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Bharti Airtel Limited
Annual Report 2012-13
A world of
friendships

Table of contents

  • Page 1
    A world of Bharti Airtel Limited Annual Report 2012-13 friendships

  • Page 2
    Vision By 2015 airtel will be the most loved brand, enriching the lives of millions.

  • Page 3
    ... Bharti Crescent, 1, Nelson Mandela Road, Vasant Kunj, Phase - II, New Delhi - 110 070, India Website www.airtel.com Group General Counsel & Company Secretary Mr. Mukesh Bhavnani Contents 02-25 Company Overview 02 04 06 08 09 10 12 13 26-237 Statutory Reports & Financial Statements A World...

  • Page 4
    ... Ranked globally (customer base) 20 Country presence ` 803.1 Bn 1.8 Bn Addressable population* (*Combined population for the regions in which Airtel has a footprint) Global revenues in 2012-13 213 Mn Daily sms sent* between subscribers (*Through wireless mobile services) 271 TB Of daily data...

  • Page 5
    ...* ( *In terms of market share) 14 Countries where 3G services are available* (*Through wireless mobile services) 188.22 Mn Mobile subscribers in India* (*Comprising wireless mobile services) 71.62 Mn Mobile subscribers in International* (*Comprising wireless mobile services) 60.26 Mn Active Data...

  • Page 6
    ...31, 2010, 2011, 2012 & 2013 are based on IFRS. * During the financial year 2009-10, the Company has sub-divided (share split) its 1 equity share of ` 10 each into 2 equity shares of ` 5 each. Thus, previous year's figures have been restated accordingly. 4 Bharti Airtel Limited Annual Report 2012...

  • Page 7
    CUSTOMER BASE (Nos. '000) REVENUE (` Millions) 271,227 251,646 220,878 595,383 714,508 803,112 137,...08-09 09-10 10-11 11-12 12-13 08-09 09-10 10-11 11-12 12-13 CASH PROFIT (` Millions) CAPITAL EMPLOYED (` Millions) 204,836 180,581 162,817 153,801 208,008 1,087,180 1,156,507 1,141,...

  • Page 8
    ... of our 3G networks complemented the changing industry dynamics effectively, helping trigger a powerful mobile internet revolution in these markets. Airtel money, currently available in 18 of the 20 markets we are present in, is redefining banking and commerce in multiple ways. The service is...

  • Page 9
    ...2012 raising ` 41,728 Mn. Enthusiastic participation by institutional investors reaffirmed market confidence in the Company's strong balance sheet and future cash ï¬,ows. responsibility of Bangladesh and Sri Lanka, Gopal Vittal took over as the Joint Managing Director & CEO (India). Over the years...

  • Page 10
    ... the rural areas to be connected to the financial world. We have now successfully launched airtel money across 16 markets and our objective is to become Africa's largest mobile bank. We also realise the opportunity that the youth of Africa 8 Manoj Kohli Bharti Airtel Limited Annual Report 2012-13

  • Page 11
    ...widest range of telecom services - mobile, fixed line, 3G, 4G, Wi-Fi, Fibre, DSL, cloud and mobile money. We are children of competition, who have constantly innovated to transform a business with far-reaching impact, in step with India's GDP growth. Dear Shareholders, The last year has seen a lot...

  • Page 12
    A World of Friendships Board of Directors Gopal Vittal Nikesh Arora Manish Kejriwal Obiageli Ezekwesili Ajay Lal Tsun-yan Hsieh Chua Sock Koong 10 Bharti Airtel Limited Annual Report 2012-13

  • Page 13
    Rajan Bharti Mittal Pulak Prasad Manoj Kohli Craig Ehrlich Tan Yong Choo Sunil Bharti Mittal Board of Directors 11

  • Page 14
    ... Telecom Company of the Year, Telecom Brand of the Year and Customer-friendly Operator of the Year Named Most Socially Responsible Company in Niger in March, 2013 Airtel Rising Stars (ARS) Championships won The Sponsorship PR Campaign of the Year at the 12th PRSK Annual Awards in December, 2012 Won...

  • Page 15
    ... Bharti Airtel partners organisations across countries of its operation to foster inclusive growth. The Company is actively pursuing its socio-economic priorities across multiple platforms. Its individual business units, spread across different geographies, have consistently tried to promote social...

  • Page 16
    ... young people employed as teachers at Satya Bharti Schools The above data are as of April 30, 2013 except the investments made in Satya Bharti Schools since inception. * In addition, ` 743.91 Mn has been spent on Capital Expenditure till March 2013. 14 Bharti Airtel Limited Annual Report 2012-13

  • Page 17
    ... to address social problems by interacting closely with their surroundings Students of the Satya Bharti School spearheaded community development campaigns against social evils and engaged over 0.5 Mn local people to bring about positive changes at the grassroots level; moreover Satya Bharti students...

  • Page 18
    ... socio-economic activities. The 12 year old was instrumental in bringing a change in the mindset of the villagers towards untouchability. Her endeavour to create an equitable society was appreciated by the jury of Pramerica Spirit of Community Awards. 16 Bharti Airtel Limited Annual Report 2012-13

  • Page 19
    ... Inspection Report (STiR) Bharti Foundation's international presence: Infopoverty World Conference organised in the UN headquarters, New York Learning for All Ministerial Country Meetings in Washington Bharti Foundation: A Resource Organisation in Education Space Bharti Foundation plays a key role...

  • Page 20
    ... the Bond Bharti Airtel joined other group companies to undertake efforts to support the Satya Bharti School Programme. The Young Leader Programme Under the Young Leader Programme, as a part of the corporate induction schedule at Bharti Airtel, 18 Bharti Airtel Limited Annual Report 2012-13

  • Page 21
    ... district, Uttar Pradesh, especially for the rural and semi-urban markets. The innovative service empowers pan-India mobile customers to easily browse and subscribe to a bouquet of value-added services, while on the move, by just dialling a toll-free number. Corporate Social Responsibility 19

  • Page 22
    .... This was one of the most complex implementations and certification efforts in business continuity globally ISO 27001 Bharti Airtel's robust information security management system and operations were certified against ISO 27001 Airtel M Commerce Services was also certified against ISO 27001 The...

  • Page 23
    ... commissioned at one of the Main Switching Centres (MSCs) of the Company in India. This is the largest rooftop installation in India's entire telecom sector, generating 1.5 Lakh units of green energy annually; moreover, planning to replicate this in its other MSC locations with 300 kwp solar power...

  • Page 24
    ... Bharti Airtel has started distributing annual reports through email, thus helping reduce paper consumption. The Company has sent the electronic version of the Annual Report to more than 2 Lakhs shareholders, saving over 2 Cr. pages. Community Development Bharti Airtel encourages its employees...

  • Page 25
    ... in India to save human lives. This year also, Airtel Centre - Gurgaon, Airtel Business, NESA Circle, Karnataka Circle, UPU Circle and Shared Services organised Blood Donation Camps. A large number of employees participated to make these initiatives successful. SMS Campaigns The Company launched...

  • Page 26
    ... improving the schools. They also volunteer onsite, visiting the schools regularly and interacting with the teachers and students. 24 17 18,000 38 Countries in Africa covered under this programme Children covered Primary schools in rural areas adapted Bharti Airtel Limited Annual Report 2012-13

  • Page 27
    ... a strategic agreement with Sanlam, a South Africa-based financial services group. The objective was to develop low-cost insurance and health funding products across Kenya, Ghana, Tanzania, Zambia, Uganda, Malawi and Nigeria. Making the World Greener To reduce its carbon footprint, Airtel Africa...

  • Page 28
    ... the Indian markets, the Company also provides telecom services through subsidiary companies in Lanka, Bangladesh and 17 countries in Africa. Number of National Locations 10. Markets served by the Company - Local/ State/National/International 26 Bharti Airtel Limited Annual Report 2012-13

  • Page 29
    Section B: Financial Details of the Company 1. 2. 3. 4. 5. Paid up capital (`) Total turnover (`) Total profit after taxes (`) Total spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%) List of activities in which expenditure in 4 above has been incurred 18,988 ...

  • Page 30
    ... policy, should do so in a responsible manner Principle 8 Businesses should support inclusive growth and equitable development Principle 9 Businesses should engage with and provide value to their customers and consumers in a responsible manner 28 Bharti Airtel Limited Annual Report 2012...

