idea cellular limited annual report 2008-09 · annual report 2008-09 5 sector growth the indian...

IDEA CELLULAR LIMITED

ANNUAL REPORT 2008-09

Mr. G. D. Birla and Mr. Aditya Birla, our founding fathers.

We live by their values.

Integrity, Commitment, Passion, Seamlessness and Speed

The Chairman’s Letter

to Shareholders

Dear Shareholders,

The Indian mobility sector witnessed robust growth during

the year. The total mobility subscribers, as on March 2009,

stood at 392 million, registering an annual growth of

around 50%. The low cost of entry and service, coupled

with the deeper penetration of the network, have been

the main drivers of the sector growth.

Your Company had an excellent year, with consolidated

revenue crossing the Rs. 100 billion mark. Its revenue at

Rs. 101.54 billion, is up by 51% over that of the previous

year. Even after the exclusion of revenue from the new

service areas of Mumbai and Bihar, and from the joint

ventures Spice and Indus, the annual revenue growth from

older service areas is around 46%. This growth,

coming on the back of the earlier year’s revenue growth of

54%, marks IDEA as India’s fastest growing major telco over

the last two years. The net profit, for the year, stood at

Rs. 8,816 million.

Your company, during the financial year 2009-10,

launched services in Orissa, Tamil Nadu (including

Chennai), Jammu & Kashmir, Kolkata and West Bengal.

With the imminent launch of services in Assam and North

East service areas, your Company, alongwith its subsidiary

and joint venture, will become a Pan India operator,

befitting its stature and potential.

Among other accolades, your company has been selected

by the Economic Times as the ‘Emerging Company of the

Year’ for 2009.

The calendar year 2009, has seen overcapacity hitting

the Indian telecom sector, largely due to the investment

decisions of 2007-08, both from cross-over licensees and

new licensees. This has inevitably lead to a phase of

hyper competition. Your company has anticipated and

prepared itself for this phase. Your company is strongly

placed in its established service areas, while the approach

for some of the new service areas is measured. I believe

based on this well-crafted strategy, advantage of

spectrum and scale, sophisticated management

processes, brand strength, human capital and strong

balance sheet, your Company will emerge even stronger

through this phase.

The Aditya Birla Group: In Perspective

Today, we manage multinational teams – 1,30,000

employees, comprising 30 nationalities, across 25

countries, anchor our US$ 29.2 billion meritocratic

conglomerate. Our values – Integrity, Commitment,

Passion, Seamlessness and Speed, is the thread that strings

us together.

Post our Group being declared the “Best Employer” in 2007

by the Hewitt / Economic Times / Wall Street Study, our

brand as an employer continues to grow strongly. More than

8,000 leading professionals from India and globally have

teamed up with us.

Our rigorous assessment process, inclusive of Development

Assessment Centres, assesses our people early in their

career on their potential to hold leadership roles. This way,

we have ensured that we have a robust bench strength of

talent. We also use short term secondments and long term

assignments to develop the capability of our people to work

across borders. This year over 1,700 colleagues have been

job rotated.

Over 80% of our businesses have participated in a

compensation benchmarking exercise this year and we have

taken significant corrective and proactive measures to stay

competitive and attractive. This positioning will further help

us to attract and retain the right talent.

We lay great emphasis on continuous learning through our

in-house learning university – Gyanodaya. This globally

benchmarked institution leverages resources from around

the world to meet the development needs of our people.

Over a 1,000 executives have taken courses this year.

Additionally, more than 14,000 employees spread across

the world, from Farmington Hills in USA to Giza in Egypt

to Perth in Australia and Renukoot in Uttar Pradesh have

used Gyanodaya’s E-learning platform called GVC. GVC

prides itself in having a course completion ratio of 90%,

which is a world benchmark.

As perhaps many of you may be aware we track the

organisational climate every two years. We use the

Organisational Health Survey (OHS), as the barometer of

employee engagement at work. It is conducted by Gallup.

Over 22,000 executives, across 17 businesses, spanning

25 countries and 750 cities/interiors participated in the

OHS6. The participation level at 94%, according to Gallup,

is a benchmark. 83% of the employees surveyed in the OHS6

said that they are proud to be an employee of the Aditya

Birla Group and get professional satisfaction working here.

67% of our management employees have clearly

emphasized their confidence in the ability of the leaders at

various levels to successfully manage the emerging

challenges that the Group is facing. Almost three-fourths

of our employees (73%) have stated that they would

definitely advocate our Group as a place to build a

meaningful career.

Going forward, I would like to emphasize that the brand of

leadership that we seek to build combines the virtues of

professionalism with the commanding power of the mind,

heart and soul. The mind which has the intellect to perceive

the right from the wrong, the heart which has an emotional

bond with the organisation that cannot be severed, and a

soul that is indomitable. Our biggest strength has been an

emotional bonding that our employees have with the Group

that makes the paradigm of duty truly boundaryless.

