limited, Rs. 42.43 crore from Reliance Communications International Inc., Rs. 0.94 crore from Reliance Communications Canada Inc., Rs. 92.20 crore from Reliance Telecom Limited, Rs. 24.65 crore from Reliance Big TV Limited and Rs. 21.69 crore from Reliance Webstore Limited).

4 Loans include Rs. 319.45 crore to Reliance Big TV Limited, Rs. 1,529.36 crore to Reliance Communications Infrastructure Limited, Rs. 405.64 crore to Reliance Infocomm Infrastructure Private Limited, Rs. 332.05 crore to Reliance Webstore Limited, Rs. 7.20 crore to Netizen Rajasthan Limited, Rs. 1,467.21 crore to Reliance Telecom Limited, Rs. 141.28 crore to Campion Properties Limited, Rs. 2,718.94 crore to Reliance Infratel Limited, Rs. 34.74 crore to Reliance Tech Services Private Limited and Advances include Rs. 1,430.51 crore to Reliance Communications Infrastructure Limited, Rs. 70.39 crore to Reliance Big TV Limited and Rs. 0.36 crore to Reliance Communications Investment and Leasing Limited (Previous year - Loans includeRs. 268.87 crore to Reliance Big TV Limited, Rs. 1,617.49 crore to Reliance Communications Infrastructure Limited, Rs. 545.37 crore to Reliance Infocomm Infrastructure Private Limited, Rs. 308.24 crore to Reliance Webstore Limited, Rs. 7.20 crore to Netizen Rajasthan Limited, Rs. 3,571.08 crore to Reliance Telecom Limited, Rs. 114.62 crore to Campion Properties Limited, Rs. 5,942.18 crore to Reliance Infratel Limited, Rs. 15.27 crore to Reliance Tech Services Private Limited and Advances includes Rs. 1,425.88 crore to Reliance Communications Infrastructure Limited).

5 Sundry Creditors include Rs. 107.59 crore to Reliance Flag Atlantic France SAS, Rs. 3,211.96 crore to Reliance Infratel Limited, Rs. 53.34 crore to Reliance Communications (UK) Limited, Rs. 55.17 crore to Reliance Tech Services Private Limited, Rs. 3.63 crore to Reliance Infocom Inc., Rs. 79.48 crore to Alcatel Lucent Managed Solutions India Private Limited, a JV and Rs. 34.13 crore to Reliance Infocomm Infrastructure Private Limited (Previous year - Sundry Creditor includeRs. 40.63 crore to Reliance Flag Atlantic France SAS, Rs. 1,036.00 crore to Reliance Infratel Limited, Rs. 25.84 crore to Reliance Communications (UK) Limited, Rs. 18.24 crore to Reliance Tech Services Private Limited, Rs. 3.72 crore to Reliance Infocom Inc, Rs.8.37 crore to Gateway Net Trading Pte. Limited Rs. 20.31crore to Reliance Infocomm Infrastructure Private Limited, Rs. 63.66 crore to Alcatel Lucent Managed Solutions India Private Limited, a JV). Sundry Creditors also include Rs. 217.30 crore to Reliance Infratel Limited for availing passive infrastructure services for 3G Operations.

6 Turnover includes Rs. 845.40 crore from Reliance Communications Infrastructure Limited, Rs. 488.27 crore from Reliance Communications Inc., Rs. 71.39 crore from Reliance Communications International Inc., Rs. 19.21 crore from Reliance Webstore Limited, Rs. 17.39 crore from Reliance Flag Atlantic France SAS, Rs. 4.64 crore from Reliance Communications Canada Inc., Rs. 21.59 crore from Reliance Big TV Limited and Rs. 666.21 crore from Reliance Telecom Limited (Previous year - Turnover includes Rs. 596.35 crore from Reliance Communications Infrastructure Limited, Rs. 342.37 crore from Reliance Communications Inc., Rs. 111.41 crore from Reliance Communications International Inc., Rs. 42.47 crore from Reliance Webstore Limited, Rs. 15.10 crore from Flag Telecom Ireland Network Limited, Rs. 4.05 crore from Reliance Communications Canada Inc., Rs. 21.51 crore from Reliance Big TV Limited and Rs. 462.52 crore from Reliance Telecom Limited).

7 Other Income includes Sale of Capital inventories of Rs. 94.97 crore to Reliance Webstore Limited (Previous year -Rs. Nil)

8 Expenditure includes Access Charges: Rs. 125.87 crore to Reliance Communications Inc., Rs. 240.43 crore to Reliance Telecom Limited. Network Operation Expenses: Rs. 4,679.52 crore to Reliance Infratel Limited. Rs. 78.47 crore to Flag Atlantic France SAS, Rs. 4.44 crore to Reliance Communications Infrastructure Limited and Rs. 27.71 crore to Reliance Communications (UK) Limited and Rs. 174.29 crore to Alcatel Lucent Managed Solutions India Private Limited, a JV Selling and Marketing expenses: Rs. 150.81 crore to Reliance Communications Infrastructure Limited and Rs. 117.02 crore to Reliance Webstore Limited. General and Administrative Expenses: Rs. 225.89 crore to Reliance Communications Infrastructure Limited, Rs. 40.57 crore to Reliance Infocomm Infrastructure Private Limited and Rs. 21.12 crore to Reliance Tech Services Private Limited. (Previous year - Expenditure include Access Charges: Rs. 149.38 crore to Reliance Communications Inc., Rs. 137.87 crore to Reliance Telecom Limited. Network Operation Expenses: Rs. 4,946.47 crore to Reliance Infratel Limited, Rs. 67.18 crore to Reliance Flag Atlantic France SAS, Rs. 6.86 crore to Reliance Communications Infrastructure Limited and Rs. 17.69 crore to Reliance Communications (UK) Limited. Selling and Marketing expenses: Rs. 132.45 crore to Reliance Communications Infrastructure Limited, Rs. 142.06 crore to Reliance Webstore Limited. General and Administrative Expenses: Rs. 195.33 crore to Reliance Communications Infrastructure Limited, Rs. 51.19 crore to Reliance Infocomm Infrastructure Private Limited, Rs. 18.04 crore to Reliance Tech Services Private Limited, Rs. 154.26 crore to Alcatel Lucent Managed Solutions India Private Limited, a JV. Rs. 23.09 crore to Reliance General Insurance Company Limited. Rent, Rates and Taxes: Rs. 2.63 crore to Reliance Capital Limited).