  • Page 31
    ... of the Policy. Except Code of Conduct all other policies are the internal policy of the Company and therefore are not available on the website of the Company. The Code of Conduct can be accessed through the following link: http://www.airtel.com/wps/wcm/connect/africaairtel/Africa/code_of_conduct/en...

  • Page 32
    .... Bharti Airtel is leveraging its existing services of Mobile DTH and Broadband to provide basic life services of financial inclusion, health and education through mobile money, mobile health, mobile education and agricultural awareness. 2. For each such product, provide the following details in...

  • Page 33
    ... groups, specially SC/ST/OBC categories and girl students. Besides, over the years, the Company has also been focusing on increasing rural penetration of its services. 17,794 Nil 17,794 Please indicate the number of permanent women employees. As of March 31, 2013, a total of 1,531 women employees...

  • Page 34
    ... to all employees and contractors, group companies, joint ventures and suppliers. 2. How many stakeholder complaints were received in the past financial year and what percent was satisfactorily resolved by the Management? Nil E) F) G) H) I) J) K) L) 32 Bharti Airtel Limited Annual Report 2012-13

  • Page 35
    ...security, sustainable business principles and others). Wherever any consultation paper is released by TRAI, the Company provides its inputs to the association for an appropriate representation to the Regulator. Bharti Airtel focuses on public policies that maximise C) These strategies are detailed...

  • Page 36
    ... rural India 3) These objectives are accomplished by: Bridging the digital divide through its robust network and far-reaching distribution Working towards expanding bouquet of services and enhancing its communication technologies Emerging and innovative business models like Airtel money, mHealth...

  • Page 37
    ... the Company is engaged in the business of providing suite of telecommunication services, the clause has limited applicability. Notwithstanding Bharti Airtel has been transparently communicating service mandatory information regarding enrolment and deactivation, tariff, usage, contact and grievance...

  • Page 38
    ...Overview Bharti Airtel continued to be among the top four mobile service providers globally with presence in 20 countries, including India, Sri Lanka, Bangladesh and 17 countries in the African continent. The Company's diversified service range includes mobile, voice and data solutions using 2G, 3G...

  • Page 39
    ... shares of ` 5 each. Capital Market Ratings As on March 31, 2013, Bharti Airtel is rated by two domestic rating agencies, namely CRISIL and ICRA, and two international rating agencies, viz. Fitch Ratings and S&P. CRISIL and ICRA revised their long-term ratings of the Company. Currently, they rate...

  • Page 40
    ... the Year award, agency faq's third Buzziest Indian Brand and so on. Bharti Airtel captured the numero uno position among telecom brands in Economic Times' Brand Trust ratings. It also entered the Financial Times London's list of Top 100 Global Brands. The Nigeria Half Dollar campaign was listed as...

  • Page 41
    ... Mobile Internet browsing experience on 2G networks Integrated Billing API with Nokia Store to help customers pay from their airtel wallet and download apps and games from Nokia Store Launched mBazaar, a unique service, which uses an innovative business model of lead generation to provide a market...

  • Page 42
    ... of India, the Board of Directors have consented for not attaching the balance sheet, statement of profit & loss, and other documents, as set out in Section 212(1) of the Companies Act, 1956, in respect of its subsidiary companies, for the year ended March 31, 2013. Annual accounts of these...

  • Page 43
    ...217(2A) of the Companies Act, 1956, read with Companies (Particular of Employees) Rules, 1975, have been set out in the annexure to this report. In terms of the provisions of Section For and on behalf of the Board Date: May 2, 2013 Place: New Delhi Sunil Bharti Mittal Chairman Directors' Report 41

  • Page 44
    ... Services in Other Countries Bharti Airtel Lanka (Pvt) Limited is Sri Lanka's fastest growing wireless service provider. It expanded its footprint by starting commercial operations in the country's eastern and northern parts. Airtel Lanka ended the financial year with 1.7 Mn customers. The Company...

  • Page 45
    ...,250 30,181,543 Nil 3) 4) 5) Options vested Number of options exercised Number of shares arising as a result of exercise of option during the financial year 2012-13 Number of options lapsed Money realised by exercise of options Total number of options in force Options granted to senior managerial...

  • Page 46
    ... schedule of performance linked options granted to Mr. Manoj Kohli and Mr. Sanjay Kapoor under ESOP scheme 2001 and 2005. No employee was granted stock options exceeding 5% of the total grants or exceeding 1% of the issued capital during the year. 44 Bharti Airtel Limited Annual Report 2012-13

  • Page 47
    ...Director - Human Resources Director - Network Service Group (India & South Asia) Director - Global Innovation & IT 39 Jayant Sood Head Customer services - Market Ops India Information Technology Customer Service Delivery 62,823,020 Vodafone Group Services Ltd./Group Technology Strategy Director...

  • Page 48
    ...Chief Operating Officer -ES Corporate-South Executive Director - Human Resources 46 47 Lal Bahadur Prasad Krishan Mohan Saxena Head - Internal Enterprise Systems Head CSD 48 49 M.p. Deepu Manish Mamtani Sales & Marketing Head Head Governance & PMO Bharti Airtel Limited Annual Report 2012-13...

  • Page 49
    ... Asia 8,199,438 Koshika Telecom Ltd./Product Manager - Prepaid 12,876,900 Lornamead Acquisitions, London/Country Director, India 11,448,036 Pantaloon Retail India Ltd/Head Operation - South Zone 20,905,698 Eicher Good Earth Limited/General Manager 7,210,466 Coke/General Chief Accountant 8,440...

  • Page 50
    ...South Asia 4 Ananda Mukerji Group Director - Business Development 5 Anil Sharma Advisor - Group Corporate Affairs 6 Anupma Suneja Head - Measurement & Research 7 Ashish D Kalay Chief Informations Officer - B2C 8 Gopal Vittal JMD & CEO (India) Bharti Airtel Limited Annual Report 2012...

  • Page 51
    ... Aventis/General Manager-HR VISA/DirectorPrepaid,Business Development,South Asia Reliance Communications Ltd/V.P., Head of New Age VAS Nokia India/Head of Marketing 16 Business Head 3-Dec-12 40 (B) EMPLOYED FOR PART OF THE FINANCIAL YEAR MMS/B.E 23 Sameer Kirit Anjaria Chief Operating Officer...

  • Page 52
    ... linkages in terms of currency, investments, capital ï¬,ows and remittances. Against the backdrop of global uncertainties, the relatively better economic prospects of India, South Asia and SubSaharan African regions augur well for the Company's business. Bharti Airtel Limited Annual Report 2012-13

  • Page 53
    ... other hand, the service areas, such as Assam (46.50%), Bihar (46.53%), Madhya Pradesh (52.23%), Uttar Pradesh (56.20%), West Bengal (56.85%) and Jammu and Kashmir (58.41%) have comparatively low teledensity. There has been a marginal improvement in rural teledensity during 2012-13 and it increased...

  • Page 54
    .../4G services in India, are likely to reduce connectivity costs and overcome the challenge of limited fixed-line connections. 52 Development in Regulations The year saw several regulatory changes and developments The highlights of significant regulatory changes are as follows: India and South Asia...

  • Page 55
    ... 16 countries. This has allowed Bharti Airtel's customers to enjoy the convenience of services akin to banking, transferring funds and paying bills on their mobiles. The Company is further working on simplified user interfaces, enhanced security features and user education on airtel money. Data The...

  • Page 56
    ...-media solutions Present in the country with second largest population globally Largest operator in India and fourth largest in the world Technology, infrastructure and skilled manpower Untapped telecom market in Africa and rural India Underpenetrated broadband connectivity Mandatory digitisation...

  • Page 57
    ..., 2012. The Company witnessed a rise in mobile data revenues in India by 66%. Digital TV grew by 26% and airtel business expanded by 19%. The Company's Africa business also grew by 21%. In constant currency terms, Africa's revenues grew by 12% over the last year. Ratio of access and inter-connection...

  • Page 58
    ...31, 2013. Of these customers, 6.4 Mn are 3G data customers. Wireless data revenues grew by 66% to ` 22,362 Mn during the year, accounting for 5.4% of the total wireless revenues (3.5% in the previous year) Sri Lanka In Sri Lanka, the Company had 1.7 Mn customers at the end of the year, with presence...

  • Page 59
    ...The year also saw Bharti Airtel gain momentum on the Wi-Fi front. With over 1,700 pan-India hotspots, the Company ensures data offloading and reduces mobile network congestion, emerging as the country's second largest Wi-Fi hotspot provider. Digital TV Services Overview The Company served a customer...