Best Regards,

Kumar Mangalam Birla

Table of Contents

1 Corporate Information

3 Performance Highlights

5 Management Discussion and Analysis

8 Directors’ Report

16 Report on Corporate Governance

26 Auditors’ Report

30 Balance Sheet

31 Profit and Loss Account

32 Schedules to the Accounts

54 Cash Flow Statement

Consolidated Financial Statements

57 Auditors’ Report

58 Consolidated Balance Sheet

59 Consolidated Profit and Loss Account

60 Schedules to the Consolidated Accounts

81 Consolidated Cash Flow Statement

83 Statement relating to Subsidiary Companies

1

Corporate Information

Board of Directors

Mr. Kumar Mangalam Birla Chairman

Mrs. Rajashree Birla Non Executive Director

Dr. Rakesh Jain Non Executive Director

Dr. Shridhir Sariputta Hansa Wijayasuriya Non Executive Director

Mr. Biswajit Anna Subramanian Non Executive Director

Mr. Arun Thiagarajan Independent Director

Mr. Gian Prakash Gupta Independent Director

Mr. Mohan Gyani Independent Director

Ms. Tarjani Vakil Independent Director

Mr. R.C. Bhargava Independent Director

Mr. P. Murari Independent Director

Mr. Sanjeev Aga Managing Director

Chief Financial Officer

Mr. Akshaya Moondra

Company Secretary

Mr. Pankaj Kapdeo

Auditors

Deloitte Haskins & Sells

Chartered Accountants

706, B Wing,

ICC Trade Tower,

Senapati Bapat Road,

Pune – 411 016

Registered Office

Suman Tower,

Plot No. 18, Sector No. 11,

Gandhinagar – 382 011

Gujarat

Corporate Office

Windsor, 5th Floor,

Off CST Road,

Near Vidya Nagari, Kalina,

Santacruz (East),

Mumbai – 400 098

Registrar and Share Transfer Agents

M/s. Bigshare Services Private Limited

E/2 Ansa Industrial Estate,

Saki Vihar Road,

Saki Naka,

Andheri (East),

Mumbai – 400 072

Website

http://www.ideacellular.com

3

Performance Highlights at a glance

0

20

40

60

80

100

120

FY 05 FY 06 FY 07 FY 08 FY 09

INR bn

Gross Revenue

22.729.9

43.9

67.4

101.5

0

5

10

15

20

25

30

FY 05 FY 06 FY 07 FY 08 FY 09

INR bn

EBITDA

8.4

10.9

14.9

22.7

28.4

0

2

4

6

8

10

12

FY05 FY06 FY07 FY09FY08

Net Profit

INR bn

0.8

2.1

5.0

10.4

8.8

0

4

8

12

16

20

24

28

FY05 FY06 FY07 FY09FY08

Cash Profit

INR bn

5.2

7.6

11.7

19.8

23.3

Annual Report 2008-09

5

Sector growth

The Indian mobility sector witnessed a growth of around 50%

in subscriber terms during the financial year 2008-2009. The

sector reported 392 mn subscribers as of March 31, 2009.

Expanding telecom networks, falling tariffs and continued

reduction in handset costs, remained the key drivers for this

growth. With wireless penetration level at 34%, the Indian

wireless market offers an attractive growth opportunity. The

subscriber base under brand !dea, increased from 24 mn as of

end March 2008 to 43.02 mn as of end March 2009, a growth

of around 79%, taking its national market share to 11%.

Regulatory

Major regulatory developments for the period are:

DoT amendment on Intra Circle Roaming

On June 12, 2008, the DoT amended license terms, allowing a

licensee to enter into agreements with other service providers

within the same service area for the purpose of intra-circle

roaming.

WPC order on Microwave Spectrum Charges

The WPC, on November 10, 2008, specified the microwave

spectrum charges for 7th to 11th carrier. The DoT had earlier

revised the microwave spectrum charges vide its order dated

November 3, 2008, wherein charges for a maximum of 6 carriers

were specified. The order was made effective from November

3, 2006, thus increasing the charges applicable to operators

holding more than 6 access spectrum carriers (access &

backbone separately), retrospectively.

Amendment to Interconnect Usage Charges (IUC) Regulation

On March 9, 2009, TRAI released the Interconnection Usage

Charges (IUC) Xth Amendment. Accordingly, with effect from

April 1, 2009, termination charges for incoming calls stood

reduced to Re. 0.20 per minute from Re. 0.30 per minute, while

the termination charges for international incoming calls stood

increased from Re. 0.30 per minute to Re. 0.40 per minute.

Amendment relating to lock-in of promoters equity

On July 23, 2009, the DoT issued the conditions for sale of

equity by promoters of a UAS licensee company. As per the

amendments, there shall be a lock-in period for sale of equity

of a person whose share capital is 10% or more in the UAS

licensee company on the effective date of UAS license and

whose net-worth has been taken into consideration for

determining the eligibility for grant of UAS license, till

completion of three years from the effective date of the UAS

license or till fulfillment of all the rollout obligations under

clause 34 of the License Agreement, whichever is earlier.

However, the provision of lock-in period shall not apply, in

pursuance to enforcement of pledge by the lending financial

institutions/banks in the event of default committed by the UAS

licensee company.

Implementation of Mobile Number Portability (MNP)

The DoT, on August 1, 2008, issued guidelines for the MNP

license. As per the guidelines, the country has been divided in

two MNP zones for grant of licenses, with 11 licensed service

areas in each zone. On March 20, 2009, the DoT signed the

MNP operator license with M/s. Syniverse Technologies (Zone I)

and M/s. MNP Interconnection Telecom Solutions (Zone II),

giving six months for MNP implementation in Metro service

areas and Category ‘A’ service areas, and one year for other

service areas. The DoT on May 6, 2009 has issued amendments

to all CMTS/ UASL/ NLDOs/ ILDOs seeking implementation of

MNP in all Metro/ Category ‘A’ service areas latest by September

20, 2009, and the other service areas latest by March 20, 2010.

However, on September 3, 2009, DoT has extended the time

frame for implementation of Mobile Number Portability by

3 months. The new date for implementation of Mobile Number

Portability for Metro and Category ‘A’ service areas is

December 31, 2009.