9 Expenditure under the heads Provision for Salaries Cost, Selling and Distribution, General and Administration and Other Expenses are net of recoveries for common cost from Reliance Communications Infrastructure Limited, Reliance Infratel Limited and Reliance Big TV Limited (Refer Note 26, Schedule Q).

10 Financial Guarantee issued includes Rs. 69.80 crore to Reliance Globalcom BV (Previous year - Rs. 69.80 crore to Reliance Globalcom BV).

11 Corporate Guarantee issued includes Rs. 188.64 crore to Reliance Infratel Limited, Rs. 79.92 crore to Gateway Net Trading Pte. Limited, Rs. 749.38 crore to Reliance Telecom Limited and Rs. 93.83 crore to Reliance Big TV Limited (Previous year - Corporate Guarantee issued include Rs. 934.28 crore to Reliance Infratel Limited, Rs. 330.18 crore to Gateway Net Trading Pte. Limited, Rs. 949.25 crore to Reliance Telecom Limited).

12 Finance Charges includes Rs. 594.63 crore received from Reliance Infratel Limited, and Rs. 47.84 crore from Reliance Telecom Limited (Previous year - Finance Charges include Rs. 326.20 crore from Reliance Infratel Limited and Rs. 230.96 crore from Reliance Telecom Limited, Rs. 6.03 crore to Reliance Webstore Limited).

13 Interest Receivable includes Rs. 670.27 crore from Reliance Infratel Limited and Rs. 47.84 crore from Reliance Telecom Limited (Previous year -Interest Receivable include Rs. 326.20 crore from Reliance Infratel Limited and Rs. 230.96 crore from Reliance Telecom Limited)

14 Investments include conversion of Loans into Preference Shares during the year Rs. 2,500 crore of Reliance Infratel Limited and conversion of Preference Shares of Rs. 2,275.66 crore of Reliance Globalcom BV into Equity Shares. Redemption of Preference Shares during the year includes Rs. 1,527.68 crore of Reliance Globalcom BV and Rs. 763.67 crore of Reliance Globalcom Limited Bermuda. (Previous year Investments include Rs. 1,500 crore of adjustment of Loans into Preference Shares of Reliance Infratel Limited and Rs. 100 crore purchased of Reliance Wimax Limited. Redemption of Preference Shares include Rs. 791.90 crore of Reliance Globalcom BV, Rs. 126.80 crore of Gateway Net Trading Pte. Limited and Rs. 148.09 crore of Reliance Globalcom Limited, Bermuda).

15 Unearned income includes Rs. 14.94 crore from Flag Telecom Ireland Network Limited and Rs. 3.56 crore from Reliance FLAG Atlantic France SAS (Previous year- Unearned Income includes Rs. 15.82 crore from Flag Telecom Ireland Network Limited and Rs. 2.97 crore from Reliance FLAG Atlantic France SAS).

16 Prepaid expense includes Rs. 10.39 crore from Reliance FLAG Atlantic France SAS (Previous year-Prepaid expenses includes Rs. 11.77 crore from Reliance FLAG Atlantic France SAS).

17 Refer Note 5, Schedule Q relating to the Scheme of Amalgamation of GISPL, Wholly a Owned Subsidiary with the Company.


Mar 31, 2010

1 Previous Year

Figures of the previous year have been regrouped and reclassified, wherever required. Previous years figures are not comparable with that of the current year on account of the effects of the Schemes considered in the previous year.

2 Foreign Currency Convertible Bonds (FCCBs)

(i) The Company issued FCCBs in two tranches; 5,00,000 FCCBs for 5 Years, 4.65%, USD 500 million issued on 9th May, 2006 and 10,000 FCCBs for 5 Years, 4.95%, USD 1000 million issued on 28th February, 2007. Pursuant to the exercise of an option by the FCCB Holders and in accordance with the terms and conditions thereof, the Company, during an earlier year, allotted 1,87,44,801 fully paid Equity Shares of Rs. 5 each at a pre determined premium of Rs. 475.68 per share against 2,03,051 FCCBs and 6,67,090 fully paid Equity Shares of Rs. 5 each at a pre determined premium of Rs. 656.23 per share against 100 FCCBs respectively.

(ii) During the year, the Company has bought back and cancelled 297 nos. (Previous year 350 nos.) of 5 Year, 4.95%, FCCBs of the face value of USD 1,00,000 each, as per approval of the Reserve Bank of India, at a discount to the face value. This has resulted in a saving of Rs. 24.49 crore (Previous year Rs. 79.61 crore) which has been reflected as part of Other Income. Consequent upon such buy back and cancellation, the Companys obligations to convert the said Bonds into Shares, if so claimed by the Bond Holders and/ or to redeem the same in foreign currency, has come to an end vis-à-vis the cancelled Bonds. Rs. 14.48 crore (Previous year Rs. 7.68 crore) being provision for premium on redemption relatable to such cancelled Bonds has been reversed on buyback and cancellation of FCCBs.

Out of total FCCBs issued, 2,96,949 (Previous year 2,96,949) FCCBs and 9,253 (Previous year 9,550) FCCBs from the respective tranches were outstanding as on 31st March, 2010.