  • Page 60
    ... Revenues EBIT Key Initiatives The Company focused on expanding into emerging global markets, building the B2B brand, offering innovative products and services, and co-building or buying access networks Better controls on operating expenditure and improved receivables resulted in a healthy growth...

  • Page 61
    ..., data, airtel money and value-added services) and markets. It also addresses a wide customer cross-section, minimising risks. To mitigate currency and interest rate risks, the Company follow a prudent risk management policy, including hedging mechanisms to protect cash ï¬,ow. A pricing strategy...

  • Page 62
    ... Bharti Airtel has successfully gained customer loyalty through innovative products and offerings, and this strategy continues to be an important pillar of the Company's sustainable growth. Technology Shifts: Evolving technologies (2G, 3G, 4G) result in change in customer value propositions. Mobile...

  • Page 63
    ... as building the right set of capabilities for all businesses at Bharti Airtel. The year witnessed some key leadership changes at the top. While Manoj Kohli moved into the enhanced role of Managing Director & CEO (International) with the added responsibility of Bangladesh and Sri Lanka, Gopal Vittal...

  • Page 64
    ... and processes, according to which an organisation is directed and controlled. Its structure specifies the distribution of rights and responsibilities among different pan-organisational participants, such as the Board, managers, shareholders and 62 Bharti Airtel Limited Annual Report 2012-13

  • Page 65
    ...policy and management compensation, employee stock option plans and investor grievances Ensures complete and timely disclosure of relevant financial and operational information to enable the Board to play an effective role in the guiding strategy Organises informal meeting of Independent Directors...

  • Page 66
    ... within India. The AMB meets monthly and takes decisions relating to Airtel India business strategy and looks at achieving operational synergies across business units. The team owns and drives company-wide processes, systems and policies. AMB also functions as a role model for leadership development...

  • Page 67
    ... are placed before the Board for information. Role and Responsibility of Independent Directors To provide entrepreneurial leadership within framework of prudent and effective controls a To evaluate and review the management's strategic, financial and business plans To establish a framework of...

  • Page 68
    ... on their core area. Information Available to the Board The Board has complete access to all the relevant information within the Company, and to all our employees. The information shared on a regular basis with the Board specifically includes: 66 Bharti Airtel Limited Annual Report 2012-13

  • Page 69
    ... from Airtel Africa subsidiary company and is not paid any remuneration from India. Remuneration Policy for Directors The remuneration of Executive Directors, i.e. Mr. Sunil Bharti Mittal - Chairman, Mr. Gopal Vittal - Joint Managing Director & CEO (India), is approved by the Board of Directors...

  • Page 70
    ...-Linked Incentive (PLI) includes provision at 100% performance for the FY 2012-13 and adjustments of actual PLI payout for the FY 2011-12. Commission include provision for the FY 2012-13 and adjustments on account of actual payout for the FY 2011-12. 68 Bharti Airtel Limited Annual Report 2012-13

  • Page 71
    ...the Company's website (www.airtel.com). The Code is applicable to all Board Members and senior management executives who directly report to the Chairman, the Managing Director & CEO (International) and the Joint Managing Director & CEO (India). The Code is circulated annually among all Board members...

  • Page 72
    ...01, 2013. Ceased to be a member of the committee w.e.f. September 26, 2012. Appointed as a member of the Committee w.e.f. September 26, 2012 and ceased to be member w.e.f. May 01, 2013. Appointed as a member of the Committee w.e.f. September 26, 2012. 70 Bharti Airtel Limited Annual Report 2012-13

  • Page 73
    ... controls and financial reporting processes lies with the management. The Statutory Auditors have the responsibility of performing an independent audit of the Company's financial statements in accordance with the India's Generally Accepted Accounting Principles (GAAP) and International Financial...

  • Page 74
    ... of the Executive Directors, the HR Committee also oversees the functions related to the Company's human capital. The Committee's key responsibilities include: Developing recruitment and retention strategies for employees Formulating employee development strategies Deciding compensation (including...

  • Page 75
    ...Securities 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 Compensation Committee Composition of ESOP Key Responsibilities of the Investor...

  • Page 76
    ...(s) from time to time To open, operate, close, change in authorisation for any Bank, Demat, Subsidiary General Ledger (SGL), Dematerialisation/Depository Account To purchase, sell, acquire, subscribe, transfer, sale or otherwise deal in the shares/securities of any company, body corporate or other...

  • Page 77
    ... During the year, the Board, in its meeting held on November 06, 2012, on the recommendation of the Independent Directors, constituted a Nomination Committee. The Committee comprises five members. Rajan Bharti Mittal, Non-Executive Director, is the Chairman of the Committee. The Company Secretary...

  • Page 78
    ... hours of the declaration of the results and were also placed at the website of the Company at www.airtel.com. General Body Meetings The last three Annual General Meetings (AGMs) were held as under: Financial Year 2011-2012 2010-2011 2009-2010 Location Air Force Auditorium, Subroto Park, New Delhi...

  • Page 79
    ... to address operational, strategic and regulatory risks. In line with the Company's commitment to deliver sustainable value, this framework aims to provide an integrated and organised approach to evaluate and manage risks. Risk assessment monitoring is included in the Company's annual Internal Audit...

  • Page 80
    ... analysis reports, latest presentation made to the institutional General Shareholders' Information 18th Annual General Meeting Date Day Time Venue : : : : September 05, 2013 Thursday 3.30 p.m. Air Force Auditorium, Subroto Park, New Delhi - 110 010 78 Bharti Airtel Limited Annual Report 2012-13

  • Page 81
    ... company, Bharti Airtel has no plant. However, the Company's Circle Office addresses are provided at the end of the Annual Report on page No. 238 : : : : Equity Shares Listing, Stock Code and Listing Fee Payment Name and address of the Stock Exchange National Stock Exchange of India Limited...

  • Page 82
    ... Category Promoter and promoter group Indian promoters Foreign promoters Total promoters shareholding Public shareholding Institutional investors Mutual Funds and Unit Trust of India Financial institutions and banks Insurance companies Foreign institutional investors Others Bodies corporate (Indian...

  • Page 83
    ... Company's equity shares are frequently traded at the BSE Limited and the National Stock Exchange of India Limited. Communication Addresses Contact For Corporate Governance and Other Secretarial related matters For queries relating to Financial Statements For Corporate Communication related matters...

  • Page 84
    ... internal controls for financial reporting and that we have evaluated the effectiveness of internal (c) Manoj Kohli Managing Director & CEO (International) Gopal Vittal Joint Managing Director & CEO (India) Date: May 02, 2013 Place: New Delhi 82 Bharti Airtel Limited Annual Report 2012...

  • Page 85
    Annual Secretarial Audit Report for Shareholders To, 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 year ...

  • Page 86
    ... 21. 22. Corporate Information Basis of Preparation Summary of Significant Accounting Policies Information about Business Segments-Primary Share Capital Reserves and Surplus Long-term Borrowings Taxes Other Long-term Liabilities Long-term Provisions Short-term Borrowings Trade Payables Other Current...

  • Page 87
    ... audited the accompanying financial statements of Bharti Airtel Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory...

  • Page 88
    ...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 89
    ...Financial Statements with Auditor's Report (c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty and cess on account of any dispute, are as follows: Name of the Statutes Nature of the Dues Sales Tax Sales Tax Sales Tax Sales...

  • Page 90
    ...any assessment of Probable, Possible and Remote, as done in case of contingent liabilities. Of the above cases, total amount deposited in respect of sales tax is ` 231 Mn, Service tax is ` 54 Mn, Income Tax is ` 9,293 Mn and Custom Duty is ` 2,222 Mn. 88 Bharti Airtel Limited Annual Report 2012-13

  • Page 91
    ... shares, debentures and other securities. of the Company, we report that funds amounting to ` 114,045 million raised on short-term basis (primarily represented by capital creditors, short term borrowings from one of it's subsidiary, deferred revenue and trade creditors) have been used for long-term...

  • Page 92
    ...Limited Sunil Bharti Mittal Chairman Manoj Kohli Managing Director & CEO (International) Gopal Vittal Joint Managing Director & CEO (India) Srikanth Balachandran Global Chief Financial Officer Mukesh Bhavnani Group General Counsel & Company Secretary 90 Bharti Airtel Limited Annual Report 2012...

  • Page 93
    ... Airtel Limited Sunil Bharti Mittal Chairman Manoj Kohli Managing Director & CEO (International) Gopal Vittal Joint Managing Director & CEO (India) Srikanth Balachandran Global Chief Financial Officer Mukesh Bhavnani Group General Counsel & Company Secretary Standalone Financial Statements...

  • Page 94
    ...of Directors of Bharti Airtel Limited Manoj Kohli Managing Director & CEO (International) Gopal Vittal Joint Managing Director & CEO (India) Srikanth Balachandran Global Chief Financial Officer Mukesh Bhavnani Group General Counsel & Company Secretary 92 Bharti Airtel Limited Annual Report 2012...

  • Page 95
    ... the financial statements for the year ended March 31, 2013 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 laws of India. The Company's shares are publicly...

  • Page 96
    ... rental payable is apportioned between principal and finance charge using the internal rate of return method. The finance charge is allocated over the lease term so as to produce a constant periodic rate of interest on the remaining balance of liability. Bharti Airtel Limited Annual Report 2012-13

  • Page 97
    ... Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating 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...

  • Page 98
    ... with access and interconnection for usage of the telephone network of other operators for local, domestic long distance and international calls and data messaging services. Service revenues are recognised as the services are rendered and are stated net of discounts, waivers and taxes. Revenues from...

  • Page 99
    ... data services and for entire outstanding from deactivated customers net off security deposits or in specific cases where the management is of the view that the amounts from certain customers are not recoverable. For receivables due from the other operators on account of their National Long Distance...

  • Page 100
    ... employee's entitlement benefits. Translation of Integral and Non-Integral Foreign Operation The financial statements of an integral foreign operation are translated as if the transactions of the foreign operation have been those of the Company itself. 98 Bharti Airtel Limited Annual Report 2012...

  • Page 101
    ...Company has operations serving customers within India as well as in other countries located Standalone Financial Statements (ii) Deferred Tax Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing...

  • Page 102
    ... being provided to large Indian and global corporations by serving as a single point of contact for all telecommunication needs across data and voice (domestic as well as international long distance), network integration and managed services. 100 Bharti Airtel Limited Annual Report 2012-13

  • Page 103
    ...tax Provision for Tax - Current Tax (including MAT credit) - Deferred Tax (Credit)/Charge Net Profit/(Loss) after tax Other Information Capital Expenditure Depreciation and amortisation As of March 31, 2013 Segment Assets Inter Segment Assets Advance tax (Net of provision for tax) MAT Credit Total...

  • Page 104
    ... eliminated at the Company level. 7. Unallocated includes other income, profits/(losses), assets and liabilities of the Company which are not allocated to the individual segments and is primarily related to the corporate headquarter of the Company. 102 Bharti Airtel Limited Annual Report 2012-13

  • Page 105
    ...to the financial statements for the year ended March 31, 2013 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...

  • Page 106
    ... in the ensuing Annual General Meeting. During the year ended March 31, 2013, the Board of Directors has proposed dividend of ` 1 per share of ` 5 each (March 31, 2012 ` 1.00). c. Details of shareholders (as per the register of shareholders) holding more than 5% shares in the Company Particulars As...

  • Page 107
    ...year ended March 31, 2012 and ` 45 Mn dividend distribution tax from a subsidiary to be utilised against dividend distribution tax for the year ended March 31, 2013. 7. Long-term Borrowings (` Millions) Particulars Secured Others Total secured loans Unsecured Term Loans From Banks From Others Total...

  • Page 108
    ... future years Gross Deferred Tax Liabilities Deferred Tax Assets/(Liabilities) (Net) As of March 31, 2013 4,995 As of March 31, 2012 4,264 4,003 3,163 2,940 2,123 1,705 1,230 13,643 (25,146) (25,146) (11,503) 10,780 (19,147) (19,147) (8,367) 106 Bharti Airtel Limited Annual Report 2012-13

  • Page 109
    ... net of outstanding, if any and security deposits received from channel partners. Trade receivables are secured to the extent of the amount outstanding against individual subscribers by way of security deposit received from them. Particulars Opening balance Addition during the year Closing balance...

  • Page 110
    ...to the financial statements for the year ended March 31, 2013 11. Short-term Borrowings (` Millions) Particulars (Unsecured unless stated otherwise) Loans From banks From others Loans repayable on demand Cash Credit Loans from related parties (refer note 46) As of March 31, 2013 As of March 31, 2012...

  • Page 111
    ...the financial statements for the year ended March 31, 2013 14. Short-term Provisions (` Millions) Particulars Provision for employee benefits (refer note 38) Provision for Gratuity Provision for Leave Encashment Total Others Provision for Income Tax (net of advance tax of ` NIL (March 31, 2012 ` 77...

  • Page 112
    ... Bharti Airtel Limited Annual Report 2012-13 Building includes building on leasehold land 2,490 43 Gross Block Additions Disposals Particulars As of April 1, 2011 Building includes building on leasehold land 2,360 130 Notes to the financial statements for the year ended March 31, 2013...

  • Page 113
    ... Licences Total * With respect to assets where the Company has economic ownership, refer note 3.20. a. The remaining amortisation period of licence fees as of March 31, 2013 ranges between 2 to 12 years for Unified Access Service Licences, 9 years for Long Distance Licences, 17.4 years for 3G...

  • Page 114
    ... of USD 1 each fully paid up (refer note 36 (v)) 15) Bharti Airtel International (Netherlands) B.V.: 908,443,919 (March 31, 2012 - 18,735) Equity shares of EURO 1 each fully paid up (refer note 36 (v)) 16) Telesonic Networks Limited (earlier known as Alcatel-Lucent Network Management Service India...

  • Page 115
    ... to the financial statements for the year ended March 31, 2013 (` Millions) Particulars Investment in Joint Ventures 1) 2) Bridge Mobile PTE Limited: 2,200,000 (March 31, 2012- 2,200,000) Equity shares of USD 1 each fully paid up. Wireless Broadband Business Services (Delhi) Private Limited: 348,560...

  • Page 116
    A World of Friendships Notes to the financial statements for the year ended March 31, 2013 18. Long-term Loans and Advances (` Millions) Particulars Unsecured, considered good unless stated otherwise Capital Advances Considered good Considered doubtful Less: Provision for doubtful advances Security...

  • Page 117
    ... to the financial statements for the year ended March 31, 2013 Details of investments are provided below: (` Millions, except as stated otherwise) Particulars Investment in mutual funds (Quoted) Tata Liquid Super High Inv. Fund - Appreciation UTI Liquid Cash Plan Institutional - Growth Option Axis...

  • Page 118
    ... more than 12 months Margin money deposit Less: Amount disclosed under non-current assets (refer note 19) 348 5 5 358 10 3,627 1,264 2 4 1,270 6 4,812 1,615 1,375 189 73 27 3,279 1,120 1,950 341 123 14 3,548 As of March 31, 2013 As of March 31, 2012 116 Bharti Airtel Limited Annual Report 2012-13

  • Page 119
    ... applicable in compliance with the applicable Accounting standards. Corporate Guarantees outstanding as of March 31, 2013 amounting to ` 537,606 Mn (March 31, 2012 - ` 481,376 Mn) have been given to banks, financial institutions and third parties on behalf of Group Companies at no cost to the latter...

  • Page 120
    ... related material, levy of service tax on SIM cards, cenvat credit disallowed for procedural lapses and inadmissibility of credit and disallowance of cenvat credit used in excess of 20% limit. employee talk time ii. iii. lease circuit/broadband connectivity services; iv. the applicability of sales...

  • Page 121
    Notes to the financial statements for the year ended March 31, 2013 e) Custom Duty The custom authorities, in some states, demanded ` 4,463 Mn as of March 31, 2013 (March 31, 2012 - ` 2,198 Mn) for the imports of special software on the ground that this would form part of the hardware on which it ...

  • Page 122
    ... in various proceedings at various stages and in various forums with DSS vi) vii) Based upon the scope of Service under UAS License and the NIA for 3G/BWA with its clarifications, in 7 such circles where the Company has not been allocated 3G 120 Bharti Airtel Limited Annual Report 2012-13

  • Page 123
    ... Airtel Holdings (Singapore) Pte Limited, Bharti Airtel International (Netherlands) B.V.including its subsidiaries and associates,Telesonic Networks Limited (earlier known as Alcatel-Lucent Network Management Services India Limited) and Bharti Teleports Limited. Standalone Financial Statements...

  • Page 124
    ... and wages Contribution to provident and other funds Expenses on employee stock option plan Staff welfare expenses Others For the year ended March 31, 2013 13,094 612 242 622 543 15,113 For the year ended March 31, 2012 11,893 552 536 519 415 13,915 122 Bharti Airtel Limited Annual Report 2012-13

  • Page 125
    ... - Network Others - 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...

  • Page 126
    .../New Developments (i) Pursuant to a definitive agreement dated May 24, 2012, Bharti Airtel Limited has acquired 49% stake for a consideration of ` 9,281 Mn (USD 165 Mn) in Qualcomm Asia Pacific's (Qualcomm AP) 4 Indian subsidiaries ("BWA entities"), (i) Wireless Business Services Private Limited...

  • Page 127
    ... year ended March 31, 2013 For the year ended March 31, 2012 38. Employee Benefits a) During the year, the Company has recognised the following amounts in the Statement of Profit and Loss: i. Defined Contribution Plans (` Millions) Particulars Employer's Contribution to Provident Fund *@ Employer...

  • Page 128
    ... benefit obligation at beginning of year Current service cost Interest cost Benefits paid Actuarial (gain)/loss Projected benefit obligation at year end 995 199 80 (201) 46 1,119 Gratuity (` Millions) Leave Encashment 606 146 49 (108) (41) 652 126 Bharti Airtel Limited Annual Report 2012-13

  • Page 129
    ... financial statements for the year ended March 31, 2013 For the year ended March 31, 2012 Particulars Change in plan assets: Fair value of plan assets at beginning of year Expected return on plan assets Actuarial gain/(loss) Fair value of plan assets at year end Net funded status of the plan Current...

  • Page 130
    ... acquired 49% stake for a consideration of ` 9,281 Mn (USD 165 Mn) in Qualcomm Asia Pacific's (Qualcommn AP) 4 Indian Subsidiaries ("BWA entities"). The principal activity of the venture is to carry on the business of internet and broadband services. 128 Bharti Airtel Limited Annual Report 2012...

  • Page 131
    ... Mn). Loan and advance in the nature of loan given to Bharti Airtel (USA) Limited at 7.33% interest rate is ` 53 Mn (March 31, 2012 ` 53 Mn). Refer note 46 for closing amount outstanding for the year for the above entities. (c) 40. As of March 31, 2013, Bharti Airtel Employee's Welfare Trust ('the...

  • Page 132
    ... (` Millions) Particulars - Audit Fee* - Reimbursement of Expenses* - As advisor for taxation matters* - Other Services* Total * Excluding Service Tax For the year ended March 31, 2013 66 5 1 5 77 For the year ended March 31, 2012 60 5 6 71 130 Bharti Airtel Limited Annual Report 2012-13

  • Page 133
    ... Related Parties (a) Entities where control exist - Subsidiary/ Subsidiaries of Subsidiary Bharti Hexacom Limited Bharti Airtel Services Limited Bharti Telemedia Limited Bharti Airtel (USA) Limited Bharti Airtel Lanka (Private) Limited Bharti Airtel (UK) Limited Standalone Financial Statements...

  • Page 134
    ...World of Friendships Related Party Disclosures Telesonic Networks Limited (earlier known as Alcatel-Lucent Network Management Services India Ltd) (effective from February 5, 2013) Other subsidiaries of Bharti Airtel Africa B.V.: Africa Towers N.V. Africa Towers Services Limited Airtel Ghana Limited...

  • Page 135
    ..., 2012)* Wireless Business Services Private Limited (acquired on May 24, 2012)* Entities where Key Management Personnel and their relatives exercise significant influence/Group Companies Beetel Teletech Limited Bharti Airtel Employees Welfare Trust Bharti Axa General Insurance Company Limited Bharti...

  • Page 136
    ...Bharti Airtel Limited Annual Report 2012-13 others Fund received/Expenses incurred on behalf of the (68) Company Employee related expenses incurred on behalf of 90 others Employee related expenses incurred on behalf of (8) Notes to the financial statements for the year ended 31, 2013 Related...

  • Page 137
    ... Subscription to share capital (refer note 36) Interest charged by others Interest charged by the Company Dividend Paid/(Received) Outstanding balances at year end Borrowings Trade Payables Loans and Advances (including security deposits) (refer note 41) Trade Receivables Total Balance Maximum Loans...

  • Page 138
    ... security deposits) (refer note 41) - 302 Trade Receivables - 7 Total Balance - 309 (2,242) Maximum Loans and Advance Outstanding during the year 302 Guarantees and Collaterals (refer note 26(i)) # Wireless Broadband Business Services Entities became joint ventures w.e.f. July 1, 2012...

  • Page 139
    ...balances at year end Borrowings Trade Payables Loans and Advances (including security deposits) (refer note 41) (` Millions) Entities where key management personnel and its relatives exercise significant inï¬,uence Bharti Airtel Jersey Bharti Centum Bharti Bharti AXA Mehrauli Nile Employees Airtel...

  • Page 140
    ... Vittal Sanjay Kapoor 591 324 324 Key Management Personnel A World of Friendships 138 Nature of transaction Bharti Airtel Limited Annual Report 2012-13 Related Party Transaction for 2012-13 FY 2012-13 Purchase of fixed assets/bandwidth Sale of fixed assets/retirement of bandwidth Purchase of...

  • Page 141
    ... given Subscription to share capital (Refer note 36) Interest paid Interest received Dividend Paid/(Received) Outstanding balances at year end Borrowings Trade Payables Loans and Advances (including security deposits) (Refer note 41) Trade Receivables Total Balance Maximum Loans and Advance 1,656 56...

  • Page 142
    ... to share capital (Refer note 36) Interest paid Interest received Dividend Paid/(Received) Outstanding balances at year end Borrowings Trade Payables Loans and Advances (including security deposits) (Refer note 41) Trade Receivables Total Balance Maximum Loans and Advance Outstanding during the year...

  • Page 143
    ... and Advances (including security deposits) (Refer note 41) Trade Receivables Total Balance Maximum Loans and Advance Outstanding during the year Guarantees and Collaterals (Refer note 26 (i)) Standalone Financial Statements **** Net of repayment of loan received from Bharti Teleports Limited of...

  • Page 144
    ...) 3 (477) (12) 36 (16) 13 (1) Bharti AXA General Insurance Company Limited (3) (510) 1 - Bharti Airtel Limited Annual Report 2012-13 Nature of transaction Related Party Transaction for 2011-12 FY 2011-12 Purchase of fixed assets/bandwidth Sale of fixed assets/retirement of bandwidth Purchase of...

  • Page 145
    ...and Advances (including security deposits) (Refer note 41) Trade Receivables Total Balance Maximum Loans and Advance Outstanding during the year Guarantees and Collaterals (Refer note 26 (i)) Standalone Financial Statements $ Represents remuneration provided in earlier year reversed in the FY 2011...

  • Page 146
    ...the employees from time to time on the basis of their performance and other eligibility criteria. (ii) On August 31, 2001 and September 28, 2001, the Company issued a total of 1,440,000 (face value ` 10 each) equity shares at a price of ` 565 per equity 144 Bharti Airtel Limited Annual Report 2012...

  • Page 147
    ... 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) LTI Plan LTI Plan Bharti Airtel Scheme 2005 2009 1,691 3-4 7 5.00 Equity settled Bharti Airtel Scheme 2005 2010 3,615...

  • Page 148
    ... (578) (396) 2,362 418 5.00 5.00 5.00 5.00 5.00 5.00 * Shares given on exercise of the options are out of the shares issued to the Trust. # Shares given on exercise of the options are out of the purchase of shares from the open market by the Trust. 146 Bharti Airtel Limited Annual Report 2012-13

  • Page 149
    ... 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 150
    ... of face value) for financial year 2011-12, which was duly approved by the shareholders of the Company in the Annual General Meeting held on September 6, 2012. b) Net Dividend remitted in foreign exchange: Particulars Number of non-resident shareholders Number of equity shares held on which dividend...

  • Page 151
    ... recognised revenue of ` 5,167 Mn, resulting in higher profit before tax by ` 3,012 Mn, and net profit by ` 2,169 Mn, during the year ended March 31, 2013, relating to previous year. 57. 54. The Company has completed the transfer pricing study for the period upto March 31, 2012. For the year ended...

  • Page 152
    ..., the Group, based on independent legal opinion, has not given any accounting treatment for the impact of the judgement in the financial statements for the year ended March 31, 2013. 58. The Company (M/s J T Mobiles Limited subsequently merged with the Company) was awarded license by DoT to operate...