Timelines for auction of 3G and BWA Spectrum

The DoT, on October 23, 2009 released a revised Information

Memorandum for auction of 3G / BWA Spectrum. As per the

revied schedule, auction of 3G / BWA Spectrum will commence

on January 14, 2010.

Discussion on Consolidated Financial Statements and

Operational Performance

Subscriber Base

As on March 31, 2009, brand !dea had an aggregate of 43.02

mn subscribers, including subscribers of Punjab and Karnataka

service areas operating under Spice Communications Limited,

and the Bihar (including Jharkhand) service area operating under

Aditya Birla Telecom Limited, representing an increase of 79.3%

compared to the subscriber base of 24.00 mn as on

March 31, 2008.

Service and Sales Revenues

Growth in service revenues was 50.8% from Rs. 67,200 mn in

the previous financial year to Rs. 101,313 mn for the year ended

March 31, 2009. Value Added Services grew by 69.0% over the

previous year. Revenues from National Long Distance services

accounted for approximately Rs. 7,111 mn, which stood

eliminated during of inter segment consolidation.

Operating Expenses

During the year ended March 31, 2009, the Company incurred

Operating Expenses of Rs. 73,179 mn representing 72.1% of

total revenues. The chief contributors to the total Operating

Expense of 72.1% were, Personnel Expenditure 5.2%, Network

Operating Expenses 20.8%, License and WPC charges 11.1%,

Management Discussion and Analysis Report


6

Roaming and Access Charges 18.2%, Subscriber Acquisition and

Servicing Expenses 8.1%, Advertisement & Business Promotion

Expenditure 4.5%, and Administration and Other Expenditure 4.1%.

Profit before Interest, Depreciation and Amortisation

For the year ended March 31, 2009, the Company had a

Profit before Interest, Depreciation and Amortisation of

Rs. 28,364 mn, a growth of 25.0% compared to the previous

year. The operating profit margins for the current financial year

and for the previous financial year stood at 27.9% and 33.7%

respectively.

Depreciation, Amortisation and Finance Charges

During the year ended March 31, 2009, Depreciation &

Amortisation expenses increased by 60.0% to Rs. 14,028 mn as

against Rs. 8,768 mn for the previous year. Net finance charges

for the year increased by 78.1% from Rs. 2,776 mn to Rs. 4,945

mn, due to increased borrowings and foreign exchange

fluctuations.

Profits and Taxes

Cash Profit from operations for the year ended March 31, 2009

stood at Rs. 23,313 mn, showing an increase of 17.5% over the

previous year. The Profit before Tax for the year stood at

Rs. 9,391 mn. The tax charge for the year, mainly due to deferred

tax charge, stood at Rs. 576 mn. The net profit for the year

ended March 31, 2009 was Rs. 8,816 mn, resulting into a net

profit margin of 8.7%.

Capital Expenditure

During the year ended March 31, 2009, the Company incurred

capital expenditure of Rs. 66,857 mn.

Balance Sheet

During the current financial year, shareholder funds increased

by Rs. 88,372 mn, largely due to a preferential issue of equity

by the Company, and the issue of Compulsorily Convertible

Preference Shares (CCPS) by one of its subsidiary companies.

This has led to strengthening of the balance sheet, which in

turn provides potential for further debt leveraging for any future

requirement.

The Gross Block stood at Rs. 205,234 mn, and Net Block

including Capital Work in Progress (CWIP) stood at Rs. 166,672

mn as at March 31, 2009. Treasury investments in mutual funds

increased by Rs. 14,892 mn during the year and stood at 20,452

mn as at March 31, 2009. Net Current Assets stood at Rs. 13,324

mn as at March 31, 2009, mainly due to investment of surplus

funds in fixed deposits with banks. The carried forward closing

debit balance of the Profit and Loss Account is Rs. 5,263 mn as

at March 31, 2009.

Human Resources

The Company through its participative work environment, skill

development activities, and by championing the values of

commitment, integrity, passion, seamlessness and speed,

promotes strong bonding with its employees. During the year,

it has again undertaken sharing of value creation by granting

another tranche of employee stock options to the eligible

employees. The findings of Organisation Health Study (OHS)

have been analysed, which are very encouraging, and concern

areas are being suitably addressed. The employee strength on

rolls stood at 6,481 as on March 31, 2009.

Risk Management

The Risk Management framework of the Company ensures,

amongst others, compliance with the requirements of Clause

49 of the Listing Agreement. The framework establishes risk

management across all service areas and functions of the

Company, and has in place procedures to inform the Board

Members about the risk assessment and minimization process.

These processes are periodically reviewed to ensure that the

management of the Company controls risks through a defined

framework. The various risks, including the risks associated with

the economy, regulations, competition, foreign exchange,

interest rate etc., are monitored and managed effectively.

Internal Control Systems

The Company has appropriate internal control systems for

business processes, covering operations, financial reporting and

compliance with applicable laws and regulations. Clearly defined

roles and responsibilities for all managerial positions drive

adherence of defined processes. Operating parameters are

monitored and controlled. Regular internal audits and checks

ensure that responsibilities are executed effectively. The audit

committee of the Board of Directors actively reviews the adequacy

and effectiveness of internal control systems and suggests

improvement for strengthening them, as appropriate.

Opportunities, Risks, Concerns and Threats

The strong growth in the sector continues, mainly due to

expansion of telecom networks to rural India, the reduced cost

of entry and the reduced cost of handsets. Low penetration,

more particularly in rural India, provides opportunity for further

growth, and your company, an incumbent GSM player with 900

MHz spectrum in about half of India, is well positioned to tap

this opportunity.

