Accounting Policies of GTL Infrastructure Ltd. Company
Mar 31, 2023
1. CORPORATE INFORMATION
GTL Infrastructure Limited (GIL, the Company, erstwhile standalone company) is domiciled and incorporated in India under the provision of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and National Stock Exchange in India. The registered office of the Company is located at Global Vision, 3rd Floor, Electronic Sadan II, MIDC TTC Industrial Area, Mahape, Navi Mumbai- 400 710, India.
The Company is in the business of passive infrastructure sharing which is based on building, owning, operating and maintaining passive telecom infrastructure sites capable of hosting active network components of various technologies of multiple telecom operators as well providing energy management solutions.
2. BASIS OF PREPARATION AND PRESENTATION
The financial statements of the Company have been prepared on a going concern basis in accordance with Indian Accounting Standards (IND AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:
⢠Certain financial assets and liabilities measured at fair value
⢠Defined Benefit Plans- measured at Fair Value
The preparation of the financial statements requires management to make estimates and underlying assumptions. Actual results could vary from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future years.
The Company''s financial statements are presented in lakhs of Indian Rupees (INR) which is its functional and presentation currency. All values are rounded off to the nearest lakh, except when otherwise indicated.
2 (A) Significant Accounting Policies
2.1. Property, Plant & Equipment
(a) Property, plant and equipment, including Capital work in progress are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost, any cost directly attributable to bringing the assets to its working condition for its intended use, net changes on foreign exchange contracts and arrangements arising from exchange rate variations attributable to the assets and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. On transition to IND AS, the Company had elected to continue with the previous GAAP carrying values as deemed cost for all items of property, plant and equipment.
(b) The tangible assets at the cellular sites, which are ready to use in the first fifteen days of a month are capitalised on the fifteenth day of that month, whereas, if they are ready to use in the second half of a month, they are capitalised on the last day of that month
(c) Advances paid towards acquisition of property, plant & equipment are disclosed as Capital Advances under Loans and Advances and cost of assets not ready for use before the year-end, are disclosed as capital work in progress.
(d) Depreciation on following assets is provided to the extent of depreciable amount on Straight Line Method over the useful life of the assets as prescribed in schedule II to the Companies Act, 2013 except in respect of following Fixed Assets where the assessed useful life is different than that prescribed in Schedule II.
|
Asset |
Years |
|
Network Operation Assets |
9 |
|
Air Conditioners |
9 |
|
Battery Bank |
3 |
|
Other Electrical and Power Supply Equipment |
9 |
|
Office Equipment |
3 |
|
Furniture and fittings |
5 |
|
Vehicles |
5 |
|
Diesel Generators |
15 |
The management believes that the useful lives as given above represent the period over which these assets are expected to be used
(e) The towers have been depreciated on straight line method at the rate of 2.72% per annum based on useful life of 35 years in terms of specific approval received from the Ministry of Corporate Affairs, Government of India vide Order no.45/2/2010-CL-III dated May 26, 2010 issued under Section 205(2)(d) of the Companies Act, 1956.The approval continues to be valid vide letter no.51/9/2014-CL-III dated September 19, 2014 received from Ministry of Corporate Affairs, Government of India.
(f) Further, In respect of Fixed Assets whose actual cost does not exceed '' 5,000, depreciation is provided at 100% in the year of addition
(g) The leasehold improvements have been depreciated over the lease period.
(h) The revised carrying amount of the assets identified as impaired have been depreciated over residual useful life of the respective assets
(i) The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
(j) Gains or losses arising from disposal (dismantling/sale/ retirement/loss due to theft by unknown miscreants) of tangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is disposed.
2.2. Investment Properties
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition,
investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
Depreciation on investment properties is provided using straight line method over the estimated useful lives as specified in Schedule II to the Companies Act, 2013. Residual values, useful lives and method of depreciation of investment properties are reviewed at each financial year end and impact of change, if any is adjusted prospectively. The effects of any revision are included in the statement of profit and loss when the changes arises.
Though the Company measures investment properties using cost based measurement, the fair value of investment property is disclosed in the notes.
Investment properties are derecognised either when they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in statement of profit and loss in the period of de-recognition.
2.3. Intangible Assets
I ntangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation and impairment loss, if any. The cost comprises purchase price, borrowing cost, and any cost directly attributable to bringing the asset to its working condition for the intended use. On transition to IND AS, the Company had elected to continue with the previous GAAP carrying values as deemed cost.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and loss when the asset is derecognised.
The Company amortises intangible assets using the straight line method based on useful lives estimated by the management as mentioned below:
Computer Software 3 years
2.4. Impairment of Non-Financial Assets including Investment property
At each balance sheet date, the Company assesses whether there is any indication that any property, plant & equipment and intangible asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
For the purpose of impairment testing, the recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Units (CGUs) to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised immediately
in the Statement of profit and loss. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
2.5. Inventories
Inventories are valued at cost or net realisable value, whichever is lower. Cost is determined on weighted average basis and includes cost of purchase and other costs incurred in bringing inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
2.6. Cash and cash equivalent
Cash and cash equivalent in the balance sheet comprise cash at banks, on hand, cheques in hand, funds in transit and shortterm deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
2.7. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
I) Financial assets
A. Initial recognition and measurement
All financial assets are initially recognised at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets, which are not at fair value through profit or loss are adjusted to the fair value on initial recognition. Purchase and sale of financial asset are recognised using trade date accounting i.e. the date that the Company commits to purchase or sell the asset.
B. Subsequent measurement
i) Financial Assets carried at amortised cost (AC)
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect the contractual cash flows and the contractual terms of the financial asset give rise on the specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. This category applies to Trade and other receivables, Security deposits, Other advance, Loan and advances to related parties, Unbilled Income, Interest Receivable etc.
ii) Financial Assets at Fair Value through Other Comprehensive Income (FVTOCI)
A financial asset is subsequently measured at Fair Value through other Comprehensive Income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
iii) Financial Assets at Fair Value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories is subsequently fair valued through profit or loss
C. Equity investments
All equity investments other than investment in Subsidiary and Associate are measured at fair value, with value changes recognised in Statement of Profit and loss except for those equity investments for which the Company has elected to present the value changes in ''other comprehensive income''.
The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
D. Investment in subsidiaries and associates
The Company accounts for its investments in subsidiaries and associates at cost in financial statements
E. Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company''s balance sheet) when:
⢠The rights to receive cash flows from the asset have expired, or
⢠The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangementand either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
F. Impairment of financial assets
I n accordance with IND AS 109, the Company uses ''Expected Credit Loss'' (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
a) The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
b) Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument)
For trade receivables Company applies ''simplified approach'' which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there
is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used to recognising impairment loss allowance based on 12-month ECL.
II. Financial liabilities
A. Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
B. Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
a) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by IND AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in IND AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk is recognized in OCI. These gains/ losses are not subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liabilities are recognised in the statement of profit and loss. The Company has not designated any financial liability at fair value through profit or loss.
b) Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the ElR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised or through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition/redemption and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
This category generally applies to borrowings.
c) Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of IND AS 109 and the amount recognised less cumulative amortisation.
d) Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another, from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
III. Embedded derivatives
An embedded derivative is a component of a hybrid (combined) contract that also includes a nonderivative host contract - with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative causes some or all of the cash flows that otherwise would be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss.
If the hybrid contract contains a host that is a financial asset within the scope of IND AS 109, the Company does not separate embedded derivatives. Rather, it applies the classification requirements contained in IND AS 109 to the entire hybrid contract. Derivatives embedded in all other host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or
loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss, unless designated as effective hedging instruments.
IV. Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
V. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
2.8. Provisions, Contingent Liabilities, Contingent Assets and Commitments
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using equivalent period government securities interest rate. Unwinding of the discount is recognised in the statement of profit and loss as a finance cost. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Information on contingent liability is disclosed in the Notes to the Financial Statements. Contingent assets are not recognised. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognised as an asset.
2.9. Fair value measurement
âThe Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) I n the absence of a principal market, in the most advantageous market for the asset or liability.â
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy.
2.10. Revenue recognition
The Company''s revenue primarily consists of revenue for use of infrastructure facilities on individual / sharing basis and energy revenue for the provision of energy for operations of sites.
Revenue for use of infrastructure (which is termed as âRevenue from Telecom / Network Infrastructure Facilitiesâ) is governed by IND AS 116. The same is recognized as and when services are rendered, on a monthly basis as per the contractual terms under agreements entered with customers. The Company has ascertained that the revenue for use of infrastructure facilities is structured to increase in line with expected inflationary increase in cost of the Company and hence, not straight-lined.
Effective April 1,2018, the Company has applied IND AS 115 âRevenue from Contracts with Customersâ which establishes a comprehensive framework to depict timing and amount of revenue to be recognised. The Company has adopted IND AS 115 using cumulative effect method, where any effect arising upon application of this standard is recognised as at the date of initial application i.e. April 1, 2018. Company''s revenue for provision of energy for operation of sites is governed by IND AS 115; Company''s revenue from use of infrastructure facilities, which is covered in leases is specifically excluded from the Scope of IND AS 115.
Energy revenue is recognized over the period on a monthly basis upon satisfaction of performance obligation as per contracts with the customers. The transaction price is the consideration received from customers based on prices agreed as per the contract with the customers. The determination of standalone selling prices is not required as the transaction prices are stated in the contract based on the identified performance obligation.
The Company provides sharing benefits to its customers based on slab defined in the revenue contracts. Contract also contains clause on Service Level Agreements (SLAs) penalty/rewards, dependent upon the achievement of network uptime level as mentioned in the contract. The Company estimates SLA penalty/rewards at each month end and considers the impact of the same in the revenue.
Revenues in excess of invoicing are classified as contract assets (referred as unbilled revenue) while invoicing in excess of revenues are classified as contract liabilities (referred as unearned revenue).
Revenue from reimbursement of property tax is recognized over the period on a monthly basis upon satisfaction of performance obligation as per contracts with the customers. The transaction price is the consideration received from customers based on prices agreed as per the contract with the customers.
Interest income
Interest Income from financial assets is recognised when it is probable that the economic benefit will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Dividends
Income from dividends is recognised when the Company''s right to receive the dividend has been established.
2.11. Leases
Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
i. Company as a lessee Operating lease:
Effective April 1, 2019, the Company has adopted Ind AS- 116 âLeasesâ under modified retrospective approach without adjustment of comparatives and has considered a Right of Use (ROU) Assets and corresponding lease liabilities.
The Company recognizes right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use asset is depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss. The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For
leases with reasonably similar characteristics, the Company may adopt the incremental borrowing rate for the entire portfolio of leases as a whole. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.
The Company recognises the amount of the remeasurement of lease liability as an adjustment to the right-of-use asset. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognizes any remaining amount of the re-measurement in statement of profit and loss.
The Company elects not to apply the requirements of Ind AS 116 to Short term leases or the leases for which the underlying asset is of low value. The lease payments associated with these leases are recognised as expense on either a straight line basis over lease term or another systematic basis. The Company has opted to recognize the asset retirement obligation liability as part of the cost of an item of property, plant and equipment in accordance with Ind AS16.
ii. Company as a lessor Operating lease:
Rental income from operating lease is recognised on a straight line basis over the lease term unless payments to the Company are structured to increase in line with expected general inflation to compensate for the Company''s expected increase in inflationary cost; such increases are recognised in the year in which such benefits accrue. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as the lease income.
Contingent rents are recognised as revenue in the period in which they are earned.
2.12. Employee benefits
Short Term Employee Benefits
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by the employees are recognised as an expense during the year when the employees render the services.
Post-Employment Benefits Defined Contribution Plan
A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contributions towards Provident Fund, Pension Scheme. The Company''s contribution is recognised as an expense in the Profit and Loss Statement during the period in which the employee renders the related service.
Defined Benefit Plan
The liability in respect of defined benefit plans and other postemployment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employee''s services.
Re-measurement of defined benefit plans in respect of post-employment benefits are charged to the other Comprehensive Income.
2.13. Foreign currency transactions
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the transactions.
2.14. Borrowing Costs
Borrowing Costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
2.15. Taxes
Tax expense represents the sum of current tax (including income tax for earlier years) and deferred tax. Tax is recognised in the statement of profit and loss, except to the extent that it relates to items recognised directly in equity or other comprehensive income, in such cases the tax is also recognised directly in equity or in other comprehensive income. Any subsequent change in direct tax on items initially recognised in equity or other comprehensive income is also recognised in equity or other comprehensive income.