  • Page 153
    ... Earnings Per Share Financial Risk Management Objectives and Policies New Operations New Companies/Developments Companies in the Group, Joint Ventures and Associates Other Significant Matters Previous Year Figures Regrouping/ Reclassification Notes 1. 2. 3. 4. 5. Corporate Information Basis of...

  • Page 154
    ...is sufficient and appropriate to provide a basis for our audit opinion. 152 For S. R. Batliboi & Associates LLP Chartered Accountants ICAI Firm Registration No: 101049W per Nilangshu Katriar Partner Membership No: 58814 Place: New Delhi Date: May 2, 2013 Bharti Airtel Limited Annual Report 2012-13

  • Page 155
    ... Place: New Delhi Date: May 2, 2013 For and on behalf of the Board of Directors of Bharti Airtel Limited Sunil Bharti Mittal Chairman Manoj Kohli Managing Director & CEO (International) Gopal Vittal Joint Managing Director & CEO (India) Srikanth Balachandran Global Chief Financial Officer Mukesh...

  • Page 156
    ... Sunil Bharti Mittal Chairman Manoj Kohli Managing Director & CEO (International) Gopal Vittal Joint Managing Director & CEO (India) Srikanth Balachandran Global Chief Financial Officer Mukesh Bhavnani Group General Counsel & Company Secretary 154 Bharti Airtel Limited Annual Report 2012-13

  • Page 157
    ... (International) Gopal Vittal Joint Managing Director & CEO (India) Consolidated Financial Statements per Nilangshu Katriar Partner Membership No: 58814 155 Place: New Delhi Date: May 2, 2013 Mukesh Bhavnani Group General Counsel & Company Secretary Srikanth Balachandran Global Chief Financial...

  • Page 158
    ... Sunil Bharti Mittal Chairman Manoj Kohli Managing Director & CEO (International) Gopal Vittal Joint Managing Director & CEO (India) Srikanth Balachandran Global Chief Financial Officer Mukesh Bhavnani Group General Counsel & Company Secretary 156 Bharti Airtel Limited Annual Report 2012-13

  • Page 159
    ...nancial 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 ('BSE'), India. The Registered office of the Company is...

  • Page 160
    ... at the non-controlling shareholders proportionate share of the acquiree's net identifiable assets. Acquisition related costs, such as finder's fees, advisory, legal, accounting, valuation and other professional or consulting fees are recognised in profit or loss in the year they are incurred...

  • Page 161
    ... IAS 18 "Revenue". 3.4 Interest in Joint Venture Companies A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control (i.e. when the strategic financial and operating policy decisions relating to the activities...

  • Page 162
    ... 3 2-5 3-5 Remaining period of the lease or 10/20 years, as applicable, whichever is less 3 - 20 5-6 20 Assets individually costing Rupees five thousand or less are fully depreciated over a period of 12 months from the date placed in service. Bharti Airtel Limited Annual Report 2012-13

  • Page 163
    ... not limited to, significant or sustained decline in revenues or earnings and material adverse changes in the economic environment. Impairment test for goodwill is performed at the level of each Cash Generating Unit ('CGU') or groups of CGUs expected to benefit from acquisition-related synergies...

  • Page 164
    ... included in finance income in the income statement. The Group does not have any Held-to-maturity and available for sale investments. 2. Derecognition The Group derecognises a financial asset only when the contractual rights to the cash ï¬,ows from the Bharti Airtel Limited Annual Report 2012-13

  • Page 165
    ... reacquired (treasury shares) through ''Bharti Airtel Employees' Welfare Trust" (Formerly known as "Bharti Tele-Ventures Employees' Welfare Trust") are recognised at cost and deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of...

  • Page 166
    ...nancial position. Scheme liabilities are calculated using the projected unit credit method and applying the principal actuarial assumptions as at the date of statement of financial position. Plan assets are assets that are held by a longterm employee benefit fund or qualifying insurance policies...

  • Page 167
    ... with access and interconnection for usage of the telephone network of other operators for local, domestic long distance and international calls and data messaging services. Service revenues are recognised as the services are rendered and are stated net of discounts, waivers and taxes. Revenues from...

  • Page 168
    ... deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit/(tax loss). Bharti Airtel Limited Annual Report 2012-13

  • Page 169
    ...when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reï¬,ects, where appropriate, the risks...

  • Page 170
    ... of a lease but convey a right to 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. 168 Bharti Airtel Limited Annual Report 2012-13

  • Page 171
    ... Group mainly operates in developing markets and in such markets, the plan for shorter duration (i.e. 5 years) is not indicative of the long term future performance. Considering this and the consistent use of such robust ten year information for management reporting purpose, the Group uses ten year...

  • Page 172
    ... the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, future tax planning strategies and recent business performances and developments...

  • Page 173
    ... has not yet determined the impact on the consolidated financial statements. b) IFRS 10 Consolidated Financial Statements In May 2011, International Accounting Standards Board issued IFRS 10, "Consolidated Financial statements". The effective date of IFRS 10 is annual periods beginning on 171

  • Page 174
    ..., statement of comprehensive income and statement of changes in equity. e) IFRS 13 Fair Value Measurement In May 2011, the International Accounting Standards Board issued IFRS 13 to provide a specific guidance on fair value measurement and requires enhanced Bharti Airtel Limited Annual Report 2012...

  • Page 175
    ... year commencing April 1, 2013. The Company believes that the adoption of the standard will not have any significant impact on the consolidated financial statements. h) Amendments to IAS 1 Presentation of Financial Instruments In June 2011, the International Accounting Standards Board issued...

  • Page 176
    ... 1, 2013 1 2 3 IFRIC Interpretation 20, "Stripping Costs in the Production Phase of a Surface Mine" Amendment to IFRS 1, "First time adoption of International Financial Reporting Standards" Annual Improvements October, 2011 March, 2012 May, 2012 174 Bharti Airtel Limited Annual Report 2012-13

  • Page 177
    ...the Executive Chairman of the Group (Chief operating decision maker). Effective April 1, 2012, in line with the changes in the internal reporting, the Broadband Wireless Access (BWA) services reported earlier under 'Telemedia Services', is now reported as part of 'Mobile Services India & South Asia...

  • Page 178
    ...240 Mobile Services India & South Asia Mobile Services Africa Revenue from external customers 419,908 237,620 Inter segment revenue 20,327 2,819 Total revenues 440,235 240,439 Segment result 70,677 15,569 Share of profits/(loss) in associates Bharti Airtel Limited Annual Report 2012...

  • Page 179
    ... 33,082 12,919 50,301 714,508 Mobile Services Africa Tower Infrastructure Services Revenue from external customers 386,716 197,796 Inter segment revenue 16,375 469 Total revenues 403,091 198,265 Segment result 82,221 14,147 Share of profits/(loss) in associates Notes to consolidated...

  • Page 180
    ...India Africa Rest of the World Total As of March 31, 2013 701,590 632,241 35,407 1,369,238 As of March 31, 2012 678,291 625,732 31,798 1,335,821 Year ended March 31, 2013 543,732 237,620 21,760 803,112 Year ended March 31, 2012 499,994 197,796 16,718 714,508 178 Bharti Airtel Limited Annual Report...

  • Page 181
    ...existing shareholders and balance 23% by way of subscription of fresh equity in the referred entities. During the year ended March 31, 2013, schemes of amalgamation have been filed for amalgamation of Wireless Broadband Business Services (Delhi) Private Limited, Wireless Broadband Business Services...

  • Page 182
    ... operating activities) (B) Total in respect of business combination (A+B) * Includes proportionate share of ` 2,380 Mn of the capital subscribed. Total 9,281 (3,379) 5,902 1 5,903 b) Acquisition of 100% Interest in Bharti Airtel Africa B.V. (Erstwhile Zain Africa B.V. ('Zain')) The Group entered...

  • Page 183
    ... ` 11,221 Mn identified subsequent to the acquisition date as per the Share Purchase Agreement. The change in the net assets acquired as determined as of March 31, 2011 is primarily on account of decrease in provisional fair valuation of tangible assets by ` 17,077 Mn, increase in provisional fair...

  • Page 184
    ... as of August 26, 2011 2,903 (` Millions) Particulars Assets acquired Property, plant & equipment Intangible assets Current assets 98 259 294 98 259 294 As determined as of March 31, 2011, and August 26, 2011 As determined on the date of acquisition 182 Bharti Airtel Limited Annual Report 2012-13

  • Page 185
    ...of cash acquired (A) (included in cash ï¬,ows from investing activities) Transaction costs of the acquisition (included in cash ï¬,ows from operating activities) - for the year ended March 31, 2011 (B) Total in respect of business combinations (A+B) d) Total consolidated revenue of the Group and its...

  • Page 186
    ... interest acquired in Airtel Networks Kenya Limited has been recognised in 'Other components of equity' during the three months period ended June 30, 2011. 8. Operating Expenses (` Millions) Particulars Access charges Licence fees, revenue share and spectrum charges Network operations cost Employee...

  • Page 187
    ...fit plan/other long term benefits Share based compensation 8.2 Notes Year ended March 31, 2013 37,065 1,761 832 440 40,098 8.2 Share Based Compensation Plans The following table provides an overview of all existing share option plans of the Group and its joint ventures: Year ended March 31, 2012...

  • Page 188
    ...March 31, 2013 and March 31, 2012, respectively. Information concerning the share options issued to directors, officers and employees is presented below: As of March 31, 2013 (Shares in Thousands) Scheme I - 2006 plan Number of shares under option: Outstanding at beginning of year Granted Exercised...

  • Page 189
    ... at end of year Scheme 2005 - LTI Plan Africa Number of shares under option: Outstanding at beginning of year Granted 418 5.00 418 Consolidated Financial Statements As of March 31, 2012 Number of share options 2,578 Weighted average exercise price (`) 333.38 Number of share options 1,736 Weighted...

  • Page 190
    ... 109.67 329.00 109.67 109.67 3,336 80 (83) 3,333 1,631 329.00 329.00 329.00 329.00 329.00 Number of share options 418 Weighted average exercise price (`) 5.00 As of March 31, 2012 Number of share options 418 Weighted average exercise price (`) 5.00 - 188 Bharti Airtel Limited Annual Report 2012-13

  • Page 191
    ... 42% of the total number of shares, under the option plan of the joint venture company. ^ As on February 1, 2013, Indus Towers Limited has cancelled its 2009 Plan. The following table summarises information about options exercised and granted during the year and about options outstanding and their...

  • Page 192
    ....43% 0 to 0.30% 361.83 to 424.11 658 422,650 2012, Bharti Airtel Employee Welfare Trust ('trust') (a trust set up for administration of ESOP Schemes of the Company) has acquired 2,945,000 and 1,507,000 Bharti Airtel equity shares from the open market at an average price of ` 258.77 and ` 360.94 per...

  • Page 193
    ... relating to India on account of change in tax rate from 32.445% to 33.99%. as proposed in the Finance Bill, 2013). During the year ended March 31, 2013, there is no change in the MAT rate. During the year ended March 31, 2012, consequent to change in MAT rate from 19.9305% to 20.00775%, the Company...

  • Page 194
    ... Others Net deferred tax (expenses)/income (119) 164 7 162 1,135 1,404 537 (2,030) 1,267 (1,053) 27 661 198 2,360 255 2,297 176 146 5,220 1,012 (753) (1,462) (1,891) (869) (37) (42) 122 4,174 Year ended March 31, 2013 Year ended March 31, 2012 192 Bharti Airtel Limited Annual Report 2012-13

  • Page 195
    ... deferred tax assets (net) is as follows: Particulars Opening balance Tax Income during the year recognised in profit & loss Tax Income on share issue expenses recognised in equity Deferred taxes acquired in business combination Translation adjustment & others Closing balance As of March 31, 2013...

  • Page 196
    ... 31, 2013 and March 31, 2012 respectively. The Group and its joint ventures have taken borrowings from banks and financial institutions which carry charge over certain of the above assets (refer note 25.7 for details towards security and pledge). 194 Bharti Airtel Limited Annual Report 2012-13

  • Page 197
    ...cation/adjustment As of March 31, 2013 Accumulated impairment As of April 1, 2011 As of March 31, 2012 As of March 31, 2013 Net Carrying Amount As of April 1, 2011 As of March 31, 2012 As of March 31, 2013 Software Bandwidth License (` Millions) Total Other acquired intangibles 15,152 46 3,996 (48...

  • Page 198
    ... based on the ten years financial plan that have been approved by management and are also used for internal purposes. The planning horizon reï¬,ects the assumptions for short-to-mid term market developments. Cash ï¬,ows beyond the planning period 196 Bharti Airtel Limited Annual Report 2012-13

  • Page 199
    ... rate or reduction of 0.87% in growth rate shall equate the recoverable amount with the carrying amount of the Mobile Services Africa CGU for the year ended March 31, 2012. Share in associates statement of financial position: (` Millions) As of As of Particulars March 31, March 31, 2013 2012 Assets...

  • Page 200
    ... Financial Assets, Non-current (` Millions) Particulars Security deposits Restricted cash Trade receivables (non-current) Rent equalisation Others As of March 31, 2013 7,035 157 638 3,499 5,670 16,999 As of March 31, 2012 6,266 218 1,052 2,623 6,728 16,887 198 Bharti Airtel Limited Annual Report...

  • Page 201
    ...cards Handsets Others Total As of March 31, 2013 276 45 762 26 1,109 As of March 31, 2012 402 143 751 12 1,308 The Group and its joint ventures have taken borrowings from banks and financial institutions. Details towards security and pledge of the above assets are given under note 25.7. 20. Trade...

  • Page 202
    ...31, 2012 16,141 1,991 18,132 The Group and its joint ventures have taken borrowings from banks and financial institutions which carry charge over certain of the above assets. Details towards security and pledge of the above assets are given under note 25.7 Bharti Airtel Limited Annual Report 2012...

  • Page 203
    ... cash represents amount given as security against various borrowing facilities and legal cases and cash received from subscribers of Mobile Commerce Services. 24. Cash and Cash Equivalents (` Millions) Particulars Cash and bank balances Fixed deposits with banks As of March 31, 2013 14,368 2,927 17...

  • Page 204
    ... 31, 2013 732,720 630,599 102,121 INR 133,822 99,437 34,385 USD 483,661 481,774 1,887 JPY 5,026 5,026 NGN 48,301 44,355 3,946 XAF 10,008 10,008 XOF 5,345 5,345 Others 6,803 2,343 4,460 March 31, 2012 692,966 632,935 60,031 202 Bharti Airtel Limited Annual Report 2012-13

  • Page 205
    ...result, the debentures were classified under current borrowings. 25.7 Security Details The Group and its joint ventures have taken borrowings in various countries towards funding of its acquisition and working capital requirements. The borrowings comprise of funding arrangements with various banks...

  • Page 206
    ..., 2013 As of Security Detail March 31, 2012 (iii) a charge on Joint Venture company's cash ï¬,ows, receivables, book debts, revenues of whatsoever nature and wherever arising, present and future subject to prior charge in favour of working capital facilities with working capital facility limits not...

  • Page 207
    ... on business assets and shares - Malawi Pledge of Materials and credit balance - Niger Pledge on specific fixed assets - Chad Pledge on specific assets - Burkina Faso, DRC Pledge on assets and shares - Congo B, Ghana Bharti Airtel Africa BV and its subsidiaries Subsidiary (viii) Pledge on Sale...

  • Page 208
    ... For the year ended March 31, 2012 27,396 16,794 44,190 Particulars Opening Balance Additions (Net) Closing Balance 27. Other Financial Liabilities, Non-current Particulars Equipment Suppy Payable - Non Current Security deposits Lease rent equalisation Others Total As of March 31, 2013 2,441 9,561...

  • Page 209
    ... include service tax, sales tax and other taxes payable. 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, 2013 and March 31, 2012, being...

  • Page 210
    ...31, 2013 Plan Liabilities - (loss)/gain Plan Assets - (loss)/gain For the year ended March 31, 2012 Plan Liabilities - (loss)/gain Plan Assets - (loss)/gain Disclosure of other long term employee benefits: 51 (6) 143 114 (6) 302 Gratuity Compensated absence 208 Bharti Airtel Limited Annual Report...

  • Page 211
    ... Opening Balance Addition Utilisation Closing Balance Long term service award (` Millions) Particulars Estimated liability As of March 31, 2013 95 As of March 31, 2012 173 For the year ended March 31, 2013 17 3 (20) For the year ended March 31, 2012 162 41 (186) 17 Statement of Employee bene...

  • Page 212
    ... 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, 2013 and March 31, 2012 is ` 5,280 Mn and ` 5,196 Mn respectively. A jointly controlled entity of the Group not listed...