The telecom sector has witnessed increasing competition

towards the end of financial year 2008-09 and the first half of

financial year 2009-10. New launches are coming both from

CDMA operators with crossover spectrum, and new licensees.

These new launches, alongwith the expansion of some regional

players, has created major overcapacity in the sector, which in

turn has lowered tariffs. However, your company, based on the

inherent advantage of spectrum and scale, brand strength and

sophisticated management processes, is in a position to emerge

even stronger through this phase of hyper competition and

sector overcapacity.

The telecom sector is characterised by change in technology.

Competition from new technologies is an inherent threat. While


7

the planned 2100 MHz spectrum auction for 3G services

will lead to additional cash outflow, it will also open new

revenue streams. The Company’s strong balance sheet and

market standing, positions it to participate effectively in such

auction.

The Company requires certain approvals, licenses, registrations

and permissions for operating its business. In addition, regulators

may amend license conditions, norms for spectrum allocation,

spectrum charges, merger & acquisition rules etc. which may

have a significant impact on the Company’s business. The

Company, however, is hopeful that the policy changes will be

equitable.

The Company’s business is dependent on key vendors to supply

critical network equipment and services. Besides, its ability to

provide quality mobile network and expanding its area of

operations and the subscriber base is also dependent on the

spectrum allocation by the government. The Company believes

in partnering with vendors who are of international repute, and

with whom it builds long term relationships.

Outlook

The competitive intensity in the telecom sector has accelerated

during the last three quarters, and is likely to increase with new

launches creating further overcapacity, placing pressure on

margins. However, it is anticipated that market forces will

eventually work the overcapacity out of the sector. The Company

focuses on strengthening its position in 900 MHz service areas,

by exploiting its advantages of scale and spectrum, while in the

newer service areas it follows a disciplined and measured

approach. The Company is fully equipped for this phase of

intense competition, and expects to emerge competitively

stronger. The telecom sector will continue to demonstrate

attractive long term opportunities for strong operators.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Company’s objectives, projections, estimates, expectations

may constitute a “forward-looking statement” within the meaning of applicable securities laws and regulations. Actual results

could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s

operations, include economic conditions affecting demand/supply and price conditions in the domestic markets in which the

Company operates, changes in the Government Regulations, tax laws and other statutes and other incidental factors.


8

Dear Shareholders,

The Directors are pleased to present the 14th

Annual Report,

together with the audited financial statements of your Company,

for the financial year ended March 31, 2009.

Financial Results

Financial highlights of the consolidated Statement of Operations

of your Company for the financial year 2008-09 are:

(Rupees in Million)

Particulars 2008-09 2007-08

Income from Services 101,313 67,200

Other Income 231 174

Total Revenue 101,544 67,374

Operating Expenses 73,180 44,682

EBITDA 28,364 22,692

Depreciation and Amortization 14,028 8,768

EBIT 14,336 13,924

Interest and Financing charges 4,945 2,776

EBT 9,391 11,148

Taxes 575 725

Net Profit after Tax 8,816 10,423

Balance brought forward from

previous year (14,079) (24,502)

Carried forward Loss (5,263) (14,079)

During the year ended March 31, 2009, gross revenues grew by

50.7% to Rs. 101,544 mn from Rs. 67,374 mn for the year

ended March 31, 2008. Your Company registered a net

profit of Rs. 8,816 mn against a net profit of Rs.10,423 mn

in 2007-08.

Dividend

As your Company does not have distributable profits as on March

31, 2009, your Directors have not recommended any dividend

for the year.

Review of Consolidated Operations

Your Company recorded an increase of 79% in its subscriber

base from 24.00 mn as of March 31, 2008 to 43.02 mn as of

March 31, 2009. Your Company has increased its subscriber

market share from 9.2% in 2007-08 to 11% in 2008-09 on a

national basis. The total Minutes of Usage have more than

doubled from 86 bn minutes in 2007-08 to 175 bn minutes in

2008-09.

Share Capital

During the year under review, the Authorised Share Capital has

been increased by Rs. 25,000 mn to Rs. 82,750 mn.

Further, the Paid-up Equity Share Capital of the Company

increased by Rs. 4,647.35 mn on account of preferential issue

of 464,734,670 Equity Shares of Rs. 10/- each to TMI Mauritius

Limited, a subsidiary of Axiata Group Berhad, Malaysia (formerly

known as TM International, Berhad).

Directors’ Report

Capital Expenditure

Your Company continues its aggressive network expansion for

enhanced coverage and improved quality experience to the

customer. Your Company incurred a capex of Rs 66,857 mn

during the financial year 2008-09. As a result, cell sites of the

Company have increased from 24,793 as at end March, 2008

to 49,860 as at end March, 2009.

The Company also made significant progress in rolling out its

National Long Distance (NLD) network and as at end September,

2009, it carried about 51% of its captive NLD traffic.

Employee Stock Option Scheme

Your Company has formulated and implemented the Employee

Stock Option Scheme 2006 (ESOS-2006). During the year under

review, the ESOS Compensation Committee granted 6,131,250

options on July 24, 2008, as a second tranche to the eligible

employees of the Company. Each option is convertible into one

Equity Share of the Company upon vesting. These options will

vest in 4 equal annual installments after one year of the grant

and shall be exercisable within a period of 5 years from the

date of the vesting. Out of the total options granted, 2,655,000

options and 454,750 options lapsed out of the options granted

in first and second tranches respectively. As on March 31, 2009

the outstanding options are 22,952,500.

Details of the options granted under ESOS – 2006 upto

March 31, 2009, and other disclosure in compliance with Clause

12 of Securities and Exchange Board of India (Employees Stock

Option Scheme and Employees Stock Purchase Scheme)

Guidelines 1999, are set out in Annexure ‘A’ to this Report.

Human Resources

Your Company continuously invests in fostering people

development, identifying and grooming management talent,

and has a culture of harnessing employees’ potential to the

maximum.

Awards and Recognitions

Your Company has been selected as “Emerging Company of the

Year” for 2009 by The Economic Times, arguably Corporate

India’s pre-eminent awards. This award is a recognition of the

strides made by your company in recent years.

Significant Developments:

● Investment in Spice Communications Limited

During the year under review, the company acquired 40.8%

stake in Spice Communications Limited (Spice), having

operations in Punjab and Karnataka service areas, from

MCorp Global Communications Private Limited (MCPL), the

erstwhile promoters of Spice. Further, the Company

alongwith TMI India Limited, TMI Mauritius Limited, Axiata

Group Berhad (formerly known as TM International Berhad)

and Green Acre Agro Services Private Limited, collectively

referred to as “the acquirers” had made a public offer to

acquire upto 20% equity stake in Spice from other public

shareholders. The said offer opened on September 17, 2008

and closed on October 6, 2008. The acquirers made the

payment on October 15, 2008 to all the eligible

shareholders of Spice who had validly tendered their shares


9

under the said offer. Consequently, the stake of the

Company in Spice stands at 41.09% as of date at a cost of

Rs. 22,041.87 mn.

The Company has paid a Non-Compete Fee of

Rs. 5,439.75 mn to MCPL, pursuant to the Non-Compete

Agreement entered into as a part of the acquisition. Further,

pursuant to a separate Scheme of Arrangement approved

by the Hon’ble High Court of Gujarat at Ahmedabad on

August 31, 2009, the Non-Compete fee paid to MCPL has

been debited to the Profit and Loss Account and setting off

by withdrawal of equal amount from the balance in

Securities Premium Account, as explained in the relevant note

to the Accounts.

Your Directors wish to inform that a Scheme of

Amalgamation of Spice with the Company has been filed

with the Hon’ble High Court of Gujarat at Ahmedabad by

the Company on May 11, 2009. Similarly, Spice has also

filed the Scheme of Amalgamation with the Hon’ble High

Court of Delhi at New Delhi on May 17, 2009. The Scheme

shall be effective on and from the last of the dates on

which all the required approvals are obtained and the

sanctioned Scheme is filed with the Registrar of Companies

at Ahmedabad and Delhi respectively. The share swap ratio

for the amalgamation has been fixed at 49 equity shares of

the Company for every 100 equity shares held in Spice.

● De-merger of Licenses

Pursuant to acquisition of Spice, the Company acquired the

operations of Punjab and Karnataka service areas. Your

Company already has UAS Licenses in these two service

areas, where no operations have been started. Under the

circumstances, your Company chose to demerge these two

UAS Licenses to an entity eligible as per policy.

Consequently, your Company has filed a Scheme of

Arrangement on May 11, 2009 with the Hon’ble High Court

of Gujarat at Ahmedabad to de-merge these two UAS

Licenses. However, your Company has, subsequent to this

filing, sought a deferment of the proceedings from the

Hon’ble High Court of Gujarat at Ahmedabad, pending

regulatory clarity on the subject. As explained in the relevant

note to the Accounts, the carrying cost of these licenses as

of March 31, 2009 is Rs. 3,585.80 mn.

● Preferential Allotment

Your Directors wish to inform you that at the Extra Ordinary

General Meeting held on July 30, 2008, the members had

approved issuance on a preferential basis 464,734,670

Equity Shares of face value of Rs. 10/- each for cash at a

premium of Rs. 146.96 per Equity Share to TMI Mauritius

Limited (‘TMI Mauritius’). Pursuant to the said allotment on

August 12, 2008 and August 13, 2008, the Company

received funds aggregating to Rs. 72,944.75 mn.

As per the terms of the Share Subscription Agreement

executed with TMI Mauritius and others, TMI has been

provided certain rights which have been duly incorporated

in the Articles of Association of the Company, including a

right to appoint one Director on the Board of your Company.

Dr. Shridhir Sariputta Hansa Wijayasuriya has been

appointed as a nominee of TMI Mauritius on the Board of

the Company.

● De-merger of Passive Infrastructure

Your Directors wish to inform you that the Company had

filed a Scheme of Arrangement on April 17, 2009 with the

Hon’ble High Court of Gujarat at Ahmedabad to de-merge

its passive infrastructure assets in the service areas of

Andhra Pradesh, Delhi, Gujarat, Uttar Pradesh (both East &

West including Uttaranchal), Haryana, Kerala, Rajasthan and

Mumbai to Idea Cellular Towers Infrastructure Limited

(ICTIL), a wholly owned subsidiary, with an appointed date

of January 1, 2009. Pursuant to the receipt of the High

Court Order(s) and filing of the same with the Registrar of

Companies on September 29, 2009, passive infrastructure

in respect of the above mentioned service areas have been

de-merged from the Company to ICTIL and given effect to

in the accounts, as explained in the relevant note to the

Accounts.

● Roll-out of services in new service areas

Your Directors wish to inform you that, brand !dea has

expanded its operations from 11 service areas in March,

2008 to 20 service areas in October, 2009. The Company

has launched services in Mumbai, Orissa, Tamil Nadu

(including Chennai), Jammu & Kashmir, Kolkata and West

Bengal. In addition, Aditya Birla Telecom Limited, a wholly

owned subsidiary, launched operations in Bihar (including

Jharkhand) service area. Subsequent to establishing joint

control over Spice, Punjab and Karnataka service areas have

come under brand !dea. With the imminent launch of

services in Assam and North East service areas, your

Company, alongwith its subsidiary and joint venture, will

become a Pan India operator, befitting its stature and

potential.

● De-merger of Unified Access Services License of Bihar

(including Jharkhand) service area from Aditya Birla

Telecom Limited (ABTL) to the Company

Your Directors wish to inform that your Company is working

towards including operations of its subsidiary and joint

venture company in its own fold. The operations of Punjab

and Karnataka service areas, which currently are in Spice

Communications Limited, are in the process of being

merged with the Company. On similar lines, the telecom

operations of Bihar (including Jharkhand) service area which

are currently in ABTL, a wholly owned subsidiary, are also

proposed to be merged with the company.

In line with the above, your Board has approved and filed a

Scheme of Arrangement with the Hon‘ble High Court of

Gujarat at Ahmedabad on September 24, 2009 for

de-merger of the Unified Access Services License (UASL) of

Bihar (including Jharkhand) service area, including certain

assets and liabilities from ABTL to the Company.

New products and initiatives

Your Company has made an extensive progress on the marketing

front by introducing various unique and innovative products and

services across all service areas of operation. Some major

initiatives are:

● To cater to the unique needs of the rural customer, ‘Krishi

Voucher’ was launched in Maharashtra in partnership with

Reuters Market Light (RML). This service is available


10

exclusively to Idea subscribers and is designed to equip

farmers with decision critical information that is easy to

access and actionable, thus enhancing their ability to market

their produce.

● Idea was the first operator in India to launch Nokia Life

Tools in association with Nokia. Nokia Life Tools is a rural

VAS product aimed at enhancing the productivity of the

farmers and rural folks by providing Mandi Prices, Weather

Information and Agricultural related information over

mobile. The information is district specific and of high

relevance to the farmers.

● Idea has tied-up with Indian Oil Corporation (IOC), the

largest petroleum company in India, to use their petrol

pumps and gas agencies for branding and distribution of

Idea SIM Cards and Recharge Vouchers. Alongwith sale of

new activations and Recharge Vouchers, Idea has

opportunity to display branding across IOC’s national

network of petrol pumps, gas agencies and delivery boys.

Similarly Idea has also tied up with BPCL to use their gas

agencies for branding and distribution of Idea SIM Cards &

Recharge Vouchers.

● ‘International Airtime Transfer’, a unique VAS service was

launched, whereby NRI community can directly recharge

the prepaid mobiles of Idea subscribers in India through

several international merchants and the web in Gulf, the

USA and UK.

● Idea launched ‘Voice of Idea’, an innovative platform which

registers responses on caller tones. Integrated with the ‘for

the people, by the people’ ad campaign, it enables Idea

subscribers to greet their callers with thought provoking

questions of public interest. The subscribers have responded

enthusiastically with over 5 mn votes being cast.

● Idea launched NetSetter Data Cards and Blackberry solutions

to cater to its data-savy consumer segments. NetSetter is a

GPRS/EDGE compatible USB data modem to access internet,

usable with both desktops and laptops with SMS facility.

The Blackberry solution brings together smart phones,

software and services to provide customers with easy

wireless access to email, phone, calendar, web and

multimedia applications, as well as of other mobile business

and lifestyle applications.

● As one of Idea’s significant VAS activities, the Idea HPCL -

Automated gas booking solution was initiated and launched

by Idea in Kerala Circle. This solution is now also launched

in Delhi Circle.

● As a significant digital initiative, ‘Zac’ – IDEA’s first ever

interactive virtual character was launched in August, 2009.

On visiting the activity micro-site, users are prompted to

make Zac, fitter and healthier by giving him a 7-day fitness

regime over an interactive mobile and web integrated

interface.

● Idea’s ‘Fans of Cricket’ campaign around IPL team Mumbai

Indians received an excellent response with more than 44

Lac calls received, with maximum calls coming on the number

alloted to Sachin Tendulkar.

● As Telecom Sponsor of cult youth property - MTV Roadies,

Idea launched the Idea Mobile Roadie Challenge, a first of

its kind customer engagement programme designed

exclusively for Idea customers integrating user experience

on Web and Mobile. This activity won kudos at the ABBY

Awards and EMVIES.

● Idea strengthened its brand through a series of media

properties like Idea Khatron Ke Khiladi-Level 2, Idea Bharat

Ki Shaan on DD, Idea Rocks India – 4, Idea IIFA Awards and

Idea Filmfare Awards. To further strengthen Idea’s

association with cricket, Idea sponsored the India - Sri Lanka

Cricket tournament and signed up with IPL Teams – Mumbai

Indians as Founding Partner and Delhi Daredevils as a

Principal Partner.

● Idea continued its clutter breaking advertising by launching

3 new thematic advertising campaigns: ‘Education for all’

campaign in July 2008, ‘Democracy’ campaign in December

2008 and ‘Walk when you Talk’ in June 2009. These

campaigns are expressions of Idea’s brand thought – ‘An

!dea can change your life’.

Subsidiaries and Joint Ventures

Subsidiaries

● Aditya Birla Telecom Limited (ABTL) provides GSM based

mobile services in Bihar (including Jharkhand) service area,

and has a 16% shareholding in Indus Towers Limited.

● Idea Cellular Services Limited (ICSL) provides manpower

services to the Company and ABTL.

● Idea Cellular Infrastructure Services Limited (ICISL), is a

tower company owning towers in Bihar, Orissa, Jammu &

Kashmir, Assam and North East service areas and provides

passive infrastructure Services in these service areas.

● Idea Cellular Towers Infrastructure Limited (ICTIL), holds

towers de-merged from the Company. ICTIL will

subsequently merge into Indus Towers Limited.

● Swinder Singh Satara and Company Limited (SSS & Co.), is

engaged in the business of sale and purchase of Data Cards,

Mobile Hand Sets and Fixed Wireless Phones.

Joint Ventures

Spice Communications Limited (Spice), in which your Company

holds 41.09% stake, provides GSM based mobile services in

Punjab and Karnataka service areas and also has NLD/ILD

operations.

Indus Towers Limited (Indus), in which ABTL holds 16% stake,

is a joint venture between Bharti group, Vodafone Essar group

and the Company (through ABTL), and provides passive

infrastructure services in 15 service areas.

Your Company had applied to the Central Government seeking

exemption from attaching the documents referred to in Section

212(1) of the Companies Act, 1956. In terms of the approval

granted by the Central Government under Section 212(8) of

the Companies Act, 1956, a copy of the Balance Sheet, Profit

and Loss Account, Reports of the Board of Directors and Auditors

of the subsidiaries for year ended March 31, 2009 have not

been attached with the financial statements of your Company.

However, the annual accounts of the subsidiary companies will


11

be made available to the shareholders of the Company and of

the subsidiary companies, who seek such information at any

point of time and are also open for inspection by any

shareholders at the Registered Office of the Company and of

the concerned subsidiary companies. The statement pursuant

to the approval under Section 212(8) of the Companies Act,

1956, forms part of the Annual Report.

Fixed Deposits

Your Company does not accept or hold any deposits and, as

such, no amount of principal or interest on fixed deposits was

outstanding on the date of the Balance Sheet.

Corporate Governance

Your Directors reaffirm their continued commitment to good

corporate governance practices. Your Company adheres to all

major stipulations in this regard as provided in Clause 49 of the

Listing Agreement which relates to Corporate Governance. A

detailed report on the Corporate Governance, together with, a

certificate from Statutory Auditors forms part of this report.

Board of Directors

Mr. M.R. Prasanna and Mr. Saurabh Misra, Directors resigned

from the Board of your Company with effect from October 1,

2008 and October 26, 2009 respectively. The Board places on

record its sincere appreciation for the valuable guidance and

contribution made by Mr. M.R. Prasanna and Mr. Saurabh Misra

in the deliberations of the Board during their respective tenures.

Dr. Rakesh Jain was appointed as a Non-Executive Director on

the Board of your Company w.e.f. October 26, 2009 to fill in

the casual vacancy caused by resignation of Mr. Saurabh Misra.

As per the provisions of Section 262 of the Companies Act,

1956, Dr. Rakesh Jain holds office as a Director only till the date

of the ensuing Annual General Meeting i.e. the date upto which

Mr. Saurabh Misra in whose place he has been appointed would

have held the office.

Mr. R.C. Bhargava and Mr. P. Murari were appointed as Additional

and Independent Directors of the Company with effect from

October 20, 2008. Dr. Shridhir Sariputta Hansa Wijayasuriya

was also appointed as an Additional Non-Executive Director of

the Company with effect from October 20, 2008. As per the

provisions of Section 260 of the Act, they will hold office upto

the date of the ensuing Annual General Meeting of the

Company.

Your Company has received notices under Section 257 of the Act

together the requisite deposit, in respect of the above persons

proposing their appointment as Directors of the Company.

Resolution(s) seeking approval of the Members for the

appointment of Dr. Rakesh Jain, Mr. R.C. Bhargava, Mr. P. Murari

and Dr. Shridhir Sariputta Hansa Wijayasuriya as Directors of the

Company have been incorporated in the Notice of the ensuing

Annual General Meeting together with their brief resume(s).

Mr. Kumar Mangalam Birla, Mr. Mohan Gyani and Mr. Gian

Prakash Gupta retire from office by rotation, and being eligible,

offer themselves for re-appointment at the ensuing Annual

General Meeting of the Company. Brief resume of the Directors

proposed to be re-appointed as required under Clause 49 of the

Listing Agreement are provided in the Notice of the Annual

General Meeting forming part of this Annual Report.

Conservation of Energy, Technology Absorption,

Foreign Exchange Earnings & Outgo

The particulars as required to be disclosed pursuant to Section

217(1) (e) of the Companies Act, 1956, read with the Companies

(Disclosures of Particulars in the Report of Board of Directors)

Rules, 1988, are given in the Annexure forming part of this

Report.

Particulars of Employees

In accordance with the provisions of Section 217(2A), read with

the Companies (Particulars of Employees) Rules, 1975, the

names and other particulars of employees are to be set in the

Directors Report, as an addendum thereto. However, as per the

provisions of Section 219(1)(b)(iv) of the Companies Act, 1956,

the report and accounts, as therein set out, are being sent to all

the members of the Company excluding the aforesaid

information about employees. Any member, who is interested

in obtaining such particulars about employees, may write to

the Company Secretary at the Registered Office of the Company.

Directors’ Responsibility Statement

Your directors affirm that the audited accounts containing

financial statements for the financial year 2008-09 are in

conformity with the requirements of the Companies Act, 1956.

They believe that the financial statements reflect fairly the form

and substance of transactions carried out during the year and

reasonably present the Company’s financial condition and results

of operations.

Pursuant to Section 217(2AA) of the Companies Act, 1956, the

Directors confirm that:

a) in the preparation of the annual accounts, the applicable

accounting standards have been followed other than the

accounting treatment for the Court approved Scheme(s) of

Arrangement which have been explained in the relevant

notes to the Accounts;

b) the accounting policies have been applied consistently and

judgments and estimates made are reasonable and prudent,

so as to give a true and fair view of the state of affairs of

the Company at the end of the financial year and of the

profit of the Company for that period;

c) proper and sufficient care has been taken to the best of

their knowledge and belief for the maintenance of adequate

accounting records in accordance with the provisions of

the Companies Act, 1956, for safeguarding the assets of

the Company and for preventing and detecting fraud and

other irregularities;

d) the annual accounts have been prepared on a going concern

basis.

Corporate Social Responsibility

The Company is a responsible corporate citizen, and strives to

give back to the community it operates in. The Corporate Social

initiatives, which the Company has identified and implemented

are as under:

● IIM Ahmedabad – Idea Telecom Centre of Excellence

Your Directors wish to inform that, your Company has entered

into a tripartite agreement with the Indian Institute of


12

Management, Ahmedabad (“IIMA”) and the Department of

Telecommunications (“DoT”), to set-up a Telecom Centre of

Excellence at the campus of IIMA known as “IIMA Idea Telecom

Center of Excellence” (IITCOE). This Centre of Excellence focuses

on the areas of telecom policies, governance, regulation and

management, especially marketing and customer care.

IITCOE will Identify and capture best practices across countries;

will enhance human capital through training and teaching

programs for policy makers, regulators and the industry; will

bring fresh insights from other countries in telecom and in

related sectors, and will find solutions to India’s specific

situation, especially in the development of rural telephony.

● Pocket PCO project

Your Company alongwith International Finance Corporation

(IFC), a member of The World Bank Group, has taken an initiative

for designing and implementing a “Pocket PCO” program in India.

Idea Pocket PCO is easy to use mobile phone that comes with a

special Idea SIM having PCO software embedded in it. The device

can be used by the individual as a mobile phone for personal

use and as a PCO for business opportunity. The project will help

rural micro-entrepreneurs to create pocket Public Call Offices

(PCOs) in India’s under-served areas. The focus is to provide

access to telephony services in rural communities, while creating

income generating opportunities. Your company is committed

to help people to improve their lives by providing high quality

access to telecommunications.

● FICCI-Aditya Birla CSR Centre for Excellence

For the purposes of creating greater awareness and promoting

Corporate Social Responsibility (“CSR”), as a part of the corporate

mission and values, the Federation of Indian Chambers of

Commerce and Industry (‘FICCI’), your Company and other group

companies of the Aditya Birla Group, viz., Hindalco Industries

Limited, Grasim Industries Limited, Aditya Birla Nuvo Limited

and Essel Mining and Industries Limited have set-up a CSR Centre

called as ‘FICCI-Aditya Birla CSR Centre for Excellence’. The object

of setting-up the Centre, amongst others, is to create and

develop the culture and concept of CSR among corporates,

businesses, industries, organizations as well as other institutions,

which benefit employees, their families and the society at large

through welfare and training programs.

Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants retire as

Statutory Auditors of the Company at the conclusion of the

ensuing Annual General Meeting. The Statutory Auditors have

confirmed their eligibility and willingness to accept the office on

re-appointment. The necessary resolution seeking your approval

for re-appointment of Statutory Auditors has been incorporated

in the Notice convening the Annual General Meeting.

Auditors’ Report and Notes to Accounts

The Board has duly reviewed the Statutory Auditors Report on

the Accounts. The notes forming part of the accounts referred

to in the Auditors Report of the Company are self explanatory

and do not call for any further explanation under Section 217(3)

of the Act.

Management Discussion and Analysis

Management Discussion and Analysis Report for the year under

review, in accordance with the Listing Agreement requirements

is presented in a separate section forming part of this Annual

Report.

Appreciation

Your Directors wish to convey their appreciation to all customers,

promoters, lenders, trading partners, suppliers and the

Government Authorities for their invaluable support and look

forward to continued support in future. Your Directors wish to

place on record their appreciation to employees at all levels for

their hard work, dedication and commitment, which has enabled

the company to march ahead.

For and on behalf of the Board

Place: Mumbai Kumar Mangalam Birla

Date: October 27, 2009 Chairman


13

Annexure to the Directors’ Report

Particulars pursuant to the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rule 1988 are furnished

hereunder:

A. CONSERVATION OF ENERGY : Electricity is used for working of the Company’s network

infrastructure equipments. The company regularly reviews power

consumption patterns across its networks and implements requisite

improvements/changes in the network or processes in order to

optimize power consumption and thereby achieve cost savings.

Some of the measures adopted by the Company for energy

conservation are:

(i) Increased battery back-up for cell sites; and

(ii) Experimenting the use of deep discharge batteries.

B. RESEARCH & DEVELOPMENT (R&D)

1. Specific areas in which R&D is carried out by

the Company : Nil

2. Benefits derived as result of the above R&D : Nil

3. Future Plan of action : The Company will explore various options to adopt latest

technology/use of equipment for its operations.

1. Expenditure on R&D:

a) