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Bharti Airtel Limited - Annual Report 2011-12
enriching lives

Table of contents

  • Page 1
    { enriching lives { Bharti Airtel Limited - Annual Report 2011-12

  • Page 2

  • Page 3
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Table of contents Corporate information Board of directors Performance at a glance Chairman's message CEO (International) & JMD's message CEO (India & South Asia)'s message Corporate social responsibility Directors' report Management discussion & analysis Report...

  • Page 4
    ...CEO (India & South Asia) Mr. Sanjay Kapoor Group General Counsel & Company Secretary Mr. Mukesh Bhavnani Statutory Auditors M/s. S. R. Batliboi & Associates Chartered Accountants Internal Auditors M/s. PricewaterhouseCoopers Private Limited M/s. ANB Consulting Private Limited Registered & Corporate...

  • Page 5
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Board of directors Sunil Bharti Mittal Akhil Gupta Chua Sock Koong N. Kumar Ajay Lal Craig Ehrlich Pulak Prasad Rakesh Bharti Mittal Tan Yong Choo Evan Mervyn Davies Rajan Bharti Mittal Hui Weng Cheong Nikesh Arora Salim Ahmed Salim Tsun-yan Hsieh...

  • Page 6
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Performance at a glance Particulars Units 2007 Total customer base Mobile services Broadband & telephone services Digital TV services 000's 000's 000's 000's 39,012 37,141 1,871 2008 64,268 61,985 2,283 Financial Year Ended March 31 2009 97,593 94,462 2,726 405 ...

  • Page 7
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Customer base (Nos.'000) 251,646 220,878 Revenues (` Millions) 714,508 595,383 137,013 97,593 64,268 39,012 184,202 270,122 418,948 373,521 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12...

  • Page 8
    ... Airtel the most robust network in the country. We also launched our 3G networks in seven African markets. Our launch of 4G services in April 2012 marked another watershed for the Indian telecom industry. This is the first technology platform that India has launched simultaneously with its global...

  • Page 9
    ... India too, we have renewed many of our managed network services contracts besides entering into relationships with new partners in emerging technology areas such as 3G and 4G. People continue to be the most important driver of our strategic intent and initiatives. Our extended global presence makes...

  • Page 10
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Message CEO (International) & JMD Dear Shareholders, By March 2012, we completed 21 months of Bharti Airtel's presence in Africa. While we face economic and business challenges, we continued to drive growth in our Brand preference, Revenue Market Share and ...

  • Page 11
    ... currently untapped in Africa. We launched our 3G operations in seven countries during the year, namely Nigeria, Zambia, Tanzania, Ghana, Kenya, Sierra Leone and Congo B. Driving 3G and data services are in line with one of our key objectives of growing non-voice revenues. We are also aggressively...

  • Page 12
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Message CEO (India & South Asia) Dear Shareholders, The year 2011-12 has been an exceptionally challenging year for the telecom industry. Uncertainty and ambiguity arising out of the regulatory developments coupled with sustained hyper-competition is making this...

  • Page 13
    .... To provide an exhilarating internet experience, we upgraded all our DSL customers to a minimum speed of 2Mbps in 14 top cities and to 1Mbps in the rest of our coverage area. Our presence across platforms makes us the only player providing the entire suite of data products, across 2G, 3G, 4G and...

  • Page 14
    BHARTI AIRTEL ANNUAL REPORT 2011-12 { enriching lives { Corporate Social Responsibility At Bharti Airtel, business success is not just about profits and shareholder returns. We believe in pursuing a wider socio-economic objective and have always endeavoured to not just ...

  • Page 15
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Bharti Foundation Delivering Quality Education Bharti Foundation is the philanthropic arm of Bharti Enterprises and was set up in the year 2000 "to help underprivileged children and young people realize their potential." Implementing and supporting primary, ...

  • Page 16
    ... to the overall development of the country. Satya Bharti School students have also won accolades for such community endeavours at various international platforms such as the Design for Change School Contest in 2011, 2010 and 2009 and Pramerica Spirit of Community Awards in 2012 and 2011. 14

  • Page 17
    ... Award-Best Public Choice Award for Innovative Practices in Education 2011 b. Best NGO for Excellence in Education at Concern 2012 Consortium for Competence in Education and Research for National Development. c. Global CSR Awards in the category of Corporate Social Responsibility - Education Bharti...

  • Page 18
    ... towards this social cause. Apart from Group Companies, various partners of Bharti Airtel Limited, joined the event this year to run in support of the Satya Bharti Schools, generating monetary contributions for the program. The ADHM 2011 saw senior management from Airtel and 30 corporate teams run...

  • Page 19
    BHARTI AIRTEL ANNUAL REPORT 2011-12 { Airtel Delhi Half Marathon also provides an opportunity to likeminded organizations and individuals to contribute towards the cause of education for the underprivileged. 17

  • Page 20
    BHARTI AIRTEL ANNUAL REPORT 2011-12 18 {

  • Page 21
    ...in 6 countries in Africa - Ghana, Kenya, Malawi, Nigeria, Tanzania and Uganda. All these are referred to as"Millennium Villages". Airtel is committed to ensure telecommunications and Internet services to these villages through its network. As part of this initiative, Airtel provides SIM cards to the...

  • Page 22
    BHARTI AIRTEL ANNUAL REPORT 2011-12 { 20 Bharti Airtel provides farmers with vital information on weather, mandi prices, agronomy, horticulture, forestry through its joint venture with IFFCO- IFFCO Kisan Sanchar Limited (IKSL). Community Initiatives Besides participation in the volunteering ...

  • Page 23
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Disaster Relief and Support In August, 2011, when ï¬,oods hit Assam bringing life to a standstill, employees of Airtel NESA circle helped the affected people by providing food packets and clothes through their Flood Relief initiative. They covered the West ...

  • Page 24
    ... companies today lies in managing their energy requirements at extremely dispersed locations. At Bharti Airtel, we understand that being the market leader it is our responsibility to lead the way for green telecom initiatives. With limited reliable access to grid power supply for the telecom network...

  • Page 25
    ... Bharti Airtel: i. Network deployment as sharer: 68% of the incremental sites in the year 2011-12 were deployed on sharing basis. These sites share the existing power infrastructure with tower companies to reduce carbon footprint. ii. Tower consolidation at existing sites: To optimise energy usage...

  • Page 26
    ...ii. Project "Green city" with Indus: Green City Project aims at "Going DG Free" whereby DG (Diesel Generator) shall not be used as back up source; instead, newer technology solutions shall be deployed to support network operations. Airtel and Indus Towers have developed various solutions which have...

  • Page 27
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Changing Norms of Corporate Social Responsibility A. Cyber Security We regularly provide support to government agencies like CERT.in, IB, NTRO, and NATGRID in dealing with specific threat mitigation like botnet threat to ADSL routers, Rustock and Stuxnet ...

  • Page 28
    ...-aid care in times of emergency" is now available to customers through Airtel's alert service. We have also launched the Ananya initiative to develop, test and scale up innovative solutions to improve the health and development of Bihar's rural families. The services range from maternal care to job...

  • Page 29
    ... annual report on the business and operations of the Company together with the audited financial statements for the year ended March 31, 2012. OVERVIEW Bharti Airtel is one of the world's leading providers of telecommunication services with presence in 20 countries including India, Sri Lanka...

  • Page 30
    ... FINANCIAL STATEMENTS In terms of the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Board of Directors have decided to circulate the abridged annual report containing salient features of the balance sheet and statement of profit & loss to the shareholders for the financial year...

  • Page 31
    ... is evident from being named India's most trusted mobile services brand in the Economic Times Brand Equity 2011 survey. Airtel was also awarded third position in the list of top 100 Indian brands. In Africa, we have re-positioned the brand airtel in line with the global brand strategy, to focus on...

  • Page 32
    ... market. Some of the key launches of the year included: • • 3G footprint expanded to over 1,100 cities in India at end of March 2012 including 7 service areas with ICR arrangements. 4G services in Kolkata, based on TD-LTE technology, making India one of the first countries in the world...

  • Page 33
    BHARTI AIRTEL ANNUAL REPORT 2011-12 airtel money (Semi Closed Wallet) launched nationally in February 2012, in over 300 towns across 20,000 retail outlets with an acceptance network across 7,500 merchant establishments. CEM (Customer Experience Management), a proactive diagnosis tool that ...