(iii) In the event, these outstanding FCCBs are fully converted into Equity Shares, the Equity Share Capital of the Company would increase by approximately 8.91 crore (Previous year 9.11 crore) Equity Shares of Rs. 5 each.

(iv) In case of the above mentioned FCCBs, on and at anytime after 9th May, 2009 and 28th February, 2010 respectively, on and prior to the maturity date, the Company may, subject to certain terms and conditions as per the offering memorandum, redeem the FCCBs in whole and not in part at their Early Redemption amount, provided that no such redemption may be made unless the aggregate value (as defined in the terms and conditions) on each trading day during the period of not less than 30 consecutive trading days, ending not earlier than 14 days prior to the date upon which notice of such redemption is given, was at least 130 percent of the Early Redemption amount.

(v) FCCBs amount includes Rs. 942.32 crore (Previous year Rs. 733.62 crore), being the premium on redemption of FCCBs computed on pro rata basis for the period up to 31st March, 2010.

3 Foreign Exchange

In accordance with an amendment to Schedule VI of the Companies Act, 1956 ("the Act") and in line with the Accounting Standard ("AS") 11, "The Effect of Changes in Foreign Exchange Rates", the Company continues the policy of accounting for the changes in the amounts of loans/ liabilities relating to Fixed Assets, consequent to changes in foreign exchange rates, as profit or loss of the Company for the year in which the changes take place without adjusting the amount of the change in the cost of fixed assets.

The net gain of Rs. 1,572.16 crore (Previous year Rs. 119.57 crore) including gain of Rs. 21.98 crore (Previous year Rs. 32.76 crore) on account of conversion of overseas bank balances and Rs. 2,126.92 crore relating to loans/ liabilities (Previous year foreign exchange loss of Rs. 4,464.57 crore relating to loans/ liabilities which was debited to Profit and Loss Account and withdrawn from the General Reserve of the Company in accordance with the terms of the Schemes of Arrangement, leaving no impact vis-à-vis profit of the year ended 31st March, 2009) have been reflected in "Financial Charges (net)" as the effect of Foreign Currency Exchange Fluctuation in Profit and Loss Account.

During the year, loss of Rs. Nil (Previous year Rs. 139.03 crore) arising out of marking related Derivative Contracts to market has also been recognised in the Profit and Loss Account, in compliance with the announcement dated 29th March, 2008 by The Institute of Chartered Accountants of India (ICAI) regarding Accounting for Derivatives. As a measure of prudence, the Company has decided that, unlike in earlier years, not to recognise any mark to market gains in respect of any outstanding class of derivative contracts related to loans, liabilities and assets expressed in foreign currency. Accordingly, the Company has not recognised gain of Rs. 34.30 crore on mark-to-market valuation of derivative contracts outstanding as at the end of the year. If the Company had not made this change of policy, net profit after tax would have been higher by an amount of Rs. 34.30 crore for the year.

4 Schemes of Amalgamation and Arrangement of earlier years

The Company, during the past years, undertook various Schemes including restructuring of ownership structure of telecom business so as to align the interest of the shareholders. Accordingly, pursuant to the Schemes of Amalgamation and Arrangement ("the Schemes") under Sections 391 to 394 of the Companies Act, 1956 approved by the Honble High Court of respective judicature, the Company, during the respective years, recorded all necessary accounting effects, along with requisite disclosure in the notes to the accounts, in accordance with the provisions of the said Schemes. The cumulative effects of the Schemes in case of Equity Share Capital of the Company have been disclosed below the respective Schedule to the Accounts. Reserves, pursuant to the said Schemes, include:

(i) Rs. 9,171.93 crore, being Securities Premium Account, which was part of the Security Premium of erstwhile Reliance Infocomm Limited (RIC), the transferor company.

(ii) General Reserve I of Rs. 5,538.00 crore representing the unadjusted balance being the excess of assets over liabilities relatable to Telecommunications Undertaking transferred and vested into the Company.

(iii) General Reserve II of Rs. 2,785.21 crore representing the unadjusted balance of the excess of assets over liabilities received by the Company relatable to Telecommunications Undertaking transferred and vested into the Company.

(iv) During the year, General Reserve III and General Reserve IV representing opening balances of Rs. 4,335.43 crore and Rs. 27,030.86 crore respectively have been combined as General Reserve III. General Reserve III includes an amount of Rs. 25,854.38 crore (Previous year Rs. 27,030.86 core) pursuant to transfer of assets and liabilities and write off of investment of Rs. 2,096.43 crore, in accordance with the Scheme, for cancellation of investment in erstwhile Reliance Gateway Net Limited (RGNL) and net effect on fair valuation of assets and liabilities of the Company of Rs. 12,698.18 crore.

(v) Reserve for Business Restructuring of Rs. 1,287.10 crore representing the unadjusted balance of revaluation of investment in Reliance Communications Infrastructure Limited, the holding company of Reliance Infratel Limited (RITL) after withdrawing an amount equivalent to writing off of Passive Infrastructure assets, transferred to RITL, to the Profit and Loss Account. Balance in Reserve for Business Restructuring shall be available to meet the increased depreciation, costs, expenses and losses, including on account of impairment of or write down of assets etc.

(vi) Additional depreciation arising on fair value of the assets has been adjusted from Provision for Business Restructuring.

(vii) The Company incorporated the effects of the Scheme, for demerger of Optic Fiber Undertaking into Reliance Infratel Limited, in the accounts of the previous year ended 31st March, 2009, then pending the filing of the Order of the Honble High Court, sanctioning the Scheme, with the Registrar of Companies (RoC) as required by Section 394 (3) of the Companies Act, 1956. The said Order was filed with RoC on 15th September, 2009. Consequently, the Scheme had become effective.