Current tax provision is computed for income calculated after considering allowances and exemptions under the provisions of the applicable Income Tax Laws. Current tax assets and current tax liabilities are off set, and presented as net. Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised. Deferred tax assets and liabilities are measured at the applicable tax rates. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilised.
2.16. Earnings per share
The earnings considered in ascertaining the Company''s Earnings Per Share (EPS) is the net profit/ (loss) after tax. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the period/year. The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless the effect of the potential dilutive equity shares is anti-dilutive.
2.17. Current and Non-Current Classification
âThe Company presents assets and liabilities in statement of financial position based on current/non-current classification.
The Company has presented non-current assets and current assets before equity, non-current liabilities and current liabilities in accordance with Schedule III, Division II of Companies Act, 2013 notified by Ministry of Corporate Affairs (MCA).â
âAn asset is classified as current when it is:
a) Expected to be realised or intended to be sold or consumed in normal operating cycle,
b) Held primarily for the purpose of trading,
c) Expected to be realised within twelve months after the reporting period, or
d) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.â
âA liability is classified as current when it is:
a) Expected to be settled in normal operating cycle,
b) Held primarily for the purpose of trading,
c) Due to be settled within twelve months after the reporting period, or
d) There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.â
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Deferred tax assets and liabilities are classified as non-current assets and liabilities. The Company has identified twelve months as its operating cycle.
2(B) Recent accounting pronouncements
On March 31,2023, the Ministry of Corporate Affairs (MCA) has notified Companies (Indian Accounting Standards) Amendment Rules, 2023. This notification has resulted into amendments in the following existing accounting standards which are applicable to company from April 1,2023.
Ind AS 1 - Presentation of Financial Statements
I nd AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
Ind AS 12 - Income Taxes
Ind AS 34-Interim Financial Reporting
Ind As 107 - Financial Instruments Disclosures
Ind As 109 - Financial Instruments
Ind As 115 - Revenue from Contract with Customers
Application of above amended standards are not expected
to have any significant impact on the Company''s financial statements
2(C) Significant accounting judgements, estimates and assumptions
The preparation of the Company''s financial statements requires management to make judgement, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
a) Operating Lease
1. As Lessor
The Company has assessed that its master service agreement (âMSAâ) with operators contains lease of its tower sites and plant and equipment and has determined, based on evaluation of the terms and conditions of the arrangements such as various lessees sharing the same tower sites with specific area, the fair value of the asset and all the significant risks and rewards of ownership of these properties retained by the Company, that such contracts are in the nature of operating lease and has accounted for as such.
The Company has ascertained that the annual escalations in the lease payment received under the MSA are structured to compensate the expected inflationary increase in cost and therefore has not been straight-lined
2. As Lessee
The Company has assessed that agreements entered with the landlords contain lease of the underlying space based on evaluation of terms and conditions of the contracts with landlords and are accounted for as such under Ind AS 116
b) Revenue Recognition
The Company''s revenue primarily consists of revenue for use of infrastructure facilities (Rentals) and energy revenue for the provision of energy for operations of sites. Rentals are not covered within the scope of IND AS 115, hence identification of distinct performance obligation within IND AS 115 do not involve significant judgement.
Judgement is required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, service level credits, etc. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. The Company provides sharing benefits to its customers based on slab defined in the revenue contracts. Contract also contains clause on Service Level Agreements (SLAs) benefits/penalties dependent upon achievement of network uptime level as mentioned in the contract.
These benefits/SLA penalties are called variable consideration. There is no additional impact of variable consideration as per IND AS 115 since maximum
benefit is already being given to customer and the same is deducted from revenue. There is no additional impact of SLA as the Company already estimates SLA penalty amount and the same is provided for at each month end. This SLA is presented as net off with revenue in the Statement of profit and loss.
c) Depreciation and useful lives of property plant and equipment
Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation to be recorded during any reporting period. The useful lives and residual values are based on the Company''s historical experience with similar assets and take into account anticipated technological changes. The depreciation for future periods is adjusted if there are significant changes from previous estimates.
d) Recoverability of trade receivable:
Judgements are required in assessing the recoverability of trade receivables and determining whether a provision against those receivables is required. Factors considered in assessing the recoverability of trade receivables include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
e) Provisions:
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take in the future years, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
f) Impairment of non-financial assets including investment property:
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or CGU''s fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or a groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transaction are
taken into account, if no such transactions can be identified, an appropriate valuation model is used.
g) Impairment of financial assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
h) Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and other post-employment benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
i) Fair value measurement of financial instruments When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
j) Taxes
Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and the level of future taxable income together with future tax planning strategies. The Company does not expect availability of future taxable income sufficient to utilise its deferred tax assets. Further details on taxes are disclosed in note 44.
k) Asset retirement obligations
The Company has recognised a provision for asset retirement obligations associated with telecommunication towers. Such Provision is recognised in respect of the costs for dismantling of infrastructure equipment and restoration of sites under operating leases, which are expected to be incurred at the end of the lease term, based on the estimate provided by the internal technical experts. In determining the fair value of such provision, assumptions and estimates are made in relation to discount rates, the expected cost to dismantle and remove the plant from the site and the expected timing of those costs.
The Company estimates that the costs would be incurred at the end of the lease term and calculates the provision using the DCF method based on the discount rate that approximates interest rate of risk free borrowings and current estimate of asset retirement obligation duly adjusted for expected inflationary increase in related costs.
Mar 31, 2021
1. CORPORATE INFORMATION
GTL Infrastructure Limited (GIL, the Company, erstwhile standalone company) is domiciled and incorporated in India under the provision of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and National Stock Exchange in India. The registered office of the Company is located at Global Vision, 3rd Floor, Electronic Sadan II, MIDC TTC Industrial Area, Mahape, Navi Mumbai- 400 710, India.
The Company is in the business of passive infrastructure sharing which is based on building, owning, operating and maintaining passive telecom infrastructure sites capable of hosting active network components of various technologies of multiple telecom operators as well providing energy management solutions.
2. BASIS OF PREPARATION AND PRESENTATION
The financial statements of the Company have been prepared on a going concern basis in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:
⢠Certain financial assets and liabilities measured at fair value
⢠Defined Benefit Plans- measured at Fair Value
The preparation of the financial statements requires management to make estimates and underlying assumptions. Actual results could vary from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future years.
The Company''s financial statements are presented in Indian Rupees (INR) which is its functional and presentation currency. All values are rounded off to the nearest lakhs (100,000) except when otherwise indicated.
2 (A) Significant Accounting Policies
2.1. Property, Plant & Equipment
(a) Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost, any cost directly attributable to bringing the assets to its working condition for its intended use, net changes on foreign exchange contracts and arrangements arising from exchange rate variations attributable to the assets and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. On transition to Ind AS, the Company had elected to continue with
the previous GAAP carrying values as deemed cost for all items of property, plant and equipment.
(b) The tangible assets at the cellular sites, which are ready to use in the first fifteen days of a month are capitalised on the fifteenth day of that month, whereas, if they are ready to use in the second half of a month, they are capitalised on the last day of that month
(c) Advances paid towards acquisition of property, plant & equipment are disclosed as Capital Advances under Loans and Advances and cost of assets not ready for use before the year-end, are disclosed as capital work in progress.
(d) Depreciation on following assets is provided to the extent of depreciable amount on Straight Line Method over the useful life of the assets as prescribed in schedule II to the Companies Act, 2013 except in respect of following Fixed Assets where the assessed useful life is different than that prescribed in Schedule II.
|
Asset |
Years |
|
Network Operation Assets |
9 |
|
Air Conditioners |
9 |
|
Battery Bank |
3 |
|
Other Electrical and Power Supply Equipment |
9 |
|
Office Equipment |
3 |
|
Furniture and fittings |
5 |
|
Vehicles |
5 |
|
Diesel Generators |
15 |
The management believes that the useful lives as given above represent the period over which these assets are expected to be used
(e) The towers have been depreciated on straight line method at the rate of 2.72% per annum based on useful life of 35 years in terms of specific approval received from the Ministry of Corporate Affairs, Government of India vide Order no.45/2/2010-CL-III dated May 26, 2010 issued under Section 205(2)(d) of the Companies Act, 1956.The approval continues to be valid vide letter no.51/9/2014-CL-III dated September 19, 2014 received from Ministry of Corporate Affairs, Government of India.
(f) Further, In respect of Fixed Assets whose actual cost does not exceed '' 5,000 depreciation is provided at 100% in the year of addition
(g) The leasehold improvements have been depreciated over the lease period.
(h) The revised carrying amount of the assets identified as impaired have been depreciated over residual useful life of the respective assets
(i) The residual values, useful lives and methods of depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted prospectively, if appropriate.
(j) Gains or losses arising from disposal of tangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is disposed.
2.2. Investment Properties
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
Depreciation on investment properties are provided using straight line method over the estimated useful lives as specified in Schedule II to the Companies Act, 2013. Residual values, useful lives and method of depreciation of investment properties are reviewed at each financial year end and are adjusted prospectively, if appropriate. The effects of any revision are included in the statement of profit and loss when the changes arises.
Though the Company measures investment properties using cost based measurement, the fair value of investment property is disclosed in the notes.
Investment properties are derecognised either when they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in statement of profit and loss in the period of de-recognition.
2.3. Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation and impairment loss, if any. The cost comprises purchase price, borrowing cost, and any cost directly attributable to bringing the asset to its working condition for the intended use. On transition to Ind AS, the Company had elected to continue with the previous GAAP carrying values as deemed cost.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposable proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and loss when the asset is derecognised.
The Company amortises intangible assets using the straight line method based on useful lives estimated by the management as mentioned below:
Computer Software 3 years
2.4. Impairment of Non-Financial Assets including Investment property
At each balance sheet date, the Company assesses whether there is any indication that any property, plant
& equipment and intangible asset may be impaired, if any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
For the purpose of impairment testing, the recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGUs to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of profit and loss. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
2.5. Inventories
Inventories are valued at cost or net realisable value, whichever is lower. Cost is determined on weighted average basis and includes cost of purchase and other costs incurred in bringing inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
2.6. Cash and cash equivalent
Cash and cash equivalent in the balance sheet comprise cash at banks, on hand, cheques in hand, funds in transit and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
2.7. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
I) Financial assets
A. Initial recognition and measurement
All financial assets are initially recognised at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets, which are not at fair value through profit or loss are adjusted to the fair value on initial recognition. Purchase and sale of financial asset are recognised using trade date accounting i.e. the date that the Company commits to purchase or sell the asset.
B. Subsequent measurement
i) Financial Assets carried at amortised cost (AC)
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect the contractual cash flows and the contractual terms of the financial asset give rise on the specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. This category applies to Trade and other receivables, Security deposits, Other advance, Loan and advances to related parties, Unbilled Income, Interest Receivable etc.
ii) Financial Assets at Fair Value through Other Comprehensive Income (FVTOCI)
A financial asset is subsequently measured at Fair Value through other Comprehensive Income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
iii) Financial Assets at Fair Value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories is subsequently fair valued through profit or loss
C. Equity investments
All equity investments other than investment in Subsidiary and Associate are measured at fair value, with value changes recognised in Statement of Profit and loss except for those equity investments for which the Company has elected to present the value changes in ''other comprehensive income''
The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
D. Investment in subsidiaries and associates
The Company accounts for its investments in subsidiaries and associates at cost in financial statements
E. Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from
the Company''s balance sheet) when:
⢠The rights to receive cash flows from the asset have expired, or
⢠The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
F. Impairment of financial assets
In accordance with IND AS 109, the Company uses ''Expected Credit Loss'' (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
a) The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or b) Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument)
For trade receivables Company applies ''simplified approach'' which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.to recognising impairment loss allowance based on 12-month ECL.
II. Financial liabilities
A. Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings including
bank overdrafts, financial guarantee contracts and derivative financial instruments.
B. Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
a) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by IND AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in IND AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk is recognized in OCI. These gains/ losses are not subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liabilities are recognised in the statement of profit and loss. The Company has not designated any financial liability at fair value through profit or loss.
b) Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised or through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition/redemption and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
This category generally applies to borrowings.
c) Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are
recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of IND AS 109 and the amount recognised less cumulative amortisation.
d) Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another, from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
III. Embedded derivatives
An embedded derivative is a component of a hybrid (combined) contract that also includes a non-derivative host contract - with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative causes some or all of the cash flows that otherwise would be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss.
If the hybrid contract contains a host that is a financial asset within the scope of IND AS 109, the Company does not separate embedded derivatives. Rather, it applies the classification requirements contained in IND AS 109 to the entire hybrid contract. Derivatives embedded in all other host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss, unless designated as effective hedging instruments.