  • Page 34
    ... data revenue. Mobile health tips were implemented in 5 African countries and allow the customer through daily, weekly and monthly subscription to get general health tips via SMS. Airtel messaging allows the Airtel Africa customer to access their emails, social networks and chat services independent...

  • Page 35
    BHARTI AIRTEL ANNUAL REPORT 2011-12 • • At the 23rd Enugu International Trade Fair in Nigeria, the Company received three awards for its outstanding performance at the fair and contribution to the development and growth of the economy of the south east region. The Company received The Special ...

  • Page 36
    ... AIRTEL ANNUAL REPORT 2011-12 CORPORATE SOCIAL RESPONSIBILITY At Bharti Airtel, Corporate Social Responsibility (CSR) encompasses much more than social outreach programs and is an integral part of the way the Company conducts its business. Detailed information on the initiatives of the Company...

  • Page 37
    BHARTI AIRTEL ANNUAL REPORT 2011-12 EMPLOYEES STOCK OPTION PLAN The Company values its employees and is committed to adopt the best HR practices. The employees of the Company are presently eligible for two ESOP schemes under 2001 and 2005 Employee Stock Option Policy. Besides attracting talent, the...

  • Page 38
    ... Bharti Airtel Limited ("the Company"), for the year ended March 31, 2012, as stipulated in clause 49 of the listing agreement of the said Company with stock exchanges in India. The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited...

  • Page 39
    ...growth in its long distance voice business and believes that its presence and operations in developing markets especially Asia and Africa will further strengthen its position by increasing share of global traffic. Telecom Services in other countries Bharti Airtel Lanka (Private) Limited is Sri Lanka...

  • Page 40
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Annexure C INFORMATION REGARDING THE EMPLOYEES STOCK OPTION SCHEMES AS ON MARCH 31, 2012 Sl.No. Particulars 1) 2) Number of stock options granted Pricing Formula ESOP Scheme 2005 25,804,379* Exercise Price not less than the par value of the equity share and not ...

  • Page 41
    ...,331 Fibcom/Project Lead Aviva Asia PTE LTD/Director Operations Bharti Infotel Ltd/Chief Technology Officer Teletech Services India Limited/Sr. Vice President Cargill Foods India/Business Head-India Foods Comsat Max Limited/Area Sales Manager 1 2 3 4 5 6 7 A M Rai Abhay Johorey Abhay Savargaonkar...

  • Page 42
    ... CEO- Bharti Airtel- India & South Asia Sr. Vice President CEO-Market Operations NCR Sr. Vice President Group CFO Sr. Vice President Group Director - Internal Assurance Castrol India Limited/VP Sales - Retail Escotel Mobile Communications Ltd/Head Sales Siemens Public Communication Networks Ltd...

  • Page 43
    ... Integrated Technology Solutions Pvt Ltd./ General Manager Blue Dart Express Ltd./Sales Executive Reliance Communications Ltd./CTO 20 Hemant Dadlani 21 Jagbir Singh BHARTI AIRTEL ANNUAL REPORT 2011-12 Chief Operating Officer Telemedia South Director - Network Service Group (India & South Asia...

  • Page 44
    ... Group Director - Finance BHARTI AIRTEL ANNUAL REPORT 2011-12 27 28 29 Manish Bhatt Manish Rastogi Manish Trehan 30 Manoj Kohli 31 Manu Sood National Data Head Head CS - South & West 2 Chief Operating Officer Mobile Services, Jammu & Kashmir CEO (International) & Joint Managing Director Head...

  • Page 45
    ... the Company's strategy of offering telecom services in 20 countries across South Asia and Africa. TELECOM SECTOR DEVELOPMENTS India & South Asia Financial year 2012 saw the continuance of healthy customer growth for the Indian telecom market which witnessed a 12.4% increase in its customer base...

  • Page 46
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Africa The year 2012 continued to experience growth in African telecom market, especially in the 17 countries that the Company operates in. The total customer base grew 20% over the 12-month period, to 53.1 Mn as at end of March 2012. The competitive intensity in...

  • Page 47
    ...in Burkina Faso; With this, the Company has 3G licences in 12 Countries. In DRC, the licence fee has been set and the Company is representing for the finalization of the terms and conditions of the licence. The Company is making efforts to obtain 3G licences in the remaining 5 countries of operation...

  • Page 48
    ...to internet access through mobile phones, heralding a new era in India's internet revolution. Powered by higher browsing speeds through technologies such as 3G and 4G, the Value Added Services (VAS) continues to be an area of growth. New services such as music download, mobile TV, MMS, video calling...

  • Page 49
    ...to home and enterprise services businesses, with the growing number of service providers for these services. Bharti Airtel, with significantly large and diverse customer base; integrated suite of products and services; pan India operations; and a very strong airtel brand is best positioned to emerge...

  • Page 50
    ... P&L. The B2B business unit focuses on serving large corporates and carriers through Bharti Airtel's wide portfolio of telecommunication solutions in India & overseas. A.1 B2C Services The Company offers mobile services using GSM technology in South East Asia across India, Sri Lanka and Bangladesh...

  • Page 51
    ... data adoption by engaging customers on mobile internet through low priced 2G plans and then encouraging them to switch to high speed 3G data services. To bridge the data price differential between the 3G Packs rate and the Volume Based Charging (VBC), the Company lowered the VBC rates in a tiered...

  • Page 52
    ... cities with an objective of enhancing customer experience. Revenues from Telemedia Services - India & South Asia for the financial year ended March 31, 2012 were ` 37,271 Mn and represented a year on year growth of 3%. During the year gone by, the Company migrated to an integrated business support...

  • Page 53
    BHARTI AIRTEL ANNUAL REPORT 2011-12 media. Airtel business is India's leading and most trusted provider of communication and ICT services to large Enterprise, Government, Small & Medium businesses and carrier customers. Airtel business offers network infrastructure, integration & management with a ...

  • Page 54
    ... its African customers a wide variety of services such as mobile telephony, mobile Internet, roaming, international calling and a suite of value added services including 'airtel money'. The Company offers 3G services in 7 countries : Nigeria, Zambia, Ghana, Kenya, Tanzania, Sierra Leone and Congo...

  • Page 55
    ... AIRTEL ANNUAL REPORT 2011-12 country and Bharti Airtel has led from the front. In the process, the Company has created a large pool of loyal customers and talented human resource capital, in addition to developing a vibrant brand. In Africa, the regulatory environment in which the Company operates...

  • Page 56
    ...in line with future growth potential of the sector. As India opens its doors to the fourth generation of cellular wireless platform (4G), Bharti Airtel led the industry and launched 4G in Kolkata. With stronger emphasis on Data business across domestic and international markets, the Company believes...

  • Page 57
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Emerging markets of Sri Lanka and Bangladesh and newer HD (High Definition) and interactive products of Digital TV will continue to be the focus areas for the Company. Airtel will continue to build its integrated solutions created for enterprise, small and medium...

  • Page 58
    ... a sustainable business model for generating long term value for all its stakeholders. Beside the mandatory clause 49 of the stock exchange listing agreement, the Ministry of Corporate Affairs has also published detailed voluntary governance guidelines that inter alia contain provisions relating to...

  • Page 59
    ... and South Asia and Airtel International Management Board (AIMB) in Africa. The CEO's and the functional directors of the respective geographies are members of the respective boards The AMB and AIMB meet monthly and takes decisions relating to the business strategy and looks at achieving operational...

  • Page 60
    ...& Managing Director are founder members. Detailed profile of each of the directors is available on the website of the Company at www.airtel.in in the Investor Relations section. The members of our Board are from diverse background with skills and experience in critical areas like technology, finance...

  • Page 61
    BHARTI AIRTEL ANNUAL REPORT 2011-12 g) If the retirement of any director pursuant to policy is close to the date of the annual general meeting, such director will retire at the AGM; h) As per the policy, tenure of independent directors on board committees is as under: - - - i) Tenure for the ...

  • Page 62
    ... included in the agenda of the meeting. Group CFO, CEO (India & South Asia) and other senior management members are invited to the Board meetings to present reports on the items being discussed at the meeting. In addition, the functional heads of various business segments/ functions are also invited...

  • Page 63
    ...; Regular business updates; Update on Corporate Social Responsibility activities; Significant transactions and arrangements by subsidiary companies; Report on action taken on last board meeting decisions. Number of Board Meetings During the financial year 2011-12, the Board met five times i.e. on...