5 Depreciation on Electronic Equipments

During the year, the Company carried out technical/ technology assessment to determine the useful life of some of its telecommunication equipments. The useful life of such telecommunication equipments has been re-assessed and ascertained as 18 years, impacting the provision for depreciation of these assets for the year ended on 31st March, 2010. As a result, depreciation charge is lower and profits for the year are higher by Rs. 771.00 crore for the year. The accounting treatment so determined is fully in accordance with the applicable provisions of the Companies Act, 1956.

6 Provisions

(i) Provisions include, provision for disputed claims of verification of customers Rs. 9.04 crore (Previous year Rs.9.04 crore) and others of Rs. 1,650.88 crore (Previous year Rs. 1,835.76 crore) and Provision for Commission to Non Executive Directors of Rs. 0.60 crore (Previous year Rs. 0.60 crore).

(ii) During the year, an amount of Rs. 140.00 crore (Previous year Rs. Nil) relating to Roll out obligations, Rs. Nil (Previous year Rs. 4.40 crore) relating to commission to Non Executive Directors and Rs. 50.52 crore (Previous year Rs. Nil) relating to disputed liablities have been reversed. An amount of Rs. 5.64 crore (Previous year Rs. Nil) has been provided towards disputed interconnect usage charges and an amount of Rs. Nil (Previous year Rs. 31.18 crore) has been reversed out of disputed interconnect usage charges. An amount of Rs. Nil (Previous year Rs. 29.22 crore), was paid towards disputed liablities and an amount of Rs. 0.60 crore (Previous year Rs. 30.60 crore) was paid towards commission to Non Executive Directors.

(iii) On determination by the Board of Directors, the liability against provision for commission to Non Exucutive Directors will be paid during the year 2010-11.

(iv) Also refer Note 2 (v) above.

The aforesaid provisions shall be utilised on settlement of the claims, if any, there against.

7 Contingent Liabilities and Capital Commitment (As represented by the Management)

(Rs. in crore)

As at As at 31st March, 2010 31st March, 2009

(i) Estimated amount of contracts remaining to be executed on capital 220.22 651.15 accounts (net of advances) and not provided for

(ii) Disputed Liabilities in Appeal

- Sales Tax and VAT 52.05 13.76

- Excise and Service Tax 2.08 2.08

- Entry Tax and Octroi 1.55 1.18

- Other Litigations 0.30 0.40

(iii) Guarantees given by the Company on behalf of its Subsidiaries 2,536.64 5,741.28

(iv) Guarantees given by the Company on behalf of other companies for 461.99 145.97 business purpose

8 Deferred Tax Assets and Liabilities

The Company being in the business of Telecommunication Services, Broadband Network and Internet Services, are eligible for deduction under Section 80IA (Tax Holiday) of the Income Tax Act, 1961. Since the Deferred Ta x Liability in respect of timing difference is expected to reverse during Ta x Holiday Period, the same is not recognised in books of accounts as at 31st March, 2010 as per the Accounting Standard ("AS") 22 of "Accounting for Taxes on Income" as referred to in Accounting Standard Rules. Following the principle of prudence, the Company has not recognised Defered Ta x Asset in respect of debits for equalised lease rentals.

9 Operating Lease

The Companys significant leasing arrangements are in respect of operating leases for premises and network sites. These lease agreements provide for cancellation by either parties thereto as per the terms and conditions of the agreements. The Company has been the lessee in respect of Optic Fibres and in respect of this lease, lease rent of Rs. 1,141.00 crore, (Previous year Rs. 903.00 crore) including Rs.1,129.00 crore (Previous year Rs. 893.00 crore) not leviable for the year as per the lease agreement, has been recognised on a straight line basis as Network Expenses and corresponding amount is included in Sundry Creditors.

10 Export Commitments

The Company has obtained Licences/ authorisations under the Export Promotion Capital Goods (EPCG) Scheme for importing capital goods at a concessional rate of customs duty against submission of bonds. Under the terms of the respective Licences/ authorisations, the Company is required to export goods of FOB value equivalent to or more than, eight times the amount of duty saved in respect of such Licences/ authorisations, where export obligation has been refixed by the order of Director General Foreign Trade, Ministry of Commerce and Industry, Government of India, as applicable.Balance export obligations outstanding as on 31st March, 2010 under the aforesaid Licences/ authorisations is Rs. 494.40 crore (Previous year Rs. 775.00 crore).

11 Segment Performance

Disclosure as per Accounting Standard ("AS") 17 "Segment Reporting" is reported in Consolidated Accounts of the Company. Therefore, the same has not been separately disclosed in line with the provisions of AS.

12 Employee Benefits

Gratuity : In accordance with the applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Plan) for all its employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on respective employees last drawn salary and for the years of employment with the Company.

13 Employee Stock Option Scheme

The Company operates two Employee Stock Option Plans; ESOS Plan 2008 and ESOS Plan 2009, which cover eligible employees of the Company, the Holding Company and its Subsidiaries. ESOS Plans are administered through an ESOS Trust. The vesting of the options is on the expiry of one year from the date of grant as per Plan under the respective ESOS(s). In respect of Options granted, the accounting value of Options (based on market price of the share on the date of the grant of the option) is accounted as deferred employee compensation, which is amortised on a straight line basis over the vesting period. Each Option entitles the holder thereof to apply for and be allotted/ transferred one Equity Share of the Company of Rs. 5 each upon payment of the exercise price during the exercise period. The maximum exercise period is 10 years from the date of grant of options.

The Company has established a Trust for the implementation and management of ESOS for the benefit of its present and future employees. Advance of Rs. 331.16 crore (Previous year Rs.159.00 crore) has been granted to the Trust. Rs. 331.00 crore (Previous year Rs. 154.91 crore) has been utilised by the Trust for purchasing 1.67 crore (0.92 crore) Equity Shares during the period upto 31st March, 2010.

14 Exceptional Items

Exceptional Items consist of write back of charges of Rs.6.65 crore (Previous year a charge of Rs. 7.47 crore) of Options which have lapsed under ESOS Plan 2008 as mentioned in Note 23 above and Stamp Duty of Rs. 25.00 crore paid by the Company on conveyancing of the assets pursuant to the Schemes approved during the year by the Honble High Court. Exceptional Items during the previous year ended on 31st March, 2009 included Rs. 404.03 crore relatable to the period ended upto 31st March, 2008, being the difference arising on restating, on the basis of closing rate of foreign currency as at 31st March, 2009, the foreign currency denominated Redeemable Preference Shares of its subsidiaries Reliance Globalcom BV (RGBV) and Gateway Net Trading Pte. Limited as required by Accounting Standard ("AS") 11 "Effects of changes in foreign exchange rates" and Rs. 3,063.27 crore, being the Profit on transfer of OFC Undertaking under the Scheme of Arrangement.

15 Recovery of Expenses

Expenses under the heads Provision for Employees Cost and Other Expenses are net of recoveries for common cost from Reliance Communications Infrastructure Limited (RCIL), a Wholly Owned Subsidiary of the Company. Such amounts recovered for the year amount to Rs. 116.86 crore (Previous year Rs. 133.05 crore) for Employee Cost and Rs. 506.91crore (Previous year Rs.500.28 crore) for Sales and General Administrative Expenses comprising of Rs. 81.00 crore (Previous year Rs. 87.50 crore) for Advertising Expenses, Rs. 339.62 crore (Previous year Rs. 332.10 crore) for Customer Acquisition and Customer Care, Rs.86.29 crore (Previous year Rs. 80.68 crore) for Hire charges. Similarly, the amount recovered from Reliance Infratel Limited (RITL), a subsidiary of RCIL for the year includes Rs. 17.75 crore (Previous year Rs. Nil) for Employee Cost and Rs. 35.76 crore (Previous year Rs. Nil) for Sales and General Administration Expenses. The Company has also collected interest, equivalent to its cost of funds, from Reliance Communications Infrastructure Limited Rs. Nil (Previous year Rs. 116.72 crore), Reliance Infratel Limited and Reliance Telecom Limited amounting to Rs. 250.55 crore (Previous year Rs. Nil) and Rs. 230.96 crore (Previous year Rs. 445.17 crore) respectively for the year ended 31st March, 2010.

16 Licence Fees

The Company accounts for its liabilities in respect of Licence Fees payable by way of Revenue Share to be computed on the Gross Revenue of the Company after taking into account the decision of the Telecom Disputes Settlement And Appellate Tribunal (the TDSAT) dated 30th August, 2007 specifying that revenues not related to UAS and Other Licences under which the Company operates are not to be included in the computation of Revenue Share. The TDSAT has, by its decision dated 26th March, 2009 applied the said decision dated 30th August, 2007 to the Company. The decision of the TDSAT is the subject matter of Appeal pending before the Supreme Court. No provision is considered necessary in this regard.

17 Special Audit

Pursuant to the Telecom Licence Agreement, the Department of Telecommunications (DoT) directed audits of various Telecom companies including of the Company. The Special Auditors appointed by DoT were required to verify records of the Company and some of its subsidiaries for the years ended 31st March, 2007 and 31st March, 2008 relating to Licence fees and revenue share. The report of the Special Auditors alleging a shortfall of Licence fee and revenue share of Rs.316.00 crore is mala fide and is in the Companys opinion biased and full of errors and inaccuracies. Criminal complaints filed by the Company against the wrongful leaking of the Report are being investigated by the Police. The Institute of Chartered Accountants of India (ICAI) is investigating the professional and other misconduct of the Special Auditors. The Company has also made presentations and representations to DoT on the observations of the Special Auditor. The Company is advised that based inter alia on current understanding of the regulation by the industry and judicial pronouncements directly applicable to the issues raised in the Special Audit report, all of which have not been properly considered nor appreciated in the Report, no provision is required in the accounts of the Company.

18 Financial Statements of Subsidiary Companies

The Ministry of Corporate Affairs, Government of India vide its letter No.47/60/2010-CL-III dated 7th May, 2010 issued under Section 212 (8) of the Companies Act, 1956 has exempted the Company from attaching the Balance Sheets, Profit and Loss Accounts, Cash Flow Statements and other documents of its subsidiaries under Section 212(1) of the Companies Act, 1956. As per the approval, key details of each subsidiary are attached.

19 Related Parties

As per Accounting Standard ("AS") 18, "Related Party Disclosures" prescribed under the Accounting Standard Rules, the disclosure of transactions with the related parties are given below.

A List of Related Parties: where control exists

Sr. Name of the Subsidiary Companies No. (direct and step down subsidiaries)

1 Reliance Communications Infrastructure Limited

2 Reliance Telecom Limited

3 Reliance Infocomm Infrastructure Private Limited

4 Reliance Digital Home Services Limited

5 Reliance WiMax Limited

6 Reliance Global IDC Limited

7 Reliance Webstore Limited

8 Campion Properties Limited

9 Reliance Mobile Limited (upto 23rd March, 2010)

10 Reliance Infratel Limited

11 Matrix Innovations Limited

12 Reliance Communications Investment and Leasing Limited

13 Netizen Rajasthan Limited

14 FLAG Access India Private Limited

15 Reliance Tech Services Private Limited

16 Reliance Big TV Limited

17 Reliance Globalcom B.V.

18 Gateway Net Trading Pte. Limited

19 Reliance Globalcom Limited

20 Reliance FLAG Pacific Holdings Limited

21 FLAG Pacific Limited

22 FLAG Telecom Singapore Pte. Limited

23 FLAG Telecom Development Limited

24 FLAG Telecom Development Services Company LLC

25 FLAGWEB Limited

26 FLAG Telecom Network Services Limited

27 Reliance FLAG Telecom Ireland Limited

28 FLAG Telecom Japan Limited

29 FLAG Telecom Servizi Italia SpA

30 FLAG Telecom Network USA Limited

31 FLAG Telecom Belgium Network SA

32 FLAG Telecom Espana Network SAU

33 FLAG Telecom Group Services Limited

34 FLAG Telecom Asia Limited

35 FLAG Telecom Deutschland GmbH

36 FLAG Telecom Nederland B.V.

37 FLAG Telecom Hellas AE

38 FLAG Atlantic UK Limited

39 Reliance FLAG Atlantic France SAS

40 FLAG Telecom Taiwan Services Limited

41 FLAG Holdings (Taiwan) Limited - Board Control

42 FLAG Telecom Taiwan Limited

43 FLAG Telecom Ireland Network Limited

44 Reliance Communications, Inc.

45 Reliance Communications International, Inc.

46 Reliance Communications Canada, Inc.

47 Bonn Investment, Inc. (formerly Reliance Netway, Inc.)

48 Reliance Communications (UK) Limited

49 Reliance Communications (Hong Kong) Limited

50 Reliance Infocom, Inc.

51 Reliance Communications (Singapore) Pte. Limited

52 Reliance Communications (New Zealand) Pte. Limited

53 Reliance Communications (Australia) Pty. Limited

54 Seoul Telenet, Inc. - Board Control

55 RCOM Malaysia SDN. BHD.

56 Reliance Telecom Infrastructure (Cyprus) Holdings Limited - Board Control

57 Lagerwood Investments Limited - Board Control

58 Reliance Globalcom (UK) Limited

59 Euronet Spain SA

60 Net Direct SA (Proprietary) Limited

61 Vanco (Shanghai) Co. Limited

62 Vanco ApS

63 Vanco (Asia Pacific) Pte. Limited

64 Vanco Australasia Pty. Limited

65 Vanco Benelux B.V.

66 Vanco B.V.

67 Vanco Deutschland GmbH

68 Vanco EpE

69 Vanco Sp Zoo

70 Vanco Euronet Sro

71 Vanco Global Limited

72 Vanco GmbH

73 Reliance Vanco Group Limited

74 Vanco Hong Kong Solutions Limited

75 Vanco International Limited

76 Vanco Japan KK

77 Vanco Net Direct Limited

78 Vanco Net Direct Limited, Ireland

79 Vanco NV

80 Vanco ROW Limited

81 Vanco SAS

82 Vanco Solutions, Inc.

83 Vanco South America Ltda

84 Vanco Srl

85 Vanco Sweden AB

86 Vanco Switzerland AG

87 Vanco UK Limited

88 Vanco US LLC

89 VNO Direct Limited

90 WANcom GmbH

91 Anupam Global Soft (U) Limited

92 Reliance Globalcom Services, Inc.

93 Yipes Holdings, Inc.

94 YTV, Inc.

95 Yipes Systems, Inc.

96 Reliance WiMax World BVI

97 Reliance WiMax World B.V.

98 Reliance WiMax World Limited

99 Reliance WiMax World LLC

100 Reliance WiMax Congo-Brazzaville B.V.

101 Reliance WiMax Guinea B.V.

102 Access Guinea SARL

103 Interconnect Brazzaville S.A.

104 Reliance WiMax Sierra Leone B.V.

105 Equatorial Communications Limited

106 Reliance WiMax Cameroon B.V.

107 Equatorial Communications SARL

108 Reliance WiMax D.R.C. B.V. (w.e.f. 1st April, 2009)

109 Reliance WiMax Gambia B.V. (w.e.f. 21st April, 2009)

110 Reliance WiMax Mauritius B.V. (w.e.f. 1st April, 2009)

111 Reliance WiMax Mozambique B.V. (w.e.f. 21st April, 2009)

112 Reliance WiMax Niger B.V. (w.e.f. 1st April, 2009)

113 Reliance WiMax Zambia B. V. (w.e.f. 1st April, 2009)

114 Access Bissau LDA (w.e.f. 1st April, 2009)

115 Global Innovative Solutions Private Limited (w.e.f. 4th September, 2009)

116 Reliance Gateway Net Limited (upto 13th July, 2009)

Holding Company

117 Reliance Innoventures Private Limited

118 AAA Communication Private Limited (ceased to be the Holding Company w.e.f. 09th October, 2009)

Individuals Promoters

119 Shri Anil D. Ambani, the person having control during the year

Manager

120 Shri Hasit Shukla

B List of Other Related Parties; where there have been transactions

Associate Companies

1 Mumbai Metro Transport Private Limited (w.e.f. 18th January, 2010)

2 Warf Telecom International Private Limited

Fellow Subsidiaries

3 Reliance Capital Limited

4 Reliance General Insurance Company Limited

Disclosure in respect of transactions which are more than 10% of the total transactions of the same type with a related party during the year

1 Fixed assets acquired during the year include Rs.38.97 crore from Reliance Tech Services Private Limited and Rs. 238.94 crore from Reliance Infratel Limited. Also during the year, the Company has transferred fixed assets pertaining to passive infrastructure of Rs. 452.19 crore and Capital Work-in-Progress of Rs. 436.89 crore to Reliance Infratel Limited (Previous year - Fixed assets acquired during the year include Rs. 5.01 crore from Reliance FLAG Atlantic France SAS, Rs. 43.34 crore from Reliance Tech Services Private Limited and Rs. 932.87 crore from Reliance Infratel Limited).