IV. Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial
assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
V. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
2.8. Provisions, Contingent Liabilities, Contingent Assets and Commitments
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using equivalent period government securities interest rate. Unwinding of the discount is recognised in the statement of profit and loss as a finance cost. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Information on contingent liability is disclosed in the Notes to the Financial Statements. Contingent assets are not recognised. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognised as an asset.
2.9. Fair value measurement
âThe Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) I n the absence of a principal market, in the most advantageous market for the asset or liability.â
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy.
2.10. Revenue recognition
The Company''s revenue primarily consists of revenue for use of infrastructure facilities on individual / sharing basis and energy revenue for the provision of energy for operations of sites.
Revenue for use of infrastructure (which is termed as âRevenue from Telecom / Network Infrastructure Facilitiesâ) is governed by IND AS 116. The same is recognized as and when services are rendered, on a monthly basis as per the contractual terms under agreements entered with customers. The Company has ascertained that the revenue for use of infrastructure facilities is structured to increase in line with expected inflationary increase in cost of the Company and hence, not straight-lined.
Effective April 1,2018, the Company has applied IND AS 115 âRevenue from Contracts with Customersâ which establishes a comprehensive framework to depict timing and amount of revenue to be recognised. The Company has adopted IND AS 115 using cumulative effect method, where any effect arising upon application of this standard is recognised as at the date of initial application i.e. April 1, 2018. Company''s revenue for provision of energy for operation of sites is governed by IND AS 115; Company''s revenue from use of infrastructure facilities, which is covered in leases is specifically excluded from the Scope of IND AS 115.
Energy revenue is recognized over the period on a monthly basis upon satisfaction of performance obligation as per contracts with the customers. The transaction price is the consideration received from customers based on prices agreed as per the contract with the customers. The determination of standalone selling prices is not required
as the transaction prices are stated in the contract based on the identified performance obligation.
The Company provides sharing benefits to its customers based on slab defined in the revenue contracts. Contract also contains clause on Service Level Agreements (SLAs) penalty/rewards, dependent upon the achievement of network uptime level as mentioned in the contract. The Company estimates SLA penalty/rewards at each month end and considers the impact of the same from revenue.
Revenues in excess of invoicing are classified as contract assets (referred as unbilled revenue) while invoicing in excess of revenues are classified as contract liabilities (referred as unearned revenue).
Revenue from reimbursement of property tax is recognized over the period on a monthly basis upon satisfaction of performance obligation as per contracts with the customers. The transaction price is the consideration received from customers based on prices agreed as per the contract with the customers.
Interest income
Interest Income from financial assets is recognised when it is probable that the economic benefit will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Dividends
Income from dividends is recognised when the Company''s right to receive the dividend has been established.
2.11. Leases
Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
i. Company as a lessee Operating lease:
Effective April 1, 2019, the Company has adopted Ind AS- 116 âLeasesâ under modified retrospective approach without adjustment of comparatives and has considered a Right of Use (ROU) Assets and corresponding lease liabilities.
The Company recognizes right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred. The right-of-use assets is subsequently measured at
cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use asset is depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For leases with reasonably similar characteristics, the Company may adopt the incremental borrowing rate for the entire portfolio of leases as a whole. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.
The Company recognises the amount of the remeasurement of lease liability as an adjustment to the right-of-use asset. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognizes any remaining amount of the re-measurement in statement of profit and loss.
The Company elects not to apply the requirements of Ind AS 116 to Short term leases or the leases for which the underlying asset is of low value. The lease payments associated with these leases are recognised as expense on either a straight line basis over lease term or another systematic basis. The Company has opted to recognize the asset retirement obligation liability as part of the cost of an item of property, plant and equipment in accordance with Ind AS 116.
ii. Company as a lessor Operating lease:
Rental income from operating lease is recognised on a straight line basis over the lease term unless payments to the Company are structured to increase in line with expected general inflation to compensate
the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
2.15. Taxes
Tax expense represents the sum of current tax (including income tax for earlier years) and deferred tax. Tax is recognised in the statement of profit and loss, except to the extent that it relates to items recognised directly in equity or other comprehensive income, in such cases the tax is also recognised directly in equity or in other comprehensive income. Any subsequent change in direct tax on items initially recognised in equity or other comprehensive income is also recognised in equity or other comprehensive income.
Current tax provision is computed for income calculated after considering allowances and exemptions under the provisions of the applicable Income Tax Laws. Current tax assets and current tax liabilities are off set, and presented as net.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised. Deferred tax assets and liabilities are measured at the applicable tax rates. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilised.
2.16. Earnings per share
The earnings considered in ascertaining the Company''s Earnings Per Share (EPS) is the net profit/ (loss) after tax. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the period/year. The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless the effect of the potential dilutive equity shares is anti-dilutive.
2.17. Current and Non-Current Classification
âThe Company presents assets and liabilities in statement of financial position based on current/non-current classification.
The Company has presented non-current assets and current assets before equity, non-current liabilities and current liabilities in accordance with Schedule III, Division II of Companies Act, 2013 notified by Ministry of Corporate Affairs (MCA).â
for the Company''s expected increase in inflationary cost; such increases are recognised in the year in which such benefits accrue. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as the lease income. Contingent rents are recognised as revenue in the period in which they are earned.
2.12. Employee benefits
Short Term Employee Benefits
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by the employees are recognised as an expense during the year when the employees render the services.
Post-Employment Benefits Defined Contribution Plan
A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contributions towards Provident Fund, Pension Scheme. The Company''s contribution is recognised as an expense in the Profit and Loss Statement during the period in which the employee renders the related service.
Defined Benefit Plan
The liability in respect of defined benefit plans and other post-employment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees ''services.
Re-measurement of defined benefit plans in respect of post-employment benefits are charged to the other Comprehensive Income.
2.13. Foreign currency transactions
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the transactions.
2.14. Borrowing Costs
Borrowing Costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Interest income earned on
âAn asset is classified as current when it is:
a) Expected to be realised or intended to be sold or consumed in normal operating cycle,
b) Held primarily for the purpose of trading,
c) Expected to be realised within twelve months after the reporting period, or
d) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.â
âA liability is classified as current when it is:
a) Expected to be settled in normal operating cycle,
b) Held primarily for the purpose of trading,
c) Due to be settled within twelve months after the reporting period, or
d) There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.â
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Deferred tax assets and liabilities are classified as non-current assets and liabilities. The Company has identified twelve months as its operating cycle.
2(B) Significant accounting judgements, estimates and assumptions
The preparation of the Company''s financial statements requires management to make judgement, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
a) Operating Lease 1. As Lessor
The Company has assessed that its master service agreement (âMSAâ) with operators contains lease of its tower sites and plant and equipment and has determined, based on evaluation of the terms and conditions of the arrangements such as various lessees sharing the same tower sites with specific area, the fair value of the asset and all the significant risks and rewards of ownership of these properties retained by the Company, that such contracts are in the nature of operating lease and has accounted for as such.
The Company has ascertained that the annual escalations in the lease payment received under the MSA are structured to compensate the expected inflationary increase in cost and
therefore has not been straight-lined
2. As Lessee
The Company has assessed that agreements entered with the landlords contain lease of the underlying space based on evaluation of terms and conditions of the contracts with landlords and are accounted for as such under Ind AS 116
b) Revenue Recognition
The Company''s revenue primarily consists of revenue for use of infrastructure facilities (Rentals) and energy revenue for the provision of energy for operations of sites. Rentals are not covered within the scope of Ind AS 115, hence identification of distinct performance obligation within Ind AS 115 do not involve significant judgement.
Judgement is required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, service level credits, etc. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. The Company provides sharing benefits to its customers based on slab defined in the revenue contracts. Contract also contains clause on Service Level Agreements (SLAs) benefits/penalties dependent upon achievement of network uptime level as mentioned in the contract.
These benefits/SLA penalties are called variable consideration. There is no additional impact of variable consideration as per Ind AS 115 since maximum benefit is already being given to customer and the same is deducted from revenue. There is no additional impact of SLA as the Company already estimates SLA penalty amount and the same is provided for at each month end. This SLA is presented as net off with revenue in the Statement of profit and loss.
c) Depreciation and useful lives of property plant and equipment
Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation to be recorded during any reporting period. The useful lives and residual values are based on the Company''s historical experience with similar assets and take into account anticipated technological changes. The depreciation for future periods is adjusted if there are significant changes from previous estimates.
d) Recoverability of trade receivable:
Judgements are required in assessing the recoverability of trade receivables and determining whether a provision against those receivables is required. Factors considered in assessing the recoverability of trade receivables include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of nonpayment.
e) Provisions:
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take in the future years, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
f) Impairment of non-financial assets including investment property:
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or CGU''s fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or a groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transaction are taken into account, if no such transactions can be identified, an appropriate valuation model is used.
g) Impairment of financial assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
h) Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and other post-employment benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
i) Fair value measurement of financial instruments
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
j) Taxes
Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and the level of future taxable income together with future tax planning strategies. The Company does not expect availability of future taxable income sufficient to utilise its deferred tax assets. Further details on taxes are disclosed in note 44.
k) Asset retirement obligations
The Company has recognised a provision for asset retirement obligations associated with telecommunication towers. Such Provision is recognised in respect of the costs for dismantling of infrastructure equipment and restoration of sites under operating leases, which are expected to be incurred at the end of the lease term, based on the estimate provided by the internal technical experts. In determining the fair value of such provision, assumptions and estimates are made in relation to discount rates, the expected cost to dismantle and remove the plant from the site and the expected timing of those costs.
The Company estimates that the costs would be incurred at the end of the lease term and calculates the provision using the DCF method based on the discount rate that approximates interest rate of risk free borrowings and current estimate of asset retirement obligation duly adjusted for expected inflationary increase in related costs.
Mar 31, 2018
1. CORPORATE INFORMATION
GTL Infrastructure Limited (GIL, the Company) is domiciled and incorporated in India under the provision of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and National Stock Exchange in India. The registered office of the Company is located at Global Vision, 3rd Floor, Electronic Sadan II, MIDC TTC Industrial Area, Mahape, Navi Mumbai- 400 710, India.
During the year, erstwhile Chennai Network Infrastructure Limited (CNIL) has been merged with the Company with an appointed date of April 1, 2016 pursuant to the Scheme of Arrangement for merger.
The Company is in the business of passive infrastructure sharing which is based on building, owning, operating and maintaining passive telecom infrastructure sites capable of hosting active network components of various technologies of multiple telecom operators as well providing energy management solutions.
These Financial Statements were approved for issue by the Board of Directors on May 08, 2018.
2. BASIS OF PREPARATION AND PRESENTATION
The financial statements of the Company have been prepared on a going concern basis in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:
- Certain financial assets and liabilities measured at fair value
- Defined Benefit Plans- measured at Fair Value
The preparation of the financial statements requires management to make estimates and underlying assumptions. Actual results could vary from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future years.
The Company''s financial statements are presented in Indian Rupees (INR) which is its functional and presentation currency. All values are rounded off to the nearest lakhs (100,000), except when otherwise indicated.
2(A) Significant Accounting Policies
2.1. Property, Plant & Equipment
(a) On transition to Ind AS, the Company has elected to continue with the previous GAAP carrying values as deemed cost for all items of property, plant and equipment.
(b) Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost, any cost directly attributable to bringing the assets to its working condition for its intended use, net changes on foreign exchange contracts and arrangements arising from exchange rate variations attributable to the assets and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
(c) The tangible assets at cellular sites, which are ready for use during the particular month are capitalised on the last day of the month.
(d) Advances paid towards acquisition of property, plant & equipment are disclosed as Capital Advances under Loans and Advances and cost of assets not ready for use before the year-end, are disclosed as capital work in progress.
(e) Depreciation on following assets is provided to the extent of depreciable amount on Straight Line Method over the useful life of the assets as prescribed in schedule II to the Companies Act, 2013 except in respect of following Fixed Assets where the assessed useful life is different than that prescribed in Schedule II.
The management believes that the useful lives as given above represent the period over which these assets are expected to be used
(f) The towers have been depreciated on straight line method at the rate of 2.72% per annum based on useful life of 35 years in terms of specific approval received from the Ministry of Corporate Affairs, Government of India vide Order no.45/2/2010-CL-III dated May 26, 2010 issued under Section 205(2)(d) of the Companies Act, 1956.The approval continues to be valid vide letter no.51/9/2014-CL-III dated September 19, 2014 received from Ministry of Corporate Affairs, Government of India.
(g) Further, In respect of Fixed Assets whose actual cost does not exceed '' 5,000, depreciation is provided at 100% in the year of addition
(h) The leasehold improvements have been depreciated over the lease period.
(i) The revised carrying amount of the assets identified as impaired have been depreciated over residual useful life of the respective assets
(j) The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
(k) Gains or losses arising from disposal of tangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is disposed.
2.2. Intangible Assets
On transition to Ind AS, the Company has elected to continue with the previous GAAP carrying values as deemed cost.
Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation and impairment loss, if any. The cost comprises purchase price, borrowing cost, and any cost directly attributable to bringing the asset to its working condition for the intended use.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposable proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and loss when the asset is derecognised.
The Company amortises intangible assets using the straight line method based on useful lives estimated by the management as mentioned below:
Computer Software 3 years
Customer Contracts 20 years
2.3. Impairment of Non-Financial Assets
At each balance sheet date, the Company assesses whether there is any indication that any property, plant &equipment and intangible asset may be impaired, if any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
For the purpose of impairment testing, the recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGUs to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of profit and loss. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
2.4. Inventories
Inventories are valued at cost or net realisable value, whichever is lower. Cost is determined on weighted average basis and includes cost of purchase and other costs incurred in bringing inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
2.5. Cash and cash equivalent
Cash and cash equivalent in the balance sheet comprise cash at banks, on hand, cheques in hand, funds in transit and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
2.6. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
I) Financial assets
A. Initial recognition and measurement
All financial assets are initially recognised at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets, which are not at fair value through profit or loss are adjusted to the fair value on initial recognition. Purchase and sale of financial asset are recognised using trade date accounting i.e. the date that the Company commits to purchase or sell the asset.
B. Subsequent measurement
i) Financial Assets carried at amortised cost (AC)
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect the contractual cash flows and the contractual terms of the financial asset give rise on the specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. This category applies to Trade and other receivables, Security deposits, Other advance, Loan and advances to related parties, Unbilled Income, Interest Receivable etc.
ii) Financial Assets at Fair Value through Other Comprehensive Income (FVTOCI)
A financial asset is subsequently measured at Fair Value through other Comprehensive Income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
iii) Financial Assets at Fair Value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories is subsequently fair valued through profit or loss
C. Equity investments
All equity investments other than investment in Subsidiary and Associate are measured at fair value, with value changes recognised in Statement of Profit and loss except for those equity investments for which the Company has elected to present the value changes in ''other comprehensive incomeâ
The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
D. Investment in subsidiaries and associates
The Company accounts for its investments in subsidiaries and associates at cost in financial statements
E. Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company''s balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
F. Impairment of financial assets
The Company assesses impairment based on expected credit loss (ECL) model to the following
a) Financial assets at amortized cost
b) Financial assets measured at fair value through Profit or Loss
The Company follows simplified approach for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risks. Rather, it recognises impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition.
The Company uses historical cost experience to determine the impairment loss allowance on the portfolio of trade receivables. At every reporting date, the historically observed default rates are updated and changes in the forward looking estimates are analysed.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
II. Financial liabilities
A. Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
B. Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
a) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk is recognized in OCI. These gains/ losses are not subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liabilities are recognised in the statement of profit and loss. The Company has not designated any financial liability at fair value through profit or loss.
b) Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised or through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
This category generally applies to borrowings.
c) Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
d) Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another, from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
III. Embedded derivatives
An embedded derivative is a component of a hybrid (combined) contract that also includes a non-derivative host contract - with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative causes some or all of the cash flows that otherwise would be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss.
If the hybrid contract contains a host that is a financial asset within the scope of Ind AS 109, the Company does not separate embedded derivatives. Rather, it applies the classification requirements contained in Ind AS 109 to the entire hybrid contract. Derivatives embedded in all other host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss, unless designated as effective hedging instruments.
IV. Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
V. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
2.7. Provisions, Contingent Liabilities, Contingent Assets and Commitments
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using equivalent period government securities interest rate. Unwinding of the discount is recognised in the statement of profit and loss as a finance cost. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Information on contingent liability is disclosed in the Notes to the Financial Statements. Contingent assets are not recognised. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognised as an asset.
2.8. Fair value measurement
âThe Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) I n the absence of a principal market, in the most advantageous market for the asset or liability.â
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy.
2.9. Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured regardless of when the proceeds are being received. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes and duties collected on behalf of the Government.
Revenue from operations includes revenue for use of infrastructure facilities and energy revenue for the provision of energy for operation of sites. Revenue for use of infrastructure (which is termed as âRevenue from Telecom / Network Infrastructure Facilitiesâ) and revenue from Energy and Other Re-imbursements is recognized as and when services are rendered, on a monthly basis as per the contractual terms under agreements entered with customers. The Company has ascertained that the revenue for use of infrastructure facilities is structured to increase in line with expected inflationary increase in cost of the Company and hence, not straight-lined.
Interest income
Interest Income from financial assets is recognised when it is probable that the economic benefit will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Dividends
Income from dividends is recognised when the Company''s right to receive the dividend has been established.
2.10. Leases
Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
- i. Company as a lessee
Operating lease:
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight line basis unless payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increase; such increases are recognised in the year in which such benefits accrue.
I n the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
- ii. Company as a lessor
Operating lease:
Rental income from operating lease is recognised on a straight line basis over the lease term unless payments to the Company are structured to increase in line with expected general inflation to compensate for the Company''s expected increase in inflationary cost; such increases are recognised in the year in which such benefits accrue. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term. Contingent rents are recognised as revenue in the period in which they are earned.
2.11. Employee benefits
Short Term Employee Benefits
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by the employees are recognised as an expense during the year when the employees render the services.
Post-Employment Benefits Defined Contribution Plan
A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contributions towards Provident Fund, Pension Scheme. The Company''s contribution is recognised as an expense in the Profit and Loss Statement during the period in which the employee renders the related service.
Defined Benefit Plan
The liability in respect of defined benefit plans and other post-employment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees ''services.
Re-measurement of defined benefit plans in respect of post-employment and other long term benefits are charged to the other Comprehensive Income.
2.12. Foreign currency transactions
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of the following:
Foreign exchange differences arising on translation of liabilities assumed before April 01, 2016 which are considered as long-term foreign currency monetary items are capitalised, if related to acquisition of fixed assets, or transferred to Foreign Currency Monetary Item Translation Difference Account and amortized over the balance period of such long term Foreign Currency Monetary items but not beyond March 31, 2020.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the transactions.
2.13. Borrowing Costs
Borrowing Costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
2.14. Taxes
Tax expense represents the sum of current tax (including income tax for earlier years) and deferred tax. Tax is recognised in the statement of profit and loss, except to the extent that it relates to items recognised directly in equity or other comprehensive income, in such cases the tax is also recognised directly in equity or in other comprehensive income. Any subsequent change in direct tax on items initially recognised in equity or other comprehensive income is also recognised in equity or other comprehensive income.
Current tax provision is computed for income calculated after considering allowances and exemptions under the provisions of the applicable Income Tax Laws. Current tax assets and current tax liabilities are off set, and presented as net.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised. Deferred tax assets and liabilities are measured at the applicable tax rates. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilised.
2.15. Earnings per share
The earnings considered in ascertaining the Company''s Earnings Per Share (EPS) is the net profit/ (loss) after tax. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the period/year. The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless the effect of the potential dilutive equity shares is anti-dilutive.
2.16. Current and Non Current Classification
âThe Company presents assets and liabilities in statement of financial position based on current/noncurrent classification.
The Company has presented non-current assets and current assets before equity, non-current liabilities and current liabilities in accordance with Schedule III, Division II of Companies Act, 2013 notified by Ministry of Corporate Affairs (MCA).â
âAn asset is classified as current when it is:
a) Expected to be realised or intended to be sold or consumed in normal operating cycle,
b) Held primarily for the purpose of trading,
c) Expected to be realised within twelve months after the reporting period, or
d) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.â
âA liability is classified as current when it is:
a) Expected to be settled in normal operating cycle,
b) Held primarily for the purpose of trading,
c) Due to be settled within twelve months after the reporting period, or
d) There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.â
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Deferred tax assets and liabilities are classified as non-current assets and liabilities. The Company has identified twelve months as its operating cycle.
2(B) Significant accounting judgements, estimates and assumptions
The preparation of the Company''s financial statements requires management to make judgement, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
a) Depreciation and useful lives of property plant and equipment
Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation to be recorded during any reporting period. The useful lives and residual values are based on the Company''s historical experience with similar assets and take into account anticipated technological changes. The depreciation for future periods is adjusted if there are significant changes from previous estimates.
b) Recoverability of trade receivable:
Judgements are required in assessing the recoverability of trade receivables and determining whether a provision against those receivables is required. Factors considered in assessing the recoverability of trade receivables include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
c) Provisions:
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take in the future years, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
d) Impairment of non-financial assets:
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount.
An asset''s recoverable amount is the higher of an asset''s or CGU''s fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or a groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transaction are taken into account, if no such transactions can be identified, an appropriate valuation model is used.
e) Impairment of financial assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
f) Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and other post-employment benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
g) Fair value measurement of financial instruments
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
h) Taxes
Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and the level of future taxable income together with future tax planning strategies. The Company does not expect availability of future taxable income sufficient to utilise its deferred tax assets. Further details on taxes are disclosed in note 46.
i) Asset retirement obligations
The Company has recognised a provision for asset retirement obligations associated with telecommunication towers.Such Provision is recognised in respect of the costs for dismantling of infrastructure equipment and restoration of sites under operating leases, which are expected to be incurred at the end of the lease term, based on the estimate provided by the internal technical experts. In determining the fair value of such provision, assumptions and estimates are made in relation to discount rates, the expected cost to dismantle and remove the plant from the site and the expected timing of those costs.
The Company estimates that the costs would be incurred at the end of the lease term and calculates the provision using the DCF method based on the discount rate that approximates interest rate of risk free borrowings and current estimate of asset retirement obligation duly adjusted for expected inflationary increase in related costs.
Standards Issued but not yet effective:
On March 28, 2018, the Ministry of Corporate Affairs (MCA) has notified Ind AS 115 - Revenue from Contract with Customers and certain amendment to existing Ind AS. These amendments shall be applicable to the Company from April 01, 2018.
a) Issue of Ind AS 115 - Revenue from Contracts with customers
Ind AS 115 will supersede the current revenue recognition guidance including Ind AS 18 Revenue, Ind AS 11 Construction Contracts and the related interpretations. The core principles of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
b) Amendment to Existing issued Ind AS
The MCA has also notified certain amendments to the following Accounting Standards:
i. I nd AS 21 - The Effects of Changes in Foreign Exchange Rates
ii. Ind AS 12 - Income Taxes
Applications of the above standards are not expected to have any significant impact on the Company''s financial statements.
Mar 31, 2017
1.1. Property, Plant & Equipment
(a) On transition to Ind AS, the Company has elected to continue with the previous GAAP carrying values as deemed cost for all items of property, plant and equipment.
(b) Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost, any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and arrangements arising from exchange rate variations attributable to the assets and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
(c) The tangible assets at cellular sites, which are ready for use during the particular month are capitalised on the last day of the month.
(d) Advances paid towards acquisition of fixed assets are disclosed as Capital Advances under Loans and Advances and cost of assets not ready for use before the year-end, are disclosed as capital work in progress.
(e) Depreciation on Fixed Assets is provided to the extent of depreciable amount on Straight Line Method over the useful life of the assets as prescribed in schedule II to the Companies Act, 2013 except in respect of following Fixed Assets where the assessed useful life is different than that prescribed in Schedule II.
The management believes that the useful lives as given above represent the period over which these assets are expected to be used.
(f) The towers have been depreciated on straight line method at the rate of 2.72% per annum based on useful life of 35 years in terms of specific approval received from the Ministry of Corporate Affairs, Government of India vide Order no.45/2/2010-CL-III dated May 26, 2010 issued under Section 205(2)(d) of the Companies Act, 1956.The approval continues to be valid vide letter no.51/9/2014-CL-III dated September 19, 2014 received from Ministry of Corporate Affairs, Government of India.
(g) Further, In respect of Fixed Assets whose actual cost does not exceed Rs.5,000, depreciation is provided at 100% in the year of addition
(h) The leasehold improvements have been depreciated over the lease period.
(i) The revised carrying amount of the assets identified as impaired have been depreciated over residual useful life of the respective assets
(j) The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
(k) Gains or losses arising from disposal of tangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is disposed.
1.2. Intangible Assets
On transition to Ind AS, the Company has elected to continue with the previous GAAP carrying values as deemed cost.
Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation and impairment loss, if any. The cost comprises purchase price, borrowing cost, and any cost directly attributable to bringing the asset to its working condition for the intended use.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposable proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and loss when the asset is derecognised.
The Company amortises intangible assets using the straight line method based on useful lives estimated by the management as mentioned below:
Computer Software 3 years
1.3. Impairment of Non-Financial Assets
At each balance sheet, the Company assesses whether there is any indication that any property, plant and equipment and intangible asset may be impaired, if any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
For the purpose of impairment testing, the recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGUs to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of profit and loss. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
1.4. Inventories
Inventories are valued at cost or net realisable value, whichever is lower. Cost is determined on weighted average basis and includes cost of purchase and other costs incurred in bringing inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
1.5. Cash and cash equivalent
Cash and cash equivalent in the balance sheet comprise cash at banks, on hand, cheques in hand, funds in transit and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
1.6. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
I) Financial assets
A. Initial recognition and measurement
All financial assets are initially recognised at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets, which are not at fair value through profit or loss are adjusted to the fair value on initial recognition. Purchase and sale of financial asset are recognised using trade date accounting i.e. the date that the Company commits to purchase or sell the asset.
B. Subsequent measurement
i) Financial Assets carried at amortised cost (AC)
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect the contractual cash flows and the contractual terms of the financial asset give rise on the specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. This category applies to Trade and other receivables, Security deposits, Other advance, Loan and advances to related parties, Unbilled Income, Interest Receivable etc.
ii) Financial Assets at Fair Value through Other Comprehensive Income (FVTOCI)
A financial asset is subsequently measured at Fair Value through other Comprehensive Income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial assets give rise on specified debts to cash flows that are solely payments of principal and interest on the principal amount outstanding.
iii) Financial Assets at Fair Value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories is subsequently fair valued through profit or loss
C. Equity investments
All equity investments other than investment in Subsidiary and Associate are measured at fair value, with value changes recognised in Statement of Profit and loss except for those equity investments for which the Company has elected to present the value changes in âother comprehensive incomeâ
The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
D. Investment in subsidiaries and associates
The Company has accounted for its investments in subsidiaries and associates at cost in financial statements
E. Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Companyâs balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
F. Impairment of financial assets
The Company assesses impairment based on expected credit loss (ECL) model to the following
a) Financial assets at amortised cost
b) Financial assets measured at fair value through Profit or Loss Account
The Company follows simplified approach for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risks. Rather, it recognises impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition.
The Company uses historical cost experience to determine the impairment loss allowance on the portfolio of trade receivables. At every reporting date, the historically observed default rates are updated and changes in the forward looking estimates are analysed.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
II. Financial liabilities
A. Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
B. Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
a) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk is recognized in OCI. These gains/ loss are not subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit and loss. The Company has not designated any financial liability as at fair value through profit or loss.
b) Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised or through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
This category generally applies to borrowings.
c) Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
d) Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another, from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
III. Embedded derivatives
An embedded derivative is a component of a hybrid (combined) contract that also includes a non-derivative host contract - with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative causes some or all of the cash flows that otherwise would be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss.
If the hybrid contract contains a host that is a financial asset within the scope of Ind AS 109, the Company does not separate embedded derivatives. Rather, it applies the classification requirements contained in Ind AS 109 to the entire hybrid contract. Derivatives embedded in all other host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss, unless designated as effective hedging instruments.
IV. Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Companyâs senior management determines change in the business model as a result of external or internal changes which are significant to the Companyâs operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
V. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.7. Provisions, Contingent Liabilities, Contingent Assets and Commitments
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using equivalent period government securities interest rate. Unwinding of the discount is recognised in the statement of profit and loss as a finance cost. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Information on contingent liability is disclosed in the Notes to the Financial Statements. Contingent assets are not recognised. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognised as an asset.
1.8. Fair value measurement
âThe Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) In the absence of a principal market, in the most advantageous market for the asset or liability.â
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy.
1.9. Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured regardless of when the proceeds are being received. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes and duties collected on behalf of the Government.
Revenue from operations includes revenue for use of infrastructure facilities and energy revenue for the provision of energy for operation sites. Revenue for use of infrastructure (which is termed as âRevenue from Telecom / Network Infrastructure Facilitiesâ) and revenue from Energy and Other Re-imbursements is recognized as and when services are rendered, on a monthly basis as per the contractual terms under agreements entered with customers. The Company has ascertained that the revenue for use of infrastructure facilities is structured to increase in line with expected inflationary increase in cost of the Company and hence, not straight-lined.
Interest income
Interest Income from financial assets is recognised when it is probable that the economic benefit will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
Dividends
Income from dividends is recognised when the Companyâs right to receive the dividend has been established.
1.10. Leases
Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
i. Company as a lessee Operating lease:
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight line basis unless payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increase; such increases are recognised in the year in which such benefits accrue.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
ii. Company as a lessor Operating lease:
Rental income from operating lease is recognised on a straight line basis over the lease term unless payments to the Company are structured to increase in line with expected general inflation to compensate for the Companyâs expected increase in inflationary cost; such increases are recognised in the year in which such benefits accrue. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term. Contingent rents are recognised as revenue in the period in which they are earned.
1.11.Employee benefits
Short Term Employee Benefits
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by the employees are recognised as an expense during the year when the employees render the services.
Post-Employment Benefits Defined Contribution Plan
A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contributions towards Provident Fund, Pension Scheme. The Companyâs contribution is recognised as an expense in the Profit and Loss Statement during the period in which the employee renders the related service.
Defined Benefit Plan
The liability in respect of defined benefit plans and other post-employment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees âservices.
Re-measurement of defined benefit plans in respect of postemployment and other long term benefits are charged to the other Comprehensive Income.
1.12.Foreign currency transactions
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of the following:
Foreign exchange differences arising on translation of liabilities assumed before April 01, 2016 which are considered as long-term foreign currency monetary items are capitalised, if related to acquisition of fixed assets, or transferred to Foreign Currency Monetary Item Translation Difference Account and amortized over the balance period of such long term Foreign Currency Monetary items but not beyond March 31, 2020.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the transactions.
1.13.Borrowing Costs
Borrowing Costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
1.14.Taxes
Tax expense represents the sum of current tax (including income tax for earlier years) and deferred tax. Tax is recognised in the statement of profit and loss, except to the extent that it relates to items recognised directly in equity or other comprehensive income, in such cases the tax is also recognised directly in equity or in other comprehensive income. Any subsequent change in direct tax on items initially recognised in equity or other comprehensive income is also recognised in equity or other comprehensive income.
Current tax provision is computed for Income calculated after considering allowances and exemptions under the provisions of the applicable Income Tax Laws. Current tax assets and current tax liabilities are off set, and presented as net.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised. Deferred tax assets and liabilities are measured at the applicable tax rates.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilised.
1.15. Earnings per share
The earnings considered in ascertaining the Companyâs Earnings Per Share (EPS) is the net profit/ (loss) after tax. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the period/year. The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless the effect of the potential dilutive equity shares is anti-dilutive.
1.16. Current and Non Current Classification
âThe Company presents assets and liabilities in statement of financial position based on current/non-current classification.
The Company has presented non-current assets and current assets before equity, non-current liabilities and current liabilities in accordance with Schedule III, Division II of Companies Act, 2013 notified by Ministry of Corporate Affairs (MCA).â
âAn asset is classified as current when it is:
a) Expected to be realised or intended to be sold or consumed in normal operating cycle,
b) Held primarily for the purpose of trading,
c) Expected to be realised within twelve months after the reporting period, or
d) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.â
âA liability is classified as current when it is:
a) Expected to be settled in normal operating cycle,
b) Held primarily for the purpose of trading,
c) Due to be settled within twelve months after the reporting period, or
d) There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.â
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Deferred tax assets and liabilities are classified as non-current assets and liabilities. The Company has identified twelve months as its operating cycle.
Mar 31, 2015
I. Basis of Preparation of Financial Statements:
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP),including the Accounting Standards notified under the
relevant provisions of the Companies Act, 2013 as adopted consistently
by the Company. The financial statements have been prepared on going
concern basis under the historical cost convention on accrual basis.
ii. Use of Estimate:
The preparation of financial statements in conformity with Indian GAAP
requires judgements,estimates and assumptions to be made that affect
the reported amount of assets and liabilities,disclosures of contingent
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. The
difference between the actual results and estimates are recognised in
the year in which the results are known / materialised.
iii. Revenue Recognition:
a. Revenue from Infrastructure / Equipment provisioning is recognised
in accordance with the Contract / Agreement entered into. Revenues are
recognised when it is earned and no significant uncertainty exists as
to its ultimate collection and includes service tax, wherever
applicable.
b. Interest income is recognised on a time proportion basis. Dividend
is considered when the right to receive is established.
iv. Fixed Assets:
a. Fixed Assets are stated at cost net of eligible Cenvat and VAT less
accumulated depreciation, amortisation and impairment loss, if any. All
costs attributable to acquisition and/or construction, including
borrowing costs upto the date asset is ready to use and exchange
difference on Long Term Foreign Currency Monetary Items related to
fixed assets are capitalised.
b. The Fixed Assets at the cellular sites, which are ready to use
during a particular month are capitalised on the last day of that
month.
c. Expenses incurred relating to project, prior to commencement of
commercial operation, are considered as pre operative expenditure and
shown under Capital Work-in-Progress.
v. Depreciation:
a. Depreciation on Fixed Assets is provided to the extent of
depreciable amount on Straight Line Method over the useful life of the
assets as prescribed in schedule II to the Companies Act, 2013 except
in respect of following Fixed Assets where the assessed useful life is
different than those prescribed in Schedule II.
i) Assets with lower assessed useful life
Sr. Asset Years
i. Network Operation Assets 9
ii. Air Conditioners 9
iii. Electrical & Power Supply Equipments 9
iv. Office Equipments 3
v Furniture & Fittings 5
vi. Vehicles 5
The management believes that the useful lives as given above represent
the period over which these assets are expected to be used.
ii) The towers have been depreciated on straight line method at the
rate of 2.72% per annum based on useful life of 35 years in terms of
specific approval received from the Ministry of Corporate Affairs,
Government of India vide Order no.45/2/2010-CL-III dated May 26, 2010
issued under Section 205(2)(d) of the Companies Act, 1956. The approval
continues to be valid vide letter no.51/9/2014-CL-III dated September
19, 2014 received from Ministry of Corporate Affairs, Government of
India.
iii) In respect of Fixed Assets whose actual cost does not exceed Rs.
5,000, depreciation is provided at 100% in the year of addition.
b. The leasehold improvements have been depreciated over the lease
period.
c. In respect of additions forming an integral part of existing assets
and exchange difference capitalised, depreciation has been provided
over residual life of the respective fixed assets.
d. The revised carrying amount of the assets identified as impaired
have been depreciated over residual useful life of the respective
assets.
vi. Intangible Assets:
Intangible Assets are stated at cost of acquisition less accumulated
amortisation. Software which is not an integral part of the related
hardware is classified as an Intangible Asset and is amortised over
three years.
vii. Impairment of Assets:
The carrying amount of assets is reviewed at each Balance Sheet date,
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
asset exceeds its recoverable value. An impairment loss is charged to
the Statement of Profit and Loss in the year in which an asset is
identified as impaired. The impairment loss recognised in prior
accounting periods is reversed if there has been a change in the
estimate of recoverable amount.
viii. Investments:
Current Investments are carried at the lower of cost or quoted / fair
value computed script wise. Long Term Investments are stated at cost.
Provision for diminution in the value of long term investments is made
only if such decline is other than temporary.
ix. Assignment of Recoverables:
In case of assignment of recoverables, the amounts are derecognised
when all the rights and titles in receivables are assigned. The charges
paid on assignment are charged to Statement of Profit & Loss.
x. Inventory of Stores, Spares and Consumables:
Inventory of stores, spares and consumables are accounted for at costs,
determined on weighted average basis, or net realisable value,
whichever is less.
xi. Foreign Currency Transactions:
a. Transactions in Foreign Currencies are normally recorded at the
exchange rate prevailing on the date of the transaction.
b. Monetary items denominated in Foreign Currency at the Balance Sheet
date are restated at the exchange rates prevailing at the Balance Sheet
date. In case of monetary items which are covered by forward exchange
contracts, the difference between the exchange rates prevailing at the
Balance Sheet date and rate on the date of the contract is recognised
as exchange difference in the Statement of Profit & Loss and the
premium paid on forward contracts has been recognised over the life of
the contract.
c. Non monetary Foreign Currency items are carried at cost.
d. Gains or losses on account of exchange difference either on
settlement or on translation are recognised in the Statement of Profit
and Loss except in respect of Long Term Foreign Currency Monetary Items
which, if related to acquisition of depreciable fixed assets, are
adjusted to the carrying cost of the depreciable fixed assets and in
other cases transferred to Foreign Currency Monetary Item Translation
Difference Account and amortised over the balance period of such long
term Foreign Currency Monetary items but not beyond March 31,2020
xii. Employee Benefits:
a. Short-term employee benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit & Loss of the year in
which the related service is rendered.
b. Post employment and other long term employee benefits are
recognised as an expense in the Statement of Profit and Loss for the
year in which the employee has rendered services. The expense is
recognised at the present value of the amount payable determined using
actuarial valuation techniques based on projected unit credit method.
Actuarial gains and losses in respect of post employment and other long
term benefits are charged to the Statement of Profit & Loss.
c. In respect of employee's stock options, the excess of market price
on the date of grant over the exercise price is recognised as deferred
employee compensation expense amortised over vesting period.
xiii. Borrowing Costs:
Borrowing costs include interest,amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Borrowing cost attributable to the acquisition or
construction of a qualifying asset (net of income earned on temporary
deployment of funds) are capitalised as a part of the cost of such
assets upto the date when such assets are ready for their intended use.
All other borrowing costs are charged to Statement of Profit & Loss.
xiv. Leases:
In respect of operating leases, lease rentals are expensed with
reference to the terms of lease and other considerations except for
lease rentals pertaining to the period upto the asset is put to use,
which are capitalised.
xv. Provision for Current and Deferred Tax:
a. Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income-tax Act, 1961.
b. Deferred tax resulting from the timing differences between taxable
and accounting income is accounted for using the tax rates and laws
that are enacted or substantively enacted as on the Balance Sheet date.
The deferred tax asset is recognized and carried forward only to the
extent that there is a virtual certainty that the assets will be
realised against future taxable profits.
xvi. Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognised but are disclosed in the
financial statements. Contingent Assets are neither recognised nor
disclosed in the financial statements.
xvii. Financial Derivatives Hedging Transactions:
In respect of derivatives contracts, premium paid, provision for losses
on restatement and gains / losses on settlement are recognised in the
Statement of Profit and Loss.
xviii. Issue Expenses:
Expenses related to issue of equity and equity related instruments are
adjusted against the Securities Premium Reserve Account.
xix. Premium on Redemption of Bonds/Debentures
Premium on redemption of bonds/debentures, net of tax impact, is
adjusted against the Securities Premium Reserve Account.
xx. Provision for Doubtful receivables and Loans and Advances:
Provision is made in the accounts for doubtful receivables and loans
and advances in cases where the management considers the debts, loans
and advances, to be doubtful of recovery.
xxi. Cash & Cash Equivalents
Cash &Cash Equivalents for the purpose of Cash flow Statement comprises
Cash at bank and in hand, cheques in hand, funds in transit and demand
deposits with banks having maturity of less than 3 months.
Mar 31, 2014
I. Basis of Preparation of Financial Statements:
The Accounts have been prepared on a going concern basis under
historical cost convention on accrual basis and in accordance with the
generally accepted accounting principles in India and the provisions of
Companies Act, 1956.
ii. Use of Estimate:
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. The
difference between the actual results and estimates are recognised in
the year in which the results are known / materialised.
iii. Revenue Recognition:
a. Revenue from Infrastructure / Equipment provisioning is recognised
in accordance with the Contract / Agreement entered into. Revenues are
recognised when it is earned and no significant uncertainty exists as
to its ultimate collection and includes service tax, wherever
applicable.
b. Interest income is recognised on a time proportion basis. Dividend
is considered when the right to receive is established.
iv. Fixed Assets:
a. Fixed Assets are stated at cost net of eligible Cenvat and VAT less
accumulated depreciation, amortisation and impairment loss, if any. All
costs, including borrowing costs up to the date asset is ready to use
and exchange difference on Long Term Foreign Currency Monetary Items
related to fixed assets are capitalised.
b. The Fixed Assets at the cellular sites, which are ready to use
during a particular month are capitalised on the the last day of that
month.
c. Expenses incurred relating to project, prior to commencement of
commercial operation, are considered as pre operative expenditure and
shown under Capital Work In Progress.
v. Depreciation:
a. Depreciation on Fixed Assets is provided on Straight Line Method at
the rates and in the manner prescribed in schedule XIV to the Companies
Act, 1956 except in respect of certain Fixed Assets where the higher
rates are applicable considering the estimated useful life as mentioned
below and Towers:
b. The towers have been depreciated on straight line method at the rate
of 2.72% per annum in terms of specific approval received from the
Ministry of Corporate Affairs, Government of India vide Order
no.45/2/2010-CL-III dated May 26, 2010 issued under Section 205(2)(d)
of the Companies Act, 1956.
c. The leasehold improvements have been depreciated over lease period.
d. In respect of additions forming an integral part of existing assets
and exchange difference capitalised, depreciation has been provided
over residual life of the respective fixed assets.
e. In respect of Fixed Assets whose actual cost does not exceed Rs.
5,000, depreciation is provided at 100% in the year of addition.
f. In respect of Fixed Assets acquired upon demerger pursuant to the
Scheme of Arrangement between GTL Infrastructure Limited and GTL
Limited, depreciation is provided for the balance period of economic
useful life of those assets.
g. The revised carrying amount of the assets identified as impaired
have been depreciated over residual life of the respective assets.
vi. Intangible Assets:
Intangible Assets are stated at cost of acquisition less accumulated
amortisation. Software which is not an integral part of the related
hardware is classified as an Intangible Asset and is amortised over
three years.
vii. Impairment of Assets:
The carrying amount of assets is reviewed at each Balance Sheet date if
there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
asset exceeds its recoverable value. An impairment loss is charged to
the Statement of Profit and Loss in the year in which the carrying
amount of an asset exceeds its recoverable amount. The impairment loss
recognised in prior accounting periods is reversed if there is a change
in the estimate of recoverable amount.
viii. Investments:
Current Investments are carried at the lower of cost or quoted / fair
value computed script wise. Long Term Investments are stated at cost.
Provision for diminution in the value of long term investments is made
only if such decline is other than temporary.
ix. Assignment of Recoverables:
In case of assignment of recoverables, the amounts are derecognised
when all the rights and titles in receivables are assigned. The charges
paid on assignment are charged to Statement of Profit & Loss.
x. Inventory of Stores, Spares and Consumables:
Inventory of stores, spares and consumables are accounted for at costs,
determined on weighted average basis, or net realisable value,
whichever is less.
xi. Foreign Currency Transactions:
a. Transactions in Foreign Currencies are normally recorded at the
exchange rate prevailing on the date of the transaction.
b. Monetary items denominated in Foreign Currency at the Balance Sheet
date are restated at the exchange rates prevailing at the Balance Sheet
date. In case of the items which are covered by forward exchange
contracts, the difference between the exchange rates prevailing at the
Balance Sheet date and rate on the date of the contract is recognised
as exchange difference. The premium on forward contracts is amortised
over the life of the contract.
c. Non monetary Foreign Currency items are carried at cost.
d. Gains or losses on account of exchange difference either on
settlement or on translation are recognised in the Statement of Profit
and Loss except in respect of Long Term Foreign Currency Monetary Items
which, if related to acquisition of depreciable fixed assets, are
adjusted to the carrying cost of the depreciable fixed assets and in
other cases transferred to Foreign Currency Monetary Item Translation
Difference Account and amortised over the balance period of such long
term Foreign Currency Monetary items but not beyond March 31,2020
xii. Employee Benefits:
a. Short-term employee benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit & Loss of the year in
which the related service is rendered.
b. Post employment and other long term employee benefits are recognised
as an expense in the Statement of Profit and Loss for the year in which
the employee has rendered services. The expense is recognised at the
present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to the Statement of
Profit & Loss.
c. In respect of employee''s stock options, the excess of market price
on the date of grant over the exercise price is recognised as deferred
employee compensation expense amortised over vesting period.
xiii. Borrowing Costs:
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset (net of income earned on temporary deployment of
funds) are capitalised as a part of the cost of such assets. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to Statement of Profit & Loss.
xiv. Leases:
In respect of operating leases, lease rentals are expensed with
reference to the terms of lease and other considerations except for
lease rentals pertaining to the period up to the asset is put to use,
which are capitalised.
xv. Provision for Current and Deferred Tax:
a. Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income-tax Act, 1961.
b. Deferred tax resulting from the timing differences between taxable
and accounting income is accounted for using the tax rates and laws
that are enacted or substantively enacted as on the Balance Sheet date.
The deferred tax asset is recognized and carried forward only to the
extent that there is a virtual certainty that the assets will be
realised in the future.
xvi. Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognised but are disclosed in the
notes. Contingent Assets are neither recognised nor disclosed in the
financial statements.
xvii. Financial Derivatives Hedging Transactions:
In respect of derivatives contracts, premium paid, provision for losses
on restatement and gains / losses on settlement are recognised in the
Statement of Profit and Loss.
xviii. Issue Expenses:
Expenses related to issue of equity and equity related instruments are
adjusted against the Securities Premium Account.
xix. Premium on Redemption of Bonds/Debentures
Premium on redemption of bonds / debentures, net of tax impact, is
adjusted against the Securities Premium Account.
xx. Provision for Doubtful receivables and Loans and Advances:
Provision is made in the accounts for doubtful receivables and loans
and advances in cases where the management considers the debts, loans
and advances, to be doubtful of recovery.
2.2 Terms / rights attached to equity shares
The Company has only one class of equity shares having par value of Rs.
10 per share. Each holder of equity shares is entitled to one vote per
share. In the event of liquidation of the Company, the holders of
equity shares will be entitled to receive any of the remaining assets
of the Company, after distribution of all the preferential amounts. The
distribution will be in proportion to the number of equity shares held
by the shareholders.
2.3 Shares reserved for issue under options :
(i) The Employee Stock Option Schemes (ESOS) holders under the ESOS
have the option to exercise/convert ESOS into Nil Equity Shares
(Previous Year 13,465,454)
(ii) The Foreign Currency Convertible Bonds (FCCB) holders have the
option to convert FCCB into 1,207,031,848 Equity Shares (Previous Year
1,115,163,217) (Refer Note No. 4.3)
(iii) Refer note No. 34 in respect of Shares to be issued pursuant to
the Scheme of Arrangement
3.1 As approved by the Shareholders in the Annual General Meeting held
on September 17, 2013, during the year the Company has cancelled
13,465,454 options which were in force and closed "GTL Infrastructure
Limited- Employee Stock Option Scheme 2005 (ESOS 2005)". Accordingly
Employee Share Option Outstanding amounting to Rs. 105,966,938 has been
credited to Surplus/Deficit account of the Company
4.1 Rupee Term Loans from Banks & Financial Institutions are secured by
way of
(i) Mortgage by first pari-passu charge on all immovable assets, both
present and future and on all movable assets, both present and future,
including first floating charge on all the current assets of the
Company.
(ii) Sponsor support from Global Holding Corporation Private Limited
(GHC) and guarantee of Mr. Manoj Tirodkar (Promoter) towards debt
servicing of CDR Lenders and personal gurantee aggregating to Rs.
6,010,400,000 by Mr. Manoj Tirodkar.
4.2 Terms of Repayment
(i) Rupee Term Loans from Banks and Financial Institutions and Current
Maturities of Long-term borrowings having an effective yield of 10.75%
over the tenure of the facility aggregating to Rs. 30,453,009,958 are
repayable in 53 structured quarterly instalments starting from June 30,
2013 and ending on June 30, 2026
(ii) Rupee Term Loans from Banks and Financial Institutions and Current
Maturities of Long-term borrowings having an Interest rate of 3% p.a
aggreegating to Rs. 2,070,946,959 are repayable in 16 structured
quarterly instalments starting from June 30, 2013 and ending on March
31,2017
(iii) Rupee Term Loans from Banks having an Interest rate of 8% p.a
aggregating to Rs. 2,112,575,718 are repayble only after the Final
Settlement date of all other restructured Loans, i.e., June 30, 2026.
(iv) The Foreign Currency Term Loan and Current Maturities of Long term
borrowings relating to Foreign Currency Term Loan are repayable in 32
equated quarterly instalments of Euro 375,000 starting from June 15,
2013 and ending on March 15, 2021. The loan carries Interest rate of 3
months Euribor 200 bps.
4.3 Foreign Currency Convertible Bonds (FCCBs) :
(i) In terms of Offering Circular dated October 17, 2012 ("Offering
Circular"), on November 8, 2012 outstanding Foreign Currency
Convertible Bonds (FCCBs) of US$ 228,300,000 together with premium of
US$ 90,986,000 on them aggregating to US$ 319,286,000 were restructured
by way of cashless exchange with 111,740 Zero Coupon Compulsorily
Convertible Bonds due 2017 (Series A) and 207,546 Interest Bearing
Convertible Bonds due 2017 (Series B) of US$ 1,000 each.
(ii) Series A and Series B Bondholders have an option to convert these
bonds into equity shares at a fixed exchange ratio of 1 US$=Rs. 54.252 at
any time upto the Close of Business on November 2, 2017 ("Maturity
Date") except during the ''closed period'' as defined in the ''Offering
Circular''.
(iii) Series A Bonds of US$ 111,740,000 are compulsorily convertible
into equity shares with Bondholders having an option to convert each
bond into 5,425.20 fully paid up equity shares of Rs. 10 each. As on
March 31,2014, 52,422 Series A Bonds were outstanding.
(iv) The Series B Bonds of US$ 207,546,000 are interest bearing
optionally convertible bonds. Each bond carries an Interest at the rate
of 0.5335% p.a. payable semi annually on the outstanding principal plus
the margin for period under consideration with effect from November 8,
2013 as defined in Offering Circular. The Conversion Price shall be
determined in terms of ''Offering Circular''. As on date, applicable
Conversion Price for each Bond is Rs. 11.38 per equity share, accordingly
Series B Bondholder have an option to convert each bond into 4,767.31
fully paid up equity shares of Rs. 10 each. As on March 31,2014, 193,533
Series B Bonds were outstanding.
(v) Unless previously converted, redeemed, repurchased or cancelled,
the Company will redeem each Series B Bond at 114.5047% of its
principal amount on the maurity date i.e November 9, 2017.
4.4 Pursuant to Trust Deeds dated November 8, 2012 executed between the
Company and the Trustee, constituting
US$ 111,740,000 Zero Coupon Compulsorily Convertible Bonds due 2017
(Series A Bonds) and US$ 207,546,000
Interest Bearing Convertible Bonds due 2017 (Series B Bonds)
respectively, the Company has cancelled fractional
Series A Bonds of US$11,000 and fractional Series B Bonds of US$ 10,000
(aggregating US$ 21,000).
10.7 Impairment of Assets
The Company, during the year, carried out an annual exercise of
identifying assets that may have been impaired in accordance with the
Accounting Standard AS 28 "Impairment of Assets". Considering the
continued unfavourable telecom environment prevailing in the country
and consequential under utilization of passive telecom infrastructure,
the management has identified certain plant & equipments (including
those under installation) as impaired. Accordingly, an impairment of Rs.
1,302,069,866/- (Previous Year Rs. 2,211,353,763/-) (including CWIP of Rs.
974,975,545/- (Previous Year Rs. 351,861,506/-)) has been charged to the
Statement of Profit & Loss.
11.2 The Company is the sole beneficiary in the Tower Trust and has
contributed as at March 31,2014Rs.18,162,277,122 (Previous Year Rs.
18,157,224,000) towards the Corpus of the said Trust. The Trust has
invested the aforesaid amount in "Chennai Network Infrastructure
Ltd." (CNIL) a special purpose vehicle (SPV) and holds 1,815,722,400
Equity Shares of Rs. 10 each (Previous Year 1,815,722,400) representing
27.53% (Previous Year 28.84%) of total issued and paid up Equity Share
Capital of CNIL as on March 31,2014
11.3 Based on the latest available Audited Financial Statements of the
Investee companies, the book value per share is considerably less than
cost. However in the opinion of the Management, having regard to the
long-term nature of the business and future plans of action, there is
no diminution in the value of investments which is other than temporary
and hence no provision for diminution in the value of non-current
investments has been considered.
11.3 Refer Note No. 1 (viii) for basis of valuation
12.1 As per the Business Purchase Agreement of July 2010 between Aircel
and the Company, in order to meet their planned deployment of 20,000
contracted tenancies under Right of First Refusal (ROFR), the Company
had placed orders on various parties to procure tower assets and made
advances against those orders. Since the beginning of year 2012, the
telecom scenario in the Country changed drastically due to cancellation
of 122 2G licenses by the Hon''ble Supreme Court, slower 2G & 3G growth,
failure of spectrum auctions and general economic slowdown. As a
result, Aircel failed to honor its ROFR commitment to the Company and
since the telecom scenario further worsened, the Company did not lift
the materials against those orders for capital goods to various
vendors. The Company is negotiating with the vendors for the recovery
of these advances and the management is confident of recovering
substantial amount from the vendors but as a matter of prudence and
based on the best estimates a provision for doubtful advances of Rs.
600,000,000 (Previous year Rs. 1,332,100,863) has been made which has
been disclosed as an exceptional item in the statement of profit and
loss.
17.1 During earlier years, as legally advised, the Company''s Cenvat
credit aggregating to Rs. 799,256,619/- was utilised for discharging
service tax liability of Chennai Network Infrastructure Limited (CNIL),
the then Subsidiary Company and now, an associate which is in the
process of merger with the Company. Subsequently, during the year CNIL
has paid the same to the Service Tax Authority under Voluntary
Compliance Encouragement Scheme (VCES). In this regard the Company has
already filed a writ petition in High Court of judicature at Mumbai for
seeking restoration of this cenvat credit. Further, CNIL has also given
an undertaking to the Company to make good the entire amount in case
the Company''s claim of restoration stands rejected or not fully
allowed.
22.1 Employee Benefits:
As per Accounting Standard 15 "Employee Benefits" the disclosure of
Employee Benefit, as defined in Accounting Standard are given below:
Defined Benefit Plan
The employee''s Gratuity Fund Scheme, which is a defined benefit plan,
is managed by the Trust maintained with Life Insurance Corporation of
India [LIC]. The present value of obligation is determined based on
actuarial valuation using Projected Unit Credit Method, which
recognises each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation. The obligation for compensated absences is
recognised in same manner as gratuity.
a. Reconciliation of opening and closing balances of the present value
of the defined benefit obligation
Mar 31, 2013
I. Basis of preparation of Financial statements:
The Accounts have been prepared on a going concern basis under
historical cost convention on accrual basis and in accordance with the
generally accepted accounting principles in India and the provisions of
Companies Act'' 1956.
ii. use of estimate:
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. The
difference between the actual results and estimates are recognised in
the year in which the results are known/materialised.
iii. Revenue Recognition:
a. Revenue from Infrastructure/Equipment provisioning is recognised in
accordance with the Contract/ Agreement entered into. Revenues are
recognised when it is earned and no significant uncertainty exists as
to its ultimate collection and includes service tax'' wherever
applicable.
b. Interest income is recognised on a time proportion basis. Dividend
is considered when the right to receive is established.
iv. Fixed Assets:
a. Fixed Assets are stated at cost net of eligible Cenvat and VAT less
accumulated depreciation'' amortisation and impairment loss'' if any. All
costs'' including borrowing costs up to the date asset is ready to use
and exchange difference on Long-Term Foreign Currency Monetary Items
related to fixed assets are capitalised.
b. The Fixed Assets at the cellular sites'' which are ready to use
during a particular month are capitalised on the last day of that
month.
c. Expenses incurred relating to project'' prior to commencement of
commercial operation'' are considered as pre-operative expenditure and
shown under Capital Work-In-Progress.
v. Depreciation:
a. Depreciation on Fixed Assets is provided on Straight Line Method at
the rates and in the manner prescribed in Schedule XIV to the Companies
Act'' 1956 except in respect of certain Fixed Assets where the higher
rates are applicable considering the estimated useful life as mentioned
below and Towers:
b. The towers have been depreciated on straight line method at the
rate of 2.72% per annum in terms of specific approval received from
Ministry of Corporate Affairs'' Government of India vide Order
no.45/2/2010-CL-III dated May 26'' 2010 issued under Section 205(2)(d)
of the Companies Act'' 1956.
c. The leasehold improvements have been depreciated over lease period.
d. In respect of additions forming an integral part of existing assets
and exchange difference capitalised'' depreciation has been provided
over residual life of the respective fixed assets.
e. In respect of Fixed Assets whose actual cost does not exceed Rs.
5''000'' depreciation is provided at 100% in the year of addition.
f. In respect of Fixed Assets acquired upon demerger pursuant to the
Scheme of Arrangement between GTL Infrastructure Limited and GTL
Limited'' depreciation is provided for the balance period of economic
useful life of those assets.
g. The revised carrying amount of the assets identified as impaired
have been depreciated over residual life of the respective assets.
vi. Intangible Assets:
Intangible Assets are stated at cost of acquisition less accumulated
amortisation. Software which is not an integral part of the related
hardware is classified as an Intangible Asset and is amortised over the
useful life of three years.
vii. Impairment of Assets:
The carrying amount of assets is reviewed at each Balance Sheet date if
there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of
assets exceeds its recoverable value. An impairment loss is charged to
the Statement of Profit and Loss in the year in which the carrying
amount of an asset exceeds its recoverable amount. The impairment loss
recognised in prior accounting periods is reversed if there is a change
in the estimate of recoverable amount.
viii. Investments:
Current Investments are carried at the lower of cost or quoted/fair
value computed scrip wise'' Long-Term Investments are stated at cost.
Provision for diminution in the value of long-term investments is made
only if such decline is other than temporary.
ix. Assignment of Recoverables:
In case of assignment of recoverables'' the amounts are derecognised
when all the rights and titles in receivables are assigned. The charges
paid on assignment are charged to Statement of Profit and Loss.
x. Inventory of stores'' spares and consumables:
Inventory of stores'' spares and consumables are accounted for at costs''
determined on weighted average basis'' or net realisable value''
whichever is less.
xi. Foreign currency transactions:
a. Transactions in Foreign Currencies are normally recorded at the
exchange rate prevailing on the date of the transaction.
b. Monetary items denominated in Foreign Currency at the Balance Sheet
date are restated at the exchange rates prevailing at the Balance Sheet
date. In case of the items which are covered by forward exchange
contracts'' the difference between the exchange rates prevailing at the
Balance Sheet date and rate on the date of the contract is recognised
as exchange difference. The premium on forward contracts is amortised
over the life of the contract.
c. Non monetary Foreign Currency items are carried at cost.
d. Gains or losses on account of exchange difference either on
settlement or on translation are recognised in the Statement of Profit
and Loss except in respect of Long-Term Foreign Currency Monetary Items
which'' if related to acquisition of depreciable fixed assets'' are
adjusted to the carrying cost of the depreciable fixed assets and in
other cases transferred to Foreign Currency Monetary Item Translation
Difference Account and amortised over the balance period of such
Long-term Foreign Currency Monetary items but not beyond March 31''
2020.
xii. employee Benefits:
a. Short-term employee benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit and Loss of the year in
which the related service is rendered.
b. Post employment and other long-term employee benefits are
recognised as an expense in the Statement of Profit and Loss for the
year in which the employee has rendered services. The expense is
recognised at the present value of the amount payable determined using
actuarial valuation techniques. Actuarial gains and losses in respect
of post employment and other long-term benefits are charged to the
Statement of Profit and Loss.
c. In respect of employeeÂs stock options'' the excess of market price
on the date of grant over the exercise price is recognised as deferred
employee compensation expense amortised over vesting period.
xiii. Borrowing costs:
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset (net of income earned on temporary deployment of
funds) are capitalised as a part of the cost of such assets. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to Statement of Profit and Loss.
xiv. leases:
In respect of operating leases'' lease rentals are expensed with
reference to the terms of lease and other considerations except for
lease rentals pertaining to the period up to the asset put to use''
which are capitalised.
xv. provision for current and Deferred tax:
a. Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income-tax Act'' 1961.
b. Deferred tax resulting from the timing differences between taxable
and accounting income is accounted for using the tax rates and laws
that are enacted or substantively enacted as on the Balance Sheet date.
The deferred tax asset is recognised and carried forward only to the
extent that there is a virtual certainty that the assets will be
realised in the future.
xvi. provisions'' contingent liabilities and contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognised but are disclosed in the
notes. Contingent Assets are neither recognised nor disclosed in the
financial statements.
xvii. Financial Derivatives Hedging transactions:
In respect of derivatives contracts'' premium paid'' provision for losses
on restatement and gains/losses on settlement are recognised in the
Statement of Profit and Loss.
xviii. Issue expenses:
Expenses related to issue of equity and equity related instruments are
adjusted against the Securities Premium Account.
xix. premium on Redemption of Bonds/Debentures
Premium on redemption of bonds/debentures'' net of tax impact'' is
adjusted against the Securities Premium Account.
xx. provision for Doubtful receivables and loans and Advances:
Provision is made in the accounts for doubtful receivables and loans
and advances in cases where the management considers the debts'' loans
and advances'' to be doubtful of recovery.
Mar 31, 2012
I. Basis of Preparation of Financial Statements:
The Accounts have been prepared on a going concern basis under
historical cost convention on accrual basis and in accordance with the
generally accepted accounting principles in India and the provisions of
Companies Act, 1956.
ii. Use of Estimate:
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions to be made that affect the reported amount of
assets and liabilities on the date of the financial statements and the
reported amount of revenues and expenses during the reporting period.
The difference between the actual results and estimates are recognised
in the year in which the results are known / materialised.
iii. Revenue Recognition:
a. Revenue from Infrastructure / Equipment provisioning is recognised
in accordance with the Contract / Agreement entered into. Revenues are
recognised when it is earned and no significant uncertainty exists as
to its ultimate collection and includes service tax, wherever
applicable.
b. Interest income is recognised on a time proportion basis. Dividend
is considered when the right to receive is established.
iv. Fixed Assets:
a. Fixed Assets are stated at cost net of eligible Cenvat and VAT less
accumulated depreciation, amortisation and impairment loss, if any. All
costs, including borrowing costs up to the date asset is ready to use
are capitalised.
b. The Fixed Assets at the cellular sites, which are ready to use in
the first fifteen days of a month are capitalised on the fifteenth day
of that month, whereas, if they are ready to use in the second half of
a month, they are capitalised on the last day of that month.
c. Expenses incurred relating to project, prior to commencement of
commercial operation, are considered as pre-operative expenditure and
shown under Capital Work In Progress.
v. Depreciation:
b. The towers have been depreciated on Straight Line Method at the
rate of 2.72% per annum in terms of specific approval received from the
Ministry of Corporate Affairs, Government of India vide Order
No.45/2/2010-CL-III dated May 26, 2010 issued under Section 205(2)(d)
of the Companies Act, 1956.
c. The leasehold improvements have been depreciated over lease period.
d. In respect of additions forming an integral part of existing assets
depreciation has been provided over residual life of the respective
fixed assets.
e. In respect of Fixed Assets whose actual cost does not exceed Rs.
5,000, depreciation is provided at 100% in the year of addition.
f. In respect of Fixed Assets acquired upon demerger pursuant to the
Scheme of Arrangement between GTL Infrastructure Limited and GTL
Limited, depreciation is provided for the balance period of economic
useful life of those assets.
vi. Intangible Assets:
Intangible Assets are stated at cost of acquisition less accumulated
amortisation. Software which is not an integral part of the related
hardware is classified as an Intangible Asset and is amortised over the
useful life of three years.
vii. Investments:
Current Investments are carried at the lower of cost or quoted/fair
value computed scrip wise, Long Term Investments are stated at cost.
Provision for diminution in the value of long term investments is made
only if such decline is other than temporary.
viii. Assignment of Recoverables:
In case of assignment of recoverables, the amounts are derecognised
when all the rights and titles in receivables are assigned and charges
paid on assignment are charged to Statement of Profit & Loss.
ix. Inventory of Stores, Spares and Consumables:
Inventory of stores, spares and consumables are accounted for at costs,
determined on weighted average basis, or net realisable value,
whichever is less.
x. Foreign Currency Transactions:
a. Transactions in Foreign Currencies are normally recorded at the
exchange rate prevailing on the date of the transaction.
b. Monetary items denominated in Foreign Currency at the Balance Sheet
date are restated at the exchange rates prevailing at the Balance Sheet
date. In case of the items which are covered by forward exchange
contracts, the difference between the exchange rates prevailing at the
Balance Sheet date and rate on the date of the contract is recognised
as exchange difference. The premium on forward contracts is amortised
over the life of the contract.
c. Non monetary Foreign Currency items are carried at cost.
d. Exchange difference arising on Long Term Foreign Currency Monetary
Items related to acquisition of fixed asset are capitalized and
depreciated over the remaining useful life of the asset.
e. All other exchange differences are recognized as income or expenses
in the period in which they arise.
xi. Employee Benefits:
a. Short-Term employee benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit & Loss of the year in
which the related service is rendered.
b. Post employment and other long term employee benefits are
recognised as an expense in the Statement of Profit and Loss for the
year in which the employee has rendered services. The expense is
recognised at the present value of the amount payable determined using
actuarial valuation techniques. Actuarial gains and losses in respect
of post employment and other long term benefits are charged to the
Statement of Profit & Loss.
c. In respect of employee's stock options, the excess of market price
on the date of grant over the exercise price is recognised as deferred
employee compensation expense amortised over vesting period.
xii. Borrowing Costs:
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset (net of income earned on temporary deployment of
funds) are capitalised as a part of the cost of such assets. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to Statement of Profit & Loss.
xiii. Leases:
In respect of operating leases, lease rentals are expensed with
reference to the terms of lease and other considerations except for
lease rentals pertaining to the period up to the asset put to use,
which are capitalised.
xiv. Provision for Current and Deferred Tax:
a. Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income-tax Act, 1961.
b. Deferred tax resulting from the timing differences between taxable
and accounting income is accounted for using the tax rates and laws
that are enacted or substantively enacted as on the Balance Sheet date.
The deferred tax asset is recognized and carried forward only to the
extent that there is a virtual certainty that the assets will be
realised in the future.
xv. Impairment of Assets:
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Statement of Profit and Loss account in the year in which an asset is
identified as impaired. The impairment loss recognised in prior
accounting period is reversed if there has been a change in the
estimate of recoverable amount.
xvi. Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognised but are disclosed in the
notes. Contingent Assets are neither recognised nor disclosed in the
financial statements.
xvii. Financial Derivatives Hedging Transactions:
In respect of derivatives contracts, premium paid, provision for losses
on restatement and gains / losses on settlement are recognised in the
Statement of Profit and Loss.
xviii. Issue Expenses:
Expenses related to issue of equity and equity related instruments are
adjusted against the Securities Premium Account.
xix. Provision for Doubtful Debts and Loans and Advances:
Provision is made in the accounts for doubtful debts and loans and
advances in cases where the management considers the debts, loans and
advances, to be doubtful of recovery.
Mar 31, 2010
1. Basis of Preparation of Financial Statements:
The Accounts have been prepared on a going concern basis under
historical cost convention on accrual basis and in accordance with the
generally accepted accounting principles in India and the provisions of
Companies Act, 1956.
2. Use of Estimate:
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions to be made that affect the reported amount of
assets and liabilities on the date of the financial statements and the
reported amount of revenues and expenses during the reporting period.
The difference between the actual results and estimates are recognised
in the period in which the results are known / materialised.
3. Revenue Recognition:
a. Revenue from Infrastructure/Equipment provisioning is recognised in
accordance with the Contract/Agreement entered into. Revenues are
recognised when it is earned and no significant uncertainty exists as
to its ultimate collection and includes service tax, wherever
applicable.
b. Interest income is recognised on a time proportion basis. Dividend
is considered when the right to receive is established.
4. Fixed Assets:
a. Fixed Assets are stated at cost net of Cenvat less accumulated
depreciation, amortisation and impairment loss, if any. All costs,
including borrowing costs up to the date asset is put to use are
capitalised.
b. The Fixed Assets at the cellular sites, which are put to use in the
first fifteen days of a month are capitalised on the fifteenth day of
that month, whereas, if they are put to use in the second half of a
month, they are capitalised on the last day of that month.
c. Expenses incurred relating to project, prior to commencement of
commercial operation, are considered as pre-operative expenditure and
shown under Capital Work-in-Progress.
5. Depreciation:
a. Depreciation on Fixed Assets is provided on Straight Line Method at
the rates and in the manner prescribed in schedule XIV to the Companies
Act, 1956 except in respect of certain Fixed Assets where higher rates
are applicable considering the estimated useful life, which are as
follows:
i. Shelters 20 years
ii. Network Operation Assets 4 to 10 years
iii. Air Conditioners 9 years
iv. Electrical & Power Supply Equipments 6 to 9 years
v. Computers 3 years
vi. Office Equipments 3 to 5 years
vii. Furniture & Fittings 5 years
viii. Vehicle 5 years
b. The leasehold improvements have been depreciated over lease period.
c. In respect of additions forming an integral part of existing assets
depreciation has been provided over residual life of the respective
fixed assets.
d. In respect of Fixed Assets whose actual cost does not exceed Rs.
5,000, depreciation is provided at 100% in the year of addition.
e. In respect of Fixed Assets acquired upon demerger pursuant to the
Scheme of Arrangement between GTL Infrastructure Limited and GTL
Limited, depreciation is provided for the balance period of economic
useful life of those assets.
6. Intangible Assets:
Intangible Assets are stated at cost of acquisition less accumulated
amortisation. Software which is not an integral part of the related
hardware is classified as an Intangible Asset and is amortised over the
useful life of three years.
7. Investments:
Current Investments are carried at the lower of cost or quoted / fair
value computed scrip wise, Long Term Investments are stated at cost.
Provision for diminution in the value of long term investments is made
only if such decline is other than temporary.
8. Assignment of Recoverables:
In case of assignment of recoverables, the amounts are derecognised
when all the rights, title, future receivables are assigned and charges
paid on assignment are charged to Profit and Loss account.
9. Inventory of Stores, Spares and Consumables:
Inventory of stores, spares and consumables are accounted for at costs,
determined on weighted average basis, or net realisable value,
whichever is less.
10. Foreign Currency Transactions:
a. Transactions in Foreign Currencies are normally recorded at the
exchange rate prevailing on the date of the transactions.
b. Monetary items denominated in Foreign Currency at the Balance Sheet
date are restated at the exchange rates prevailing at the Balance Sheet
date. In case of the items which are covered by forward exchange
contracts, the difference between the exchange rates prevailing at the
Balance Sheet date and rate on the date of the contract is recognised
as exchange difference. The premium on forward contracts is amortised
over the life of the contract.
c. Non monetary Foreign Currency items are carried at cost.
d. Any gain or loss on account of exchange difference either on
settlement or on restatement is recognised in the Profit and Loss
account.
11. Employee Benefits:
a. Short-term employee benefits are recognised as an expense at the
undiscounted amount in the Profit and Loss account of the year in which
the related service is rendered.
b. Post employment and other long term employee benefits are
recognised as an expense in the Profit and Loss account for the year in
which the employee has rendered services. The expense is recognised at
the present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to the Profit and
Loss account.
c. In respect of employees stock options, the excess of market price
on the date of grant over the exercise price is recognised as deferred
employee compensation expense amortised over vesting period.
12. Borrowing Costs:
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset (net of income earned on temporary deployment of
funds) are capitalised as a part of the cost of such assets. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to Profit and Loss account.
13. Leases:
In respect of operating leases, lease rentals are expensed with
reference to the terms of lease and other considerations except for
lease rentals pertaining to the period up to the asset put to use,
which are capitalised.
14. Provision for Current and Deferred Tax:
a. Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income-tax Act, 1961.
b. Deferred tax resulting from the timing differences between taxable
and accounting income is accounted for using the tax rates and laws
that are enacted or substantively enacted as on the Balance Sheet date.
The deferred tax asset is recognised and carried forward only to the
extent that there is a virtual certainty that the assets will be
realised in the future.
15. Impairment of Assets:
An-asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Profit and Loss account in the year in which an asset is identified as
impaired. The impairment loss recognised in prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount.
16. Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognised but are disclosed in the
notes. Contingent Assets are neither recognised nor disclosed in the
financial statements.
17. Financial Derivatives Hedging Transactions:
In respect of derivatives contracts, premium paid, provision for losses
on restatement and gains / losses on settlement are recognised in the
Profit and Loss account.
18. Issue Expenses:
Expenses related to issue of equity and equity related instruments are
adjusted against the Securities Premium Account.
19. Provision for Doubtful Debts and Loans and Advances:
Provision is made in the accounts for doubtful debts and loans and
advances in cases where the management considers the debts, loans and
advances, to be doubtful of recovery.
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