  • Page 64
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Remuneration Policy for Directors The remuneration of executive director i.e. Mr. Sunil Bharti Mittal - Chairman and Managing Director is approved by the Board of directors within the limits approved by the shareholders on the basis of the recommendation of the ...

  • Page 65
    ...on the website of the Company (www.airtel.in). The Code is applicable to all Board members and executives who directly report to the Chairman & Managing Director, CEO (International) & Joint Managing Director and CEO (India & South Asia) at senior management level. The Code is circulated annually to...

  • Page 66
    ... 292A of the Companies Act, 1956 and clause 49 of the listing agreement. The Company Secretary is the secretary to the Committee. The CEO (International) & Joint Managing Director, CEO (India & South Asia), Group CFO, Chief Financial Officer, Group Director - Internal Assurance, statutory auditors...

  • Page 67
    ...2012. Time gap between any two meetings was less than four months. All the meetings were held in New Delhi except August 03, 2011 meeting, which was held in Nairobi, Kenya. Besides above, the Committee also holds a conference call a week before every regular meeting to discuss internal audit reports...

  • Page 68
    ... for ensuring adequacy of internal control systems and adherence to management policies and statutory requirements. The Company also has in place an internal assurance group headed by Group Director-Internal Assurance, responsible for reviewing all the operations of the Company to evaluate the risks...

  • Page 69
    ... strategies for employees; Employee development strategies; Compensation (including salaries and salary adjustments, incentives/benefits bonuses, stock options) and performance targets for the Chairman and Managing Director and CEO (India & South Asia); All human resource related issues; Other key...

  • Page 70
    ... and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 1995; Other key issues as may be referred by the Board. • Meetings, Attendance and Composition During the financial year 2011-2012, the Committee met four times...

  • Page 71
    ... Executive director Number of meetings attended (total held) 9 (10) 10 (10) 10 (10) Nil (9) Compliance Officer Mukesh Bhavnani, Group General Counsel & Company Secretary acts as Compliance Officer of the Company for complying with the requirements of the listing agreement with the stock exchanges...

  • Page 72
    ... Account; To purchase, sell, acquire, subscribe, transfer, sale or otherwise deal in the shares/securities of any company, body corporate or other entities within the limits approved by the Board. Borrowing Related • To borrow such sum of money as may be required by the Company from time to time...

  • Page 73
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Allotment of Shares Issue and allot shares of the Company in one or more trenches as per the terms of the ESOP Schemes for the time being in force or upon conversion of Foreign Currency Convertible Bonds issued by the Company; To seek listing of shares issued as...

  • Page 74
    BHARTI AIRTEL ANNUAL REPORT 2011-12 GENERAL BODY MEETINGS The last three Annual General Meetings (AGMs) were held as under: Financial Year 2010-2011 2009-2010 2008-2009 Air Force Auditorium, Subroto Park, New Delhi Location Date September 1, 2011 September 1, 2010 August 21, 2009 Time 1530 Hrs. (...

  • Page 75
    ... accounting and accordingly the consolidated financial statements are prepared under IFRS from the financial year 2010-2011 onwards. Green Initiatives by MCA In support of the "Green initiative in the corporate governance", the Company has decided to send all communications including annual reports...

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  • Page 78
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Transfer of shares in physical form is normally processed within 15 days from the date of receipt, provided the documents are complete in all respects. All requests for registration of transfers are first processed by Karvy Computershare Pvt. Limited, Hyderabad, ...

  • Page 79
    ... the National Stock Exchange of India Limited. Communication Addresses For Corporate Governance and Other Secretarial related matters Mukesh Bhavnani Group General Counsel and Company Secretary Bharti Airtel Limited Bharti Crescent, 1, Nelson Mandela Road, Vasant Kunj, Phase - II New Delhi 110 070...

  • Page 80
    ... Senior Management team, affirmation of compliance with the Code of Conduct for Directors and Senior Management in respect of financial year ended March 31, 2012. For Bharti Airtel Limited Sanjay Kapoor CEO (India & South Asia) Place: New Delhi Date: May 02, 2012 Annexure B CHIEF EXECUTIVE OFFICER...

  • Page 81
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Secretarial audit report The Board of Directors Bharti Airtel Limited Bharti Crescent, 1, Nelson Mandela Road Vasant Kunj, Phase II, New Delhi - 110070 We have examined the registers, records and documents of Bharti Airtel Limited (the Company) for the financial ...

  • Page 82
    BHARTI AIRTEL ANNUAL REPORT 2011-12 15. Conferment of options and transfer of shares under the Employee Stock Option Scheme of the Company. 16. Requirement of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. 17. Requirement of the ...

  • Page 83
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Standalone financial statements with Auditors' report INDEPENDENT AUDITORS' REPORT To The Members of Bharti Airtel Limited 1. We have audited the attached balance sheet of Bharti Airtel Limited ('Bharti Airtel' or 'the Company') as at March 31, 2012 and also the ...

  • Page 84
    ... authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty and cess and other material statutory dues applicable to it. The provisions relating to excise duty is not...

  • Page 85
    ...no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, cess and other material undisputed statutory dues were outstanding, at the year end, for a period of more than...

  • Page 86
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Name of the Statutes Nature of the Dues Amount Disputed (in ` Mn) 291 1 603 1,941 0 0 14 2,438 255 2 1 1 5 4,657 Period to Which it Relates 2004-05 2004-05 Forum where the dispute is pending Karnataka Sales Tax Act Tamil Nadu General Sales Tax Act Sub Total ...

  • Page 87
    BHARTI AIRTEL ANNUAL REPORT 2011-12 (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company. In our opinion, the Company ...

  • Page 88
    ... 2012 For and on behalf of the Board of Directors of Bharti Airtel Limited Sunil Bharti Mittal Chairman & Managing Director Akhil Gupta Director Sanjay Kapoor CEO (India & South Asia) Mukesh Bhavnani Group General Counsel & Company Secretary Srikanth Balachandran Global Chief Financial Officer...

  • Page 89
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Statement of Profit and Loss for the year ended March 31, 2012 (` Millions, except per share data and as stated otherwise) Particulars Revenue from operations Other income Total Revenue Expenses Access charges License fee and spectrum charges (revenue share) Cost...

  • Page 90
    ...2, 2012 For and on behalf of the Board of Directors of Bharti Airtel Limited Sunil Bharti Mittal Chairman & Managing Director Sanjay Kapoor CEO (India & South Asia) Mukesh Bhavnani Group General Counsel & Company Secretary Akhil Gupta Director Srikanth Balachandran Global Chief Financial Officer 88

  • Page 91
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Notes to the financial statements for the year ended March 31, 2012 1. CORPORATE INFORMATION Bharti Airtel Limited ('the Company') incorporated in India on July 7, 1995, is a company promoted by Bharti Telecom Limited ('BTL'), a company incorporated under the ...

  • Page 92
    BHARTI AIRTEL ANNUAL REPORT 2011-12 d. Depreciation on tangible assets Depreciation on tangible assets is provided on the straight line method based on useful lives of respective assets as estimated by the management or at the rates prescribed under Schedule XIV of the Companies Act, 1956, ...

  • Page 93
    ... leases. Lease income in respect of 'Operating Lease' is recognised in the statement of profit and loss on a straight-line basis over the lease term. Assets subject to operating leases are included in fixed assets. Leases in which the Company transfer substantially all the risks and benefits of...

  • Page 94
    BHARTI AIRTEL ANNUAL REPORT 2011-12 l. Revenue recognition and receivables Mobile Services Service revenue is recognised on completion of provision of services. Service revenue includes income on roaming commission and an access charge recovered from other operators, and is net of discounts and ...

  • Page 95
    BHARTI AIRTEL ANNUAL REPORT 2011-12 m. License fees - revenue share With effect from August 1, 1999, the variable licence fee computed at prescribed rates of revenue share is charged to the statement of profit and loss in the year in which the related revenues are recognised. Revenue for this ...

  • Page 96
    ... statement of profit and loss for the year. o. Employee benefits (a) Short term employee benefits are recognised in the year during which the services have been rendered. (b) All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined contribution plan...

  • Page 97
    ... General Reserve. s. Segmental reporting a) Primary Segment The Company operates in three primary business segments viz. Mobile Services, Telemedia Services and Airtel Business. b) Secondary Segment The Company has operations serving customers within India as well as in other countries located...

  • Page 98
    ... connectivity to the mobile services business in India. Telemedia Services - These services cover voice and data communications based on fixed network and broadband technology. Airtel Business - These services cover end-to-end telecom solutions being provided to large Indian and global corporations...