2 Loans and Advances include loan granted during the year of Rs. 15,496.03 crore to Reliance Communications Infrastructure Limited, Rs.137.18 crore to Reliance Webstore Limited, Rs.802.66 crore to Reliance Infratel Limited, Rs.326.13 crore to Reliance Big TV Limited, Rs. 56.37 crore to Reliance Infocomm Infrastructure Private Limited, Rs.57.24 crore to Reliance Tech Services Private Limited, Rs.25,485.59 crore to Reliance Telecom Limited, Rs.23.80 crore to Campion Properties Limited and repaid during the year Rs.15,506.48 crore by Reliance Communications Infrastructure Limited, Rs. 289.82 crore by Reliance Webstore Limited, Rs.195.08 crore by Reliance Big TV Limited, Rs.29,794.00 crore by Reliance Telecom Limited, Rs. 1,835.69 crore by Reliance Infratel Limited, Rs.45.60 crore by Reliance Tech Services Private Limited , Rs.10.14 crore by Gateway Net Trading Pte. Limited and Rs.278.30 crore by Reliance Infocomm Infrastructure Limited. (Previous year - Loans and Advances include loan granted during the year of Rs. 1,554.21 crore to Reliance Telecom Limited, Rs.27,340.47 crore to Reliance Communications Infrastructure Limited, Rs. 890.79 crore to Reliance Webstore Limited, Rs. 31.46 crore to Campion Properties Limited, Rs. 2,543.54 crore to Reliance Infratel Limited, Rs. 206.49 crore to Reliance Big TV Limited, Rs. 793.02 crore to Reliance Infocomm Infrastructure Private Limited, Rs. 71.89 crore to Reliance Tech Services Private Limited and Rs. 6,718.94 crore, as per the Scheme of Arrangement, to Reliance Infratel Limited and repaid during the year Rs. 28,073.13 crore by Reliance Communications Infrastructure Limited, Rs. 1,327.27 crore by Reliance Webstore Limited, Rs. 1,201.36 crore by Reliance Infocomm Infrastructure Private Limited, Rs. 146.78 crore by Reliance Big TV Limited, Rs. 1,780.12 crore by Reliance Telecom Limited, Rs. 2,287.27 crore by Reliance Infratel Limited, Rs.68.25 crore by Reliance Tech Services Private Limited and converted into Equity Shares of Rs. 977.62 crore by Reliance Gateway Net Limited.).

3 Sundry Debtors include Rs.303 crore from Reliance Communications, Inc., Rs.14.20 crore from FLAG Telecom Ireland Network Limited, Rs.46.08 crore from Reliance Communications Infrastructure Limited, Rs.42.43 crore from Reliance Communications International, Inc., Rs.0.94 crore from Reliance Communications Canada, Inc., Rs.92.20 crore from Reliance Telecom Limited, Rs.24.65 crore from Reliance Big TV Limited and Rs.21.69 crore from Reliance Webstore Limited. (Previous year - Sundry Debtors include Rs. 298.53 crore from Reliance Communications, Inc., Rs. 99.67 crore from FLAG Telecom Ireland Network Limited, Rs. 42.28 crore from Reliance Communications Infrastructure Limited, Rs. 61.03 crore from Reliance Communications International, Inc., Rs. 4.57 crore from Reliance Communications Canada, Inc., Rs. 0.20 crore from Reliance WiMax Limited, Rs. 47.96 crore from Reliance Telecom Limited and Rs. 6.94 crore from Reliance Big TV Limited).

4 Loans include Rs.268.87 crore to Reliance Big TV Limited, Rs.1,617.49 crore to Reliance Communications Infrastructure Limited, Rs. 545.37 crore to Reliance Infocomm Infrastructure Private Limited, Rs.308.24 crore to Reliance Webstore Limited, Rs.7.20 crore to Netizen Rajasthan Limited,Rs. 3,571.08 crore to Reliance Telecom Limited,Rs. 114.62 crore to Campion Properties Limited, Rs. 5,942.18 crore to Reliance Infratel Limited, Rs.15.27 crore to Reliance Tech Services Private Limited and Advances include Rs. 1,425.88 crore to Reliance Communications Infrastructure Limited. (Previous year-Advances include Rs. 18.16 crore to Reliance Big TV Limited, Rs. 23.58 crore to Reliance Infocomm Infrastructure Private Limited, Rs. 21.53 crore to Reliance Flag Atlantic France SAS, Rs. 0.08 crore to Reliance Communications Investment and Leasing Limited, Rs. 1,582.78 crore to Reliance Communications Infrastructure Limited,Rs. 6.62 crore to Alcatel-Lucent Managed Solutions India Private Limited, a Joint Venture (JV) and Rs. 20.95 crore to Reliance General Insurance Company Limited).

5 Sundry Creditors include Rs. 40.63 crore to Reliance FLAG Atlantic France SAS, Rs.1,036.00 crore to Reliance Infratel Limited, Rs.25.84 crore to Reliance Communications (UK) Limited, Rs.18.24 crore to Reliance Tech Services Private Limited, Rs.3.72 crore to Reliance Infocom, Inc., Rs. 8.37 crore to Gateway Net Trading Pte. Limited Rs.20.31crore to Reliance Infocomm Infrastructure Private Limited, Rs. 63.66 crore to Alcatel-Lucent Managed Solutions India Private Limited, a JV. (Previous year - Sundry Creditors include Rs. 234.99 crore to Reliance FLAG Atlantic France SAS, Rs. 1,265.36 crore to Reliance Infratel Limited, Rs. 9.95 crore to Reliance Webstore Limited, Rs. 12.43 crore to Reliance Communications (UK) Limited, Rs. 15.87 crore to Reliance Tech Services Private Limited, Rs. 4.15 crore to Reliance Infocom, Inc., Rs. 17.94 crore to Gateway Net Trading Pte. Limited. Rs. 0.47 crore to Reliance Communications, Inc., Rs. 0.63 crore to Reliance Communications International, Inc., Rs. 0.12 crore to Reliance WiMax Limited, Rs. 3.41 crore to Reliance Capital Limited and Rs. 14.61 crore to Reliance Infocomm Infrastructure Private Limited, Rs. 36.88 crore to Alcatel-Lucent Managed Solutions India Private Limited, a JV).