  • Page 213
    ... Financial Assets Assets carried at fair value through profit or loss Currency swaps, forward and option contracts Interest rate swaps Embedded derivatives Held for trading securities - quoted mutual funds Assets carried at amortised cost Fixed deposits with banks Cash and bank balances Trade...

  • Page 214
    ...ficant effect on the recorded fair value are observable, either directly or indirectly Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. ii. iii. iv. 212 Bharti Airtel Limited Annual Report 2012-13

  • Page 215
    ...266 Purchase of assets Sale/transfer of assets Sale/Rendering of Services Purchase/Receiving of Services Loans to related party Expenses incurred by the Group on behalf of Related Party Expenses incurred by Related Party for the Group Security deposit paid Security deposit/Advance received Interest...

  • Page 216
    ...security deposit of ` 2,235 Mn. * Transactions above have not been proportionate based on the equity holding in the respective JVs. Amount due from and due to JVs are included in the respective line items in the financial statements. **Refer note 7(a). 214 Bharti Airtel Limited Annual Report 2012...

  • Page 217
    ... instruments and network equipment. Expenses incurred by/for the Group - include expenses of general and administrative nature. Sale of services - represents billing for broadband, international long distance services, mobile, access and roaming services. Purchase of services - includes primarily...

  • Page 218
    ...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 216 Future minimum lease payments 0 1 1 Interest 0 0 0 Present value 0 1 1 Bharti Airtel Limited Annual Report 2012-13

  • Page 219
    ... supplies assets as well as services to the Group. The amount represents total minimum commitment over the unexpired period of the contracts i.e. between 2-9 years, since it is not b. Guarantees (` Millions) Particulars Financial bank guarantees* # Guarantees to third parties As of March 31, 2013 35...

  • Page 220
    ... 31, 2013 and March 31, 2012 relate to 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 service tax demand on employee talk time...

  • Page 221
    ..., 2013 (` 3,083 Mn as of March 31, 2012) for the imports of special software on the ground that this would form part of the hardware along with which the same has been imported. The view of the Company is that such imports should not be subject to any custom duty as it would be operating software...

  • Page 222
    ... The Company's indirect subsidiary, Bharti Airtel Nigeria BV, which is the current owner of 65.7% (increased to 79.059% in March, 2013) of the equity in Airtel Networks Limited has been defending these cases vigorously since the arbitration was commenced. Bharti Airtel Limited Annual Report 2012-13

  • Page 223
    ... regard and Bharti Airtel Nigeria BV filed its Defence on April 19, 2013. Given the low probability of any material adverse effect to the Company's consolidated financial position and the indemnities in the share sale agreement concluded with the Zain Group in 2010, the Company determined that...

  • Page 224
    ...as equity risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments. The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio 222 Bharti Airtel Limited Annual Report 2012-13

  • Page 225
    ... primary host contract requirement and risk management strategy of the Company. The Group manages its foreign currency risk by hedging appropriate percentage of its foreign currency exposure, as approved by Board as per established risk management policy. Foreign Currency Sensitivity The following...

  • Page 226
    ... -100 (1,423) 1,423 (4,770) 4,770 (582) 582 (75) 75 Increase/decrease in basis points Effect on profit before tax The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment. 224 Bharti Airtel Limited Annual Report 2012-13

  • Page 227
    ... 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 days to 30 days credit term except in case of balances due from trade receivables in Airtel...

  • Page 228
    ...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, 2013 and March 31, 2012. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Net...

  • Page 229
    .... New Companies/Developments a) On February 22, 2013, Airtel Mobile Commerce Rwanda Limited had been incorporated as a wholly owned subsidiary of Airtel Mobile Commerce B.V. (a wholly owned subsidiary of Bharti Airtel International (Netherlands) B.V.). During the year ended March 31, 2013, the Group...

  • Page 230
    ... Bharti Airtel International (Mauritius) Limited Bharti Airtel (Japan) Kabushiki Kaisha Bharti Airtel (France) SAS Bangladesh Infratel Networks Limited Telesonic Networks Limited (formerly Alcatel Lucent Network Management Services India Limited) Bharti Airtel Africa B.V. Bharti Airtel Burkina Faso...

  • Page 231
    ...II B.V. Bharti Airtel Nigeria B.V. Bharti Airtel Ghana Holdings B.V. Airtel Ghana Limited Bharti Airtel Acquisition Holdings B.V. Bharti Airtel Services B.V. Airtel Networks Limited Bharti Airtel Zambia Holdings B.V. Airtel Mobile Commerce Limited Airtel Mobile Commerce (Kenya) Limited Airtel Mobile...

  • Page 232
    ... Services Niger S.A.* Airtel DTH Services Nigeria Limited Airtel DTH Services Tchad S.A.* Airtel DTH Services Tanzania Limited Bharti DTH Services Zambia Limited Airtel Towers (SL) Company Limited Burkina Faso Towers S.A. Congo Towers S.A. Kenya Towers Limited Madagascar Towers S.A. Mobile Commerce...

  • Page 233
    ... year ended March 31, 2013. S. No. Name of Associates Country of Incorporation Principal Activities Percentage of Holding (Direct/Indirect) by the Group As of As of March March 31, 2013 % 31, 2012 % 1 2 3 4 Bharti Teleports Limited Alcatel Lucent Network Management Services India Ltd Tanzania...

  • Page 234
    ... revenue of ` 5,406 Mn, resulting in higher profit before tax by ` 3,161 Mn, and net profit by ` 2,277 Mn, respectively, during the year ended March 31, 2013, relating to previous periods. The Company has completed the transfer pricing study for the period upto March 31, 2012. For the year...

  • Page 235
    ... of recovery process, the Group, based on independent legal opinion, has not given any accounting treatment for the impact of the judgement in the financial statements for the year ended March 31, 2013. e) On May 31, 2011, the subsidiary company "Bharti Infratel Ventures Limited" (wholly owned...

  • Page 236
    ...2013 March 31, 2013 March 31, 2013 March 31, 2013 March 31, 2013 Name of the Subsidiary Note Country of Registration Reporting Currency 1 2 3 Bharti Airtel Services Limited Network i2i Limited Bharti Airtel (USA) Limited (a) (a) (a) 4 Bharti Airtel (UK) Limited 5 6 7 India Mauritius United...

  • Page 237
    ...31, 2012 28.072 2 88 86 68 (c) Kenya - - - - - - 235 69 Bharti Airtel Acquisition Holdings B.V. Bharti Airtel Services B.V. Airtel Networks Limited Bharti Airtel Zambia Holdings B.V. Airtel Mobile Commerce Limited (Malawi) (formerly known as Zap Trust Company Ltd. (Malawi)) Airtel Mobile...

  • Page 238
    ...Malawi relating to subsidiary companies for the year ended March 31, 2013 88 (f) Uganda 89 90 91 92 (c) (c) (b) (e) Netherlands Ghana Netherlands Kenya 93 94 (f) (d) Sierra Leone Burkina Faso 95 Celtel (Mauritius) Holdings Limited ZMP Limited Airtel Mobile Commerce (SL) Limited (formerly...

  • Page 239
    ...Bharti Airtel Cameroon B.V. Airtel Rwanda Limited Africa Towers Services Limited Rwanda Towers Limited Airtel Mobile Commerce Rwanda Limited (b) (b) (b) (b) (c) Netherlands Rwanda Kenya Rwanda Rwanda Statement Pursuant to Section 212 (8) of the Companies Act, 1956 Notes: a) Financial information...

  • Page 240
    ..., Rajasthan Delhi NCR Airtel Center Plot No. 16, NH-8 Udyog Vihar, Phase-IV, Gurgaon - 122001, Haryana Uttar Pradesh & Uttaranchal TCG - 7/7 Vibhuti Khand, Gomti Nagar, Lucknow - 226010 Gujarat 2nd & 4th Floor, Zodiac Square, S G Road, Opp. Gurudwara, Ahmedabad - 380054, Gujarat West Bengal...

  • Page 241
    Notes

  • Page 242
    Notes

  • Page 243

  • Page 244
    ... enthu friend, A cartoon friend, A geek friend, A show-off friend, A twitter friend, A self-obsessed friend, A save-you-from-trouble friend, Airtelwala friend! Bharti Airtel Limited Bharti Crescent, 1, Nelson Mandela Road, Vasant Kunj, Phase II, New Delhi - 110 070, India. www.airtel.in concept...