  • Page 99
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Summary of the Segmental Information for the year ended and as of March 31, 2012: (` Millions) Particulars Revenue Revenue from operations Inter Segment Revenue Total Revenue Results Segment Result - Profit/(Loss)* Finance Expense * Profit/(Loss) before tax ...

  • Page 100
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Summary of the Segmental Information for the year ended and as of March 31, 2011: (` Millions) Particulars Revenue Revenue from operations Inter Segment Revenue Total Revenue Results Segment Result - Profit/(Loss)* Finance Expense * Profit/(Loss) before tax ...

  • Page 101
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Information about Geographical Segment - Secondary The Company has operations serving customers within India as well as located in other countries. The information relating to the geographical segments in respect of customers being served and assets within India,...

  • Page 102
    ... by the Board of Directors is subject to approval of the shareholders in the ensuing annual general meeting. During the year ended March 31, 2012, the amount of dividend per share recognized as distributions to equity shareholders was ` 1.00 (March 31, 2011 ` 1.00). c. Details of shareholders...

  • Page 103
    ... of employee stock option Add : Adjustment on account of exercise of stock options through open market purchase Add : Transferred from surplus balance in statement of profit and loss Closing balance Surplus in the Statement of Profit and Loss Opening balance Add : Profit for the year Amount...

  • Page 104
    ...AIRTEL ANNUAL REPORT 2011-12 6. LONG-TERM BORROWINGS (` Millions) Particulars Secured Debentures Others Total secured loans Unsecured Term Loans From Banks From Others Total unsecured loans Less: Current maturities (payable within 1 year) From Banks From Others 29 29 125 46 171 As of March 31, 2012...

  • Page 105
    ...in the accounts, and monies deposited and investments made there from and in project documents, book debts and insurance policies. - 125 7. TAXES a. Deferred tax liabilities (Net) (` Millions) Particulars Deferred Tax Assets Provision for doubtful debts/advances charged in financial statement but...

  • Page 106
    ... liabilities and Contingent Assets' notified under Companies (Accounting Standards) Rules, 2006 ('as amended') , is given below: (` Millions) Particulars Opening balance Addition during the year Closing balance For the year ended March 31, 2012 165 274 439 For the year ended March 31, 2011 162 3 165...

  • Page 107
    BHARTI AIRTEL ANNUAL REPORT 2011-12 10. SHORT-TERM BORROWINGS (` Millions) Particulars (Unsecured unless stated otherwise) Loans From banks From others Loans repayable on demand Cash Credit Loans & advances from related parties (refer note 45) As of March 31, 2012 As of March 31, 2011 43,383 2,000...

  • Page 108
    BHARTI AIRTEL ANNUAL REPORT 2011-12 12. OTHER CURRENT LIABILITIES (` Millions) Particulars Deferred revenue Equipment supply payables Payable to others Advance received from customers Current maturities of long term debt Interest accrued but not due on borrowings Other taxes payable Unpaid ...

  • Page 109
    BHARTI AIRTEL ANNUAL REPORT 2011-12 14. TANGIBLE ASSETS (` Millions) Particulars Leasehold Land Freehold Land Building Plant and Equipment Furniture and Fixtures Vehicles Office Computer* Leasehold Total Equipment improvements Cost As of April 1, 2010 Additions Disposals Reclassification/...

  • Page 110
    ... fees as at March 31, 2012 ranges between 3 to 13 years for Unified Access Service Licences, 10 years for Long Distance Licences, 18.4 years for 3G spectrum fees. b. Licences includes Net Block of 3G spectrum fees of ` 116,106 Mn as on March 31, 2012 (March 31, 2011 ` 105,795 Mn). c. Capitalised...

  • Page 111
    ... each fully paid up Bharti Airtel Services Limited : 100,000 (March 31, 2011 - 100,000) Equity shares of ` 10 each fully paid up Bharti Airtel (USA) Limited : 300 (March 31, 2011 - 300) Equity shares of USD .0001 each fully paid up 5,718 1 509 101 5,718 1 509 101 As of March 31, 2012 As of March 31...

  • Page 112
    ... AIRTEL ANNUAL REPORT 2011-12 (` Millions) Particulars As of March 31, 2012 As of March 31, 2011 Investment in Associates 1) 2) Bharti Teleport Limited : 11,270,000 (March 31, 2011- 1,470,000) Equity shares of ` 10 each fully paid up (refer note 35 (o)) Alcatel-Lucent Network Management Services...

  • Page 113
    ... - Super Institutional Plan - Growth JP Morgan India Liquid Fund Peerless Liquid Fund Super IP Religare Liquid Fund - Super Institutional Growth Total Investment in Deposits and Bonds (Unquoted) India Innovation Fund 7.30% REC Secured Bonds Total As of March 31, 2012 (No. of Units) (Cost) 73,050 227...

  • Page 114
    BHARTI AIRTEL ANNUAL REPORT 2011-12 20. INVENTORIES (VALUED AT LOWER OF COST AND NET REALISABLE VALUE) (` Millions) Particulars Stock-In-Trade* As of March 31, 2012 321 321 * Net of provision for diminution in value ` 219 Mn (March 31, 2011 ` 191 Mn) As of March 31, 2011 344 344 21. TRADE ...

  • Page 115
    BHARTI AIRTEL ANNUAL REPORT 2011-12 23. SHORT-TERM LOANS AND ADVANCES (` Millions) Particulars Unsecured, considered good unless stated otherwise Loans and advances to related parties (refer note 45) Advances recoverable in cash or kind Considered good Considered doubtful Less: Provision for ...

  • Page 116
    ... as at March 31, 2012 relate to: i. ii. iii. iv. v. cenvat claimed on tower and related material, levy of service tax on SIM cards, cenvat credit disallowed for procedural lapses and inadmissibility of credit, disallowance of cenvat credit used in excess of 20% limit, and employee talk time. 114

  • Page 117
    ... of tax on payments to international operators for access charges etc. The management believes that, based on legal advice, its tax positions will be sustained and accordingly, recognition of a provision for those tax positions will not be appropriate. e) Custom duty The custom authorities, in some...

  • Page 118
    ... conditions related to renting/transfer of sim cards in a mobility circle d) In respect of provision of IPLC services to a non-licensed entity which has directly sold the same to a customer located in India in Airtel Business segment. The above stated matters are being contested by the Company...

  • Page 119
    ... 2012 (March 31, 2011 ` 2,404 Mn) by November 24, 2018. 27. The Company has undertaken to provide financial support, to its subsidiaries and associates Bharti Airtel Services Limited, Bharti Airtel (USA) Limited, Bharti Airtel (Hongkong) Limited, Bharti Telemedia Limited, Airtel M Commerce Services...

  • Page 120
    BHARTI AIRTEL ANNUAL REPORT 2011-12 29. OTHER INCOME (` Millions) Particulars Interest income on bank deposits Interest income on loan given to related parties Dividend income on investments in subsidiaries Net gain on sale of investments Net foreign exchange gain Other non-operating income Lease ...

  • Page 121
    ... - Administrative Leased Line and Gateway charges Internet access and bandwidth charges Advertisement and Marketing Sales Commission, Customer verification and Content cost Indirect Selling and Distribution Sim card utilisation Legal and Professional Rates and Taxes IT and Call Center Outsourcing...

  • Page 122
    ... intangible assets (refer note 15) For the year ended March 31, 2012 48,500 10,660 59,160 For the year ended March 31, 2011 41,937 4,179 46,116 35. NEW OPERATIONS a) The Company had invested ` 201 Mn in Bharti Airtel International (Mauritius) Limited, during the year ended March 31, 2012 and holds...

  • Page 123
    ... share in Bharti Teleports Limited, during the quarter ended March 31, 2012 and continues to hold 49% of the total shareholding as on March 31, 2012. p) During the year ended March 31, 2012, the Company has completed the launch of 3G services in all its eligible licensed circles in India...

  • Page 124
    BHARTI AIRTEL ANNUAL REPORT 2011-12 37. EMPLOYEE BENEFITS a) During the year, the Company has recognized the following amounts in the Statement of Profit and Loss: i. Defined Contribution Plans (` Millions) Particulars Employer's Contribution to Provident Fund*@ Employer's Contribution to ESI* * ...

  • Page 125
    BHARTI AIRTEL ANNUAL REPORT 2011-12 For the year ended March 31, 2011: Particulars Discount Expected Expected Expected rate rate of increase in compensation levels rate of return on plan assets average remaining working lives of employees (years) Gratuity 7.50% 9.00% 7.50% 24.22 Leave Encashment 7....

  • Page 126
    ... for Deferred Incentive Plan (` Millions) Particulars Opening Balance Addition during the year Less : Utilized during the year Closing Balance For the year ended March 31, 2012 74 40 (114) For the year ended March 31, 2011 609 128 (663) 74 ii) Long term service award provided by the Company as at...

  • Page 127
    ... Fixed assets (net) Current assets Trade Receivables Cash and bank balances Current liabilities and provisions As of March 31, 2012 (Unaudited) (35) 2 12 83 15 As of March 31, 2011 (Audited) (33) 3 10 71 14 (` Millions) Particulars Statement of profit and loss Service revenue Expenses Operating...

  • Page 128
    ... & Others Network Services Annual Maintenance Bandwidth Charges Access Charges Software Marketing Content Charges Directors Commission and Sitting Fees Agency Fees & Premium fees Income Tax Total Earnings Service Revenue Management Charges Total For the year ended March 31, 2012 For the year ended...

  • Page 129
    BHARTI AIRTEL ANNUAL REPORT 2011-12 42. CIF VALUE OF IMPORTS (` Millions) Particulars Capital Goods Total For the year ended March 31, 2012 17,628 17,628 For the year ended March 31, 2011 19,105 19,105 43. AUDITORS' REMUNERATION (` Millions) Particulars (i) Audit Fee* (ii) Other services * (iii) ...

  • Page 130
    ...of Bharti Airtel Africa B.V. : Africa Towers N.V. Africa Towers Services Limited (incorporated on September 8, 2011) * Airtel (Ghana) Limited Airtel (SL) Limited Airtel Burkina Faso S.A.# Airtel Congo S.A# Airtel DTH Services (K) Airtel DTH Services (Sierra Leone) Limited Airtel DTH Services Burkina...

  • Page 131
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Airtel DTH Services Tanzania Limited Airtel DTH Services Uganda Limited Bharti DTH Services Zambia Limited Airtel Madagascar S.A. Airtel Malawi Limited Airtel Mobile Commerce (SL) Limited (Formerly Zap Trust Company (SL) Limited) Airtel Mobile Commerce B.V. (...

  • Page 132
    ... Company Nigeria Limited Zebrano (Mauritius) Limited (Formerly Zain (IP) Mauritius Limited) ZMP Limited (Zambia) (b) Associates/Associate of subsidiary Alcatel-Lucent Network Management Services India Limited Bharti Teleports Limited Tanzania Telecommunications Limited (Associate of Bharti Airtel...

  • Page 133
    ...,047 Borrowings Trade Payables Loans and Advances (Refer note 40) Trade Receivables Total Balance Maximum Loans and Advance Outstanding during the year Guarantees and Collaterals (Refer note 25 (i)) BHARTI AIRTEL ANNUAL REPORT 2011-12 ** Refer Note 47(viii) *** Net of repayment of loan of...

  • Page 134
    ... assets/ bandwidth Sale of fixed assets/ retirement of bandwidth BHARTI AIRTEL ANNUAL REPORT 2011-12 Purchase of Investments Sale of Investments Rendering of services Receiving of services Reimbursement of energy expenses Common cost allocation charge's Received Fund transferred/Expenses...

  • Page 135
    ... Payables Loans and Advances (Refer note 40) Trade Receivables Total Balance Maximum Loans and Advance Outstanding during the year Guarantees and Collaterals (Refer note 25 (i)) BHARTI AIRTEL ANNUAL REPORT 2011-12 **** Net of repayment of loan received from Bharti Teleports Limited of ` 235...

  • Page 136
    ... assets/ bandwidth Sale of fixed assets/ retirement of bandwidth Purchase of Investments BHARTI AIRTEL ANNUAL REPORT 2011-12 Sale of Investments Rendering of services Receiving of services Reimbursement of energy expenses Common cost allocation charge's Received Fund transferred/Expenses...

  • Page 137
    ... incurred on behalf of others Employee related expenses incurred on behalf of the Company Remuneration Donation Amount received on exercise of ESOP options Security deposit/Advances paid Security deposit/Advances received Loan received Loan given Subscription to share capital (Refer Note 35...

  • Page 138
    ... Bharti Airtel Lanka (Private) Limited 111 (54) 3,513 399 9,697 40 9,737 9,697 136 Nature of transaction Purchase of fixed assets/ bandwidth BHARTI AIRTEL ANNUAL REPORT 2011-12 Sale of fixed assets/ retirement of bandwidth Purchase of Investments Sale of Investments Rendering of services...

  • Page 139
    ...Loan given Subscription to share capital Interest paid Interest received Dividend Paid Outstanding balances at year end Borrowings Trade Payables Loans and Advances Trade Receivables Total Balance Maximum Loans and Advance Outstanding during the year BHARTI AIRTEL ANNUAL REPORT 2011-12...

  • Page 140
    ... assets/ bandwidth BHARTI AIRTEL ANNUAL REPORT 2011-12 Sale of fixed assets/ retirement of bandwidth Purchase of Investments Sale of Investments Rendering of services Receiving of services Reimbursement of energy expenses Common cost allocation charge's Received Fund transferred/Expenses...

  • Page 141
    ... Limited Limited Limited Insurance Managers Limited Life Insurance Foundation Employees Airtel Enterprises Learning Retail General Investment Tech Bharti AXA Bharti Bharti Airtel Jersey Bharti Centum Bharti Bharti AXA Bharti AXA Nile Nature of transaction Purchase of fixed assets/ bandwidth Sale...

  • Page 142
    ... assets/ bandwidth BHARTI AIRTEL ANNUAL REPORT 2011-12 Sale of fixed assets/ retirement of bandwidth Purchase of Investments Sale of Investments Rendering of services Receiving of services Reimbursement of energy expenses Common cost allocation charge's Received Fund transferred/Expenses...

  • Page 143
    ... by the customer is credited to the statement of profit and loss on a straight - line basis over the lease term. Due to the nature of the transaction, it is not possible to compute gross carrying amount, depreciation for the year and accumulated depreciation of the asset given on operating lease as...

  • Page 144
    ... Bharti Airtel Bharti Airtel Bharti Airtel Bharti Airtel Scheme I Scheme I Scheme I Scheme I Scheme 2005 Scheme 2005 2001 Plan 2004 Plan Superpot 2006 Plan 2005 Plan 2008 Plan & Annual Grant Plan (AGP) Performance Share Plan (PSP) 2009 Plan Special ESOP & Restricted Share Units (RSU) Long term...

  • Page 145
    ... AIRTEL ANNUAL REPORT 2011-12 (v) The information concerning stock options granted, exercised, forfeited and outstanding at the year-end is as follows: Particulars As of March 31, 2012 Number of Weighted stock options average (Shares in exercise price Thousands) (` ) As of March 31, 2011 Number...

  • Page 146
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Particulars As of March 31, 2012 Number of Weighted stock options average (Shares in exercise price Thousands) (` ) As of March 31, 2011 Number of Weighted stock options average (Shares in exercise price Thousands) (`) 2008 Plan & Annual Grant Plan (AGP) ...

  • Page 147
    ...of the share price since the Company's equity shares became publicly traded, which may be shorter than the term of the options. (viii) The Company has granted stock options to the employees of the subsidiaries i.e. Bharti Hexacom Limited, Bharti Infratel Limited (BIL) and Bharti Airtel International...

  • Page 148
    BHARTI AIRTEL ANNUAL REPORT 2011-12 The following table details the status of the Company's exposure as on March 31, 2012: (` Millions) Sr Particulars No A For Loan related exposures* a) Forwards b) Options c) Interest Rate Swaps (Principal amount of the contract) Total For Trade related exposures*...

  • Page 149
    ...' report REPORT OF INDEPENDENT AUDITORS To the Board of Directors of Bharti Airtel Limited We have audited the accompanying consolidated statement of financial position of Bharti Airtel Limited ("the Company") and its subsidiaries (together referred to as "the Group") as at March 31, 2012, the...

  • Page 150
    ...Singhal Partner Membership No: 93283 Place : New Delhi Date : May 2, 2012 Sunil Bharti Mittal Chairman & Managing Director Sanjay Kapoor CEO (India & South Asia) Mukesh Bhavnani Group General Counsel & Company Secretary Akhil Gupta Director Srikanth Balachandran Global Chief Financial Officer 148

  • Page 151
    ... 2, 2012 For and on behalf of the Board of Directors of Bharti Airtel Limited Sunil Bharti Mittal Chairman & Managing Director Sanjay Kapoor CEO (India & South Asia) Mukesh Bhavnani Group General Counsel & Company Secretary Akhil Gupta Director Srikanth Balachandran Global Chief Financial Officer...

  • Page 152
    ...on behalf of the Board of Directors of Bharti Airtel Limited Sunil Bharti Mittal Chairman & Managing Director Sanjay Kapoor CEO (India & South Asia) Mukesh Bhavnani Group General Counsel & Company Secretary Akhil Gupta Director Srikanth Balachandran Global Chief Financial Officer Particulars As of...

  • Page 153
    ... 2, 2012 For and on behalf of the Board of Directors of Bharti Airtel Limited Sunil Bharti Mittal Chairman & Managing Director Sanjay Kapoor CEO (India & South Asia) Mukesh Bhavnani Group General Counsel & Company Secretary Akhil Gupta Director Srikanth Balachandran Global Chief Financial Officer...

  • Page 154
    ... AIRTEL ANNUAL REPORT 2011-12 Notes to consolidated financial statements 1. CORPORATE INFORMATION Bharti Airtel Limited ("Bharti Airtel" or "the Company" or "the Parent") is domiciled and incorporated in India and publicly traded on the National Stock Exchange ('NSE') and the Bombay Stock Exchange...

  • Page 155
    BHARTI AIRTEL ANNUAL REPORT 2011-12 3.1 Basis of measurement The consolidated financial statements are prepared on a historical cost basis except for certain financial instruments that have been measured at fair value. These consolidated financial statements have been presented in Indian Rupees ('...

  • Page 156
    ...as the Company. Adjustments are made where necessary to bring the accounting policies in line with those of the Group. Adjustments are made in the Group's consolidated financial statements to eliminate the Group's share of balances, income and expenses and unrealized gains and losses on transactions...

  • Page 157
    ... changes in accounting estimates. a. Goodwill Goodwill is initially recognised at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is held in the currency of the acquired entity and revalued to the closing rate at each date of statement of financial position...

  • Page 158
    ... Cash Generating Unit ('CGU') or groups of CGUs expected to benefit from acquisition-related synergies and represent the lowest level within the entity at which the goodwill is monitored for internal management purposes, within an operating segment. A CGU is the smallest identifiable group of assets...

  • Page 159
    BHARTI AIRTEL ANNUAL REPORT 2011-12 An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The recoverable amount of an asset is the greater of its fair value less costs to sell and value in use. To calculate value in ...

  • Page 160
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset ...

  • Page 161
    BHARTI AIRTEL ANNUAL REPORT 2011-12 After initial measurement, other financial assets measured at amortized cost are measured using the effective interest rate method (EIR), less impairment, if any. Amortized cost is calculated by taking into account any discount or premium on acquisition and fee ...

  • Page 162
    BHARTI AIRTEL ANNUAL REPORT 2011-12 E. Fair value of financial instruments The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for log positions and ask price for ...

  • Page 163
    ...of statement of financial position. Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies. All expenses in respect of defined benefit plans, including actuarial gains and losses, are recognised in the profit or loss as incurred. The amount charged...

  • Page 164
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Exchange differences arising on a monetary item that forms part of a Group entity's net investment in a foreign operation is recognised in profit or loss in the separate financial statements of the Group entity or the individual financial statements of the ...

  • Page 165
    ... AIRTEL ANNUAL REPORT 2011-12 d. Multiple element arrangements The Group has entered into certain multiple-element revenue arrangements. These arrangements involve the delivery or performance of multiple products, services or rights to use assets including VSAT and internet equipment, internet...

  • Page 166
    ... or Board of Directors, as appropriate. 3.21 Earnings per share The Group's Earnings per Share ('EPS') is determined based on the net income attributable to the shareholders' of the parent. Basic earnings per share are computed using the weighted average number of shares outstanding during the year...

  • Page 167
    ...use an asset in return for a payment or series of payments. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that such contracts are in the nature of operating leases. b) Revenue recognition and presentation The Group assesses its revenue arrangements...

  • Page 168
    ... and impairment testing. The Group prepares and internally approves formal five year plans for its businesses and uses these as the basis for its impairment reviews. In certain markets which are forecast to grow ahead of the long term growth rate for the market, further years will be used until the...

  • Page 169
    ... future net cash flows generated by the asset, where no active market for the assets exists. The use of different assumptions for the expectations of future cash flows and the discount rate would change the valuation of the intangible assets. The relative size of the Group's intangible assets...

  • Page 170
    ... OF THE GROUP'S FINANCIAL STATEMENTS a) IFRS 9 Financial Instruments In November 2009, International Accounting Standards Board issued IFRS 9, "Financial Instruments", to reduce complexity of the current rules on financial instruments as mandated in IAS 39, "Financial Instruments: Recognition and...

  • Page 171
    BHARTI AIRTEL ANNUAL REPORT 2011-12 c) IFRS 10 Consolidated Financial Statements In May 2011, International Accounting Standards Board issued IFRS 10, "Consolidated Financial statements". IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the ...

  • Page 172
    ...on the consolidated financial statements. i) Amendments to IAS 1 Presentation of Financial instruments In June 2011, the International Accounting Standards Board issued amendments to IAS 1. The amendments require companies preparing financial statements in accordance with IFRSs to group items within...

  • Page 173
    BHARTI AIRTEL ANNUAL REPORT 2011-12 j) Amendments to IAS 19 Employee Benefits In June 2011, International Accounting Standards Board issued amendments to IAS 19. The revised standard includes a number of amendments that range from fundamental changes to simple clarifications and re-wording. The ...

  • Page 174
    BHARTI AIRTEL ANNUAL REPORT 2011-12 6. SEGMENT REPORTING The Group's operating segments are organized and managed separately through the respective business managers, according to the nature of products and services provided, with each segment representing a strategic business unit. These business ...

  • Page 175

  • Page 176
    ...) Notes to consolidated financial statements (` Millions) Eliminations Consolidated Summary of the segmental information as of and for the year ended March 31, 2011 is as follows: Description BHARTI AIRTEL ANNUAL REPORT 2011-12 Revenue from external customers Inter segment revenue 595,383 595...

  • Page 177
    ... geographical areas by location of the entity is as follows: (a) Revenue from external customers: (` Millions) Particulars India Africa Rest of the World Total Year ended March 31, 2012 499,994 197,796 16,718 714,508 Year ended March 31, 2011 452,412 130,721 12,250 595,383 (b) Non-current assets...

  • Page 178
    BHARTI AIRTEL ANNUAL REPORT 2011-12 7. BUSINESS COMBINATION/ACQUISITION OF NON-CONTROLLING INTEREST/DISPOSAL OF SUBSIDIARY a) Acquisition of 100% interest in Bharti Airtel Africa B.V. (erstwhile Zain Africa B.V. ('Zain')) The Group entered into a share purchase agreement with Zain International BV ...

  • Page 179
    ... of acquisition, Bharti Airtel Africa B.V. has contributed revenue of ` 130,418 Mn and loss before tax of ` 3,843 Mn to the consolidated revenue and net profit before tax of the Group, respectively, for the year ended March 31, 2011. The details of receivables acquired through business combination...

  • Page 180
    BHARTI AIRTEL ANNUAL REPORT 2011-12 b) Acquisition of 70% effective interest in Airtel Bangladesh limited (erstwhile Warid Telecom International Limited 'Warid') The Group entered into a share purchase agreement with Warid Telecom international LLC to acquire 70% equity interest in Airtel ...

  • Page 181
    ... from the combined operation of the Group and Airtel (Seychelles) Limited. During the three months period ended September 30, 2011, the end of the measurement period, the group has completed the fair valuation of net assets acquired as at the acquisition date. There are no changes in the fair...

  • Page 182
    BHARTI AIRTEL ANNUAL REPORT 2011-12 From the date of acquisition, Telecom Seychelles Limited has contributed revenue of ` 416 Mn and profit before tax of ` 176 Mn to the consolidated revenue and net profit before tax of the Group, respectively, for the year ended March 31, 2011. The details of ...

  • Page 183
    ...) Particulars Access charges Licence fees, revenue share and spectrum charges Network operations cost Employee costs Selling, general and adminstrative expenses Charity & donations Notes Year ended March 31, 2012 97,361 61,099 157,598 35,159 126,310 408 477,935 Year ended March 31, 2011 74,718...

  • Page 184
    ...share option plans of the Group and its joint ventures: Classification/ accounting treatment Equity settled Equity settled Equity settled Equity settled Equity settled Equity settled Equity settled Entity Bharti Airtel Scheme I Bharti Airtel Scheme I BHARTI AIRTEL ANNUAL REPORT 2011-12 Bharti...

  • Page 185
    ...31, 2011, respectively. Information concerning the share options issued to directors, officers and employees is presented below: Particulars As of March 31, 2012 Number of share options (Shares in Thousands) Scheme I - 2001 plan Number of shares under option: Outstanding at beginning of year Granted...

  • Page 186
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Contd...Particulars As of March 31, 2012 Number of share options (Shares in Thousands) Scheme I - superpot Number of shares under option: Outstanding at beginning of year Granted Exercised Expired Forfeited Outstanding at year end Exercisable at end of year ...

  • Page 187
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Contd...Particulars As of March 31, 2012 Number of share options (Shares in Thousands) Scheme 2005 - LTIP Plan Number of shares under option: Outstanding at beginning of year Granted Exercised Expired Forfeited Outstanding at year end Exercisable at end of year ...

  • Page 188
    ... 2012 and March 31, 2011, Bharti Airtel Employee Welfare Trust ('trust') (a trust set up for administration of ESOP Schemes of the Company) has acquired 1,507,000 and 1,157,025 Bharti Airtel equity shares from the open market at an average price of ` 360.94 and ` 347.44 per share and has transferred...

  • Page 189
    ... on others Net gain on securities held for trading Net gain on derivative financial instruments Finance costs Interest on borrowings Unwinding of discount on provisions Net exchange loss Other finance charges 2 445 49 423 1,639 85 2,643 30,608 446 5,233 4,541 40,828 Year ended March 31, 2011 10 475...

  • Page 190
    ...AIRTEL ANNUAL REPORT 2011-12 During the years ended March 31, 2012 and March 31, 2011, the Company recognised additional income tax charge of ` 70 Mn and ` 2,980 Mn under 'current income tax' and additional MAT credit of ` 70 Mn and ` 2,980 Mn under 'deferred tax', respectively on account of change...

  • Page 191
    ...31, 2011 The reconciliation of deferred tax assets net is as follows: (` Millions) Particulars Opening Balance Tax Income/(expense) during the year recognized in profit & loss Deferred taxes acquired in business combination Translation adjustment Others* Closing Balance Year ended March 31, 2012 32...

  • Page 192
    ... the tax rates applicable as of March 31, 2012 in the jurisdiction in which the respective Group entity operates. During the years ended March 31, 2012 and March 31, 2011, the Group has recognised deferred tax asset of ` 2,455 Mn and ` Nil, respectively, on carry forward unused tax losses in respect...

  • Page 193
    BHARTI AIRTEL ANNUAL REPORT 2011-12 12. PROPERTY, PLANT AND EQUIPMENT (` Millions) Particulars Land and buildings Technical equipment and machinery Other equipment, operating and office equipment Advance payments and construction in progress Total Cost As of April 1, 2010 Additions Acquisition ...

  • Page 194
    BHARTI AIRTEL ANNUAL REPORT 2011-12 "Land and Building" include gross block of assets capitalised under finance lease ` Nil and ` 914 Mn as of March 31, 2012 and March 31, 2011 respectively and the corresponding accumulated depreciation for the respective periods ` Nil and ` 67 Mn. The "advance ...

  • Page 195
    ... cash generating units are founded on projections that are based on five to ten years, as applicable, financial plans that have been approved by management and are also used for internal purposes. The Group has used ten year plans for Mobile Services India & South Asia and Airtel business CGU's in...

  • Page 196
    ...coupled with additional capital expenditure required for roll out of incremental coverage requirements and to provide enhanced voice and data services. Sensitivity to changes in assumptions With regard to the assessment of value-in-use for Mobile Services - India & South Asia and Airtel Business, no...

  • Page 197
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Cumulative unrecognised loss is ` 757 Mn and ` 324 Mn as of March 31, 2012 and March 31, 2011, respectively. Share in associates statement of financial position: (` Millions) Particulars Assets Liabilities Equity As of March 31, 2012 2,032 2,532 (500) As of March...

  • Page 198
    BHARTI AIRTEL ANNUAL REPORT 2011-12 16. DERIVATIVE FINANCIAL INSTRUMENTS The Group uses foreign exchange option contracts, swap contracts, forward contracts and interest rate swaps to manage some of its transaction exposures. These derivative instruments are not designated as cash flow, fair value ...

  • Page 199
    ... value of the financial assets (security deposits) on initial recognition and the amount paid. Advances represent payments made to various Government authorities under protest and are disclosed net of provision of ` 12,900 Mn and ` 7,820 Mn as of March 31, 2012 and March 31, 2011, respectively. 19...

  • Page 200
    ...783 Mn as of March 31, 2012 and March 31, 2011, respectively. Employee receivables principally consist of advances given for business purposes. Other taxes receivables include customs duty, excise duty, service tax, sales tax and other recoverable and are disclosed net of provision of ` 1,590 Mn and...

  • Page 201
    BHARTI AIRTEL ANNUAL REPORT 2011-12 22. SHORT TERM INVESTMENTS (` Millions) Particulars Held for trading securities - quoted Loans and receivables - fixed deposits with banks As of March 31, 2012 16,141 1,991 18,132 As of March 31, 2011 6,125 99 6,224 The market values of quoted investments were ...

  • Page 202
    BHARTI AIRTEL ANNUAL REPORT 2011-12 25. BORROWINGS 25.1 Long term debts (` Millions) Particulars Secured Term loans Non convertible debentures (NCDs) Others Total Less: Current portion Total secured loans, net of current portion Unsecured Term Loans Total Less: Current portion Total unsecured loans...

  • Page 203
    BHARTI AIRTEL ANNUAL REPORT 2011-12 25.3.2 Interest rate & currency of borrowings (` Millions) Particulars INR USD JPY NGN XAF XOF Others March 31, 2012 INR USD JPY NGN XAF XOF Others March 31, 2011 Total borrowings 133,822 483,661 5,026 48,301 10,008 5,345 6,803 692,966 100,803 454,332 16,626 35,...

  • Page 204
    ... REPORT 2011-12 (` Millions) Outstanding loan amount Entity Bharti Airtel Ltd Relation As of March 31, 2012 65 As of March 31, 2011 218 Security Detail (i) against hypothecation of vehicles (for secured loans as of March 31, 2012 and as of March 31, 2011); (ii) first ranking pari passu charge...

  • Page 205
    ... (vi) Pledge on specific assets - Burkina Faso (vii) Pledge on assets and shares - Ghana BAABV (erstwhile ZAIN) acquisition related borrowing: Bharti Airtel acquired operations of 15 countries in Africa from ZAIN BV through its subsidiary Bharti Airtel International Netherlands BV with effect from...

  • Page 206
    ... 25.8 Unused lines of credit (` Millions) Particulars Secured Unsecured Total Unused lines of credit As of March 31, 2012 10,473 37,814 48,287 As of March 31, 2011 10,189 20,528 30,717 25.9 During the year ended March 31, 2012, the Group has fallen short of meeting certain financial covenants with...

  • Page 207
    BHARTI AIRTEL ANNUAL REPORT 2011-12 During the year ended March 31, 2011, a jointly controlled entity has revised its estimate for ARO and consequently reversed provisions amounting to ` 246 Mn with corresponding reduction in gross block of assets. The impact of such change in estimates is not ...

  • Page 208
    BHARTI AIRTEL ANNUAL REPORT 2011-12 29. EMPLOYEE BENEFITS The following table sets forth the changes in the projected benefit obligation and plan assets and amounts recognised in the consolidated statement of financial position as of March 31, 2012 and March 31, 2011, being the respective ...

  • Page 209
    ... of other long term employee benefits: Deferred incentive plan (` Millions) Particulars Opening Balance Addition Utilization Closing Balance For the year ended March 31, 2012 162 41 (186) 17 For the year ended March 31, 2011 807 228 (873) 162 Long term service award (` Millions) Particulars...

  • Page 210
    ... share-based payment transactions provided to employees including key management personnel, as part of their remuneration. The carrying value of the reserve as of March 31, 2012 and March 31, 2011 is ` 5,196 Mn and ` 4,776 Mn, respectively. A jointly controlled entity of the Group not yet listed...

  • Page 211
    BHARTI AIRTEL ANNUAL REPORT 2011-12 d) Reserves arising on transactions with equity owners of the Group or Reserve arising on dilution. The transactions with non-controlling interests are accounted for as transactions with equity owners of the Group. Gains or losses on transaction with holders of ...

  • Page 212
    BHARTI AIRTEL ANNUAL REPORT 2011-12 "Others" include non-interest bearing advance received from customers and international operators. "Others" also include ` Nil (USD Nil) as of March 31, 2012 and ` 35,763 Mn (USD 801 Mn) as of March 31, 2011 towards the amount payable to Zain International B.V. ...

  • Page 213
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Fair Values The Group and its joint ventures maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available. In addition, the Group and its joint ventures internally reviews valuation, ...

  • Page 214
    BHARTI AIRTEL ANNUAL REPORT 2011-12 (` Millions) Particulars March 31, 2012 Financial assets Derivative financial assets Held for trading securities - quoted Financial liabilities Derivative financial Liabilities March 31, 2011 Financial assets Derivative financial assets Held for trading ...

  • Page 215
    ... charges towards network equipments. Payments made to key management personnel/non executive directors were as follows: (` Millions) Particulars Short-Term employee benefits Post-Employment benefits Defined Contribution Scheme Defined Benefit Scheme* Share-based payment** Year ended March 31, 2012...

  • Page 216
    BHARTI AIRTEL ANNUAL REPORT 2011-12 34. LEASE DISCLOSURE Operating Lease As lessee, the Group's and its joint ventures' obligations arising from non-cancellable lease are mainly related to lease arrangements for passive infrastructure and real estate. These leases have various extension options and...

  • Page 217
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Finance Lease - As a Lessee (i) Finance lease obligation of the Group as of March 31, 2012 is as follows (` Millions) Particulars Not later than one year Later than one year but not later than five years Later than five years Total Future minimum lease payments 0...

  • Page 218
    ... the Group and its joint ventures have operations in India, South Asia region and Africa region. a) Sales and Service Tax The claims for sales tax as of March 31, 2012 and as of March 31, 2011 comprised of cases relating to the appropriateness of declarations made by the Company under relevant sales...

  • Page 219
    BHARTI AIRTEL ANNUAL REPORT 2011-12 c) Access charges (Interconnect Usage Charges)/Port charges Interconnect charges are based on the Interconnect Usage Charges (IUC) agreements between the operators although the IUC rates are governed by the IUC guidelines issued by TRAI. BSNL has raised a demand ...

  • Page 220
    ... license conditions related to renting/transfer of sim cards in a mobility circle. d. In respect of provision of IPLC services to a non-licensed entity which has directly sold the same to a customer located in India in Airtel Business. The above stated matters are being contested by the Company and...

  • Page 221
    ...) Particulars Weighted average shares outstanding- Basic Effect of dilutive securities on account of ESOP Weighted average shares outstanding- diluted Year ended March 31, 2012 3,795 1 3,796 Year ended March 31, 2011 3,795 0 3,795 Income available to common stockholders of the Group used in the...

  • Page 222
    ... respective market risks. This is based on the financial assets and financial liabilities held as of March 31, 2012 and March 31, 2011. The Group's activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. The Group...

  • Page 223
    BHARTI AIRTEL ANNUAL REPORT 2011-12 • Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's and its joint ventures' exposure to the risk of changes in market ...

  • Page 224
    BHARTI AIRTEL ANNUAL REPORT 2011-12 1) Trade receivables Customer credit risk is managed by each business unit subject to the Group's established policy, procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally on 14-day to 30-...

  • Page 225
    ... payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the year ended March 31, 2012 and March 31, 2011. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net...

  • Page 226
    ... the year ended March 31, 2012, the Group has completed the launch of 3G services in all its eligible licensed circles in India and launched Airtel Money at Pan India level. In respect of Africa operations, 3G services were commenced in select countries and commercial operations were launched in...

  • Page 227
    ..., which are as follows:S. no Name of subsidiary Country of incorporation Principal activities Percentage of holding (direct/indirect) by the Group As of March 31, 2012 % 1 Bharti Airtel Services Limited India Administrative support to Bharti Group and trading activities Submarine Cable System...

  • Page 228
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Contd...S. Name of subsidiary no Country of incorporation Principal activities Percentage of holding (direct/indirect) by the Group As of March 31, 2012 % 35 36 37 38 39 Partnership Investments Sprl Celtel Congo (RDC) S.a.r.l. Bharti Airtel Mali Holdings B.V. ...

  • Page 229
    ... AIRTEL ANNUAL REPORT 2011-12 Contd...S. Name of subsidiary no Country of incorporation Principal activities Percentage of holding (direct/indirect) by the Group As of March 31, 2012 % 66 67 68 Bharti Airtel Zambia Holdings B.V. Airtel Mobile Commerce Limited (formely known as Zap Trust Company...

  • Page 230
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Contd...S. Name of subsidiary no Country of incorporation Principal activities Percentage of holding (direct/indirect) by the Group As of March 31, 2012 % 93 Airtel DTH Services (SL) Limited Sierra Leone Burkina Faso Madagascar Niger Nigeria Chad Tanzania Zambia ...

  • Page 231
    BHARTI AIRTEL ANNUAL REPORT 2011-12 S. Name of associates no Country of Principal activities incorporation Percentage of holding (direct/indirect) by the Group As of March 31, 2012 % As of March 31, 2011 % 49 26 35 1 2 3 Bharti Teleports Limited Alcatel Lucent Network Management Services India ...

  • Page 232
    ...borrowings (net) to improve the understandability of the effect of short term borrowings. (iii) During the comparative previous year ended March 31, 2011, 'other income' and 'non-operating expenses' were presented after 'Profit/(Loss) from operating activities' in the income statement. The Group has...

  • Page 233
    ... International Limited) 7 Bharti Airtel (UK) Limited 8 Bharti Airtel (Canada) Limited 9 Bharti Airtel Lanka (Pvt) Limited 10 Bharti Airtel Holdings (Singapore) Pte Ltd 11 Bharti Airtel (USA) Limited (a) (h) (a) (a) (a) (a) India Mauritius India India India INR USD INR INR INR March 31, 2012...

  • Page 234
    ... Sierra Leone Holdings B.V. Bharti Airtel Tanzania B.V. Bharti Airtel Uganda Holdings B.V. Bharti Airtel Zambia Holdings B.V. Celtel (Mauritius) Holdings Limited Indian Ocean Telecom Limited Zebrano (Mauritius) Limited (Formerly known as Zain (IP) Mauritius Limited) Airtel Mobile Commerce (Ghana...

  • Page 235
    ... 79 Airtel Money Niger S.A. (formerly known Zap Niger S.A. (Niger)) 80 Mobile Commerce Congo S.A. 81 Mobile Commerce Gabon S.A. 82 Zap Trust Company Nigeria Ltd. 83 ZMP Limited 84 Africa Towers Services Limited 85 Airtel Towers (Ghana) Limited 86 Airtel Towers (SL) Company Limited 87 Burkina Faso...

  • Page 236
    ... Sprl 119 MSI-Celtel Nigeria Limited 120 Channel Sea Management Company Mauritius Limited 121 Montana International S.A 122 Société Malgache de Téléphone Cellulaire S.A. 123 Bharti Airtel Developers Forum Limited (formely known as Zain Developers Forum) NOTES a) Financial information has been...

  • Page 237
    BHARTI AIRTEL ANNUAL REPORT 2011-12 Circle offices Assam & North East States Bharti House, Six Mile, Khanapara, Guwahati - 781 022 Andhra Pradesh Splendid Towers, HUDA Road, Begumpet, Hyderabad - 500 016 Bihar 7th Floor, Anand Vihar, Boring Canal Road, Patna - 800 001 Delhi NCR Airtel Centre, Plot ...

  • Page 238
    Notes

  • Page 239
    Ushering in a DATA Revolution in Africa

  • Page 240
    Main hoon na friend, Close friend, Lazy friend, Notes friend... har friend zaroori hai, yaar the campaign that has taken India by storm! Bharti Airtel Limited Bharti Crescent, 1, Nelson Mandela Road, Vasant Kunj, Phase II, New Delhi - 110 070, India. www.airtel.in