6 Turnover includes Rs.596.35 crore from Reliance Communications Infrastructure Limited, Rs.342.37 crore from Reliance Communications Inc., Rs. 111.41 crore from Reliance Communications, International, Inc., Rs. 42.47 crore from Reliance Webstore Limited, Rs. 15.10 crore from Flag Telecom Ireland Network Limited, Rs.4.05 crore from Reliance Communications Canada, Inc., Rs. 21.51 crore from Reliance Big TV Limited and Rs.462.52 crore from Reliance Telecom Limited. (Previous year - Turnover includes Rs. 476.19 crore from Reliance Communications Infrastructure Limited, Rs. 596.17 crore from Reliance Communications, Inc., Rs. 227.16 crore from Reliance Communications International, Inc., Rs. 76.04 crore from Reliance Webstore Limited, Rs. 22.82 crore from Flag Telecom Ireland Network Limited, Rs. 4.91 crore from Reliance Communications Canada, Inc., Rs. 0.62 crore from Reliance WiMax Limited, Rs. 8.83 crore from Reliance Big TV Limited, Rs. 313.65 crore from Reliance Telecom Limited and Rs. 1.47 crore from Reliance Communications (UK) Limited).

7 Expenditure includes Access Charges: Rs. 149.38 crore to Reliance Communications, Inc., Rs. 137.87 crore to Reliance Telecom Limited, Network Operation Expenses: Rs.4,946.47 crore to Reliance Infratel Limited, Rs. 67.18 crore to Reliance FLAG Atlantic France SAS, Rs.6.86 crore to Reliance Communications Infrastructure Limited and Rs.17.69 crore to Reliance Communications (UK) Limited. Selling and Marketing expenses: Rs.132.45 crore to Reliance Communications Infrastructure Limited, Rs. 142.06 crore to Reliance Webstore Limited. General and Administrative Expenses: Rs. 195.33 crore to Reliance Communications Infrastructure Limited, Rs. 51.19 crore to Reliance Infocomm Infrastructure Private Limited, Rs. 18.04 crore to Reliance Tech Services Private Limited, Rs.154.26 crore to Alcatel-Lucent Managed Solutions India Private Limited, Rs. 23.09 crore to Reliance General Insurance Company Limited. Rent, Rates and Taxes: Rs. 2.63 crore to Reliance Capital Limited. Finance Charges includes Rs. 326.20 crore received from Reliance Infratel Limited, Rs.6.03 crore to Reliance Webstore Limited and Rs.230.96 crore from Reliance Telecom Limited.

Expenditure under the heads Provision for Employees Cost and Other Expenses are net of recoveries for common cost from Reliance Communications Infrastructure Limited, a Wholly Owned Subsidiary of the Company (Refer Note 25, Schedule Q).

(Previous year-Expenditure includes Access Charges: Rs. 83.85 crore to Reliance Communications, Inc., Rs. 91.11 crore to Reliance Telecom Limited. Network Operation Expenses: Rs.2,749.23 crore to Reliance Infratel Limited, Rs. 120.85 crore to Reliance FLAG Atlantic France SAS, Rs. 1.27 crore to Reliance Telecom Limited, Rs.3.92 crore to Reliance Communications Infrastructure Limited and Rs.0.95 crore to Reliance Communications (UK) Limited. Selling and Marketing expenses: Rs. 87.26 crore to Reliance Communications Infrastructure Limited, Rs. 171.04 crore to Reliance Webstore Limited. General and Administrative Expenses: Rs. 171.07 crore to Reliance Communications Infrastructure Limited, Rs. 43.51 crore to Reliance Infocomm Infrastructure Private Limited, Rs. 15.18 crore to Reliance Tech Services Private Limited, Rs.63.38 crore to Alcatel-Lucent Managed Solutions India Private Limited, a JV and Rs.17.20 crore to Reliance General Insurance Company Limited. Professional Fees: Rs. 1.09 crore to Reliance Infocom, Inc. Rent, Rates and Taxes: Rs. 5.87 crore to Reliance Capital Limited. Finance Charges include Rs. 445.17 crore receivable from Reliance Telecom Limited and Rs. 116.72 crore receivable from Reliance Communications Infrastructure Limited).

8 Financial Guarantee issued includes Rs. 69.80 crore to Reliance Globalcom B.V. (Previous year - Rs. 69.80 crore to Reliance Globalcom B.V.).

9 Corporate Guarantee issued includes Rs. 934.28 crore to Reliance Infratel Limited, Rs.330.18 crore to Gateway Net Trading Pte. Limited, Rs. 949.25 crore to Reliance Telecom Limited, (Previous year-Corporate Guarantee issued to the Banks include Rs.102.00 crore for Reliance Telecom Limited, Rs. 3,123.93 crore for Reliance Infratel Limited, Rs. 2,422.20 crore for Gateway Net Trading Pte. Limited).

10 The Company has collected interest, equivalent to its cost of funds, from Reliance Infratel Limited and Reliance Telecom Limited amounting to Rs. 326.20 crore and Rs. 230.96 crore respectively. (Previous year-The Company has collected interest, equivalent to its cost of funds, from Reliance Communications Infrastructure Limited and Reliance Telecom Limited amounting to Rs. 116.72 crore and Rs. 445.17 crore respectively).

 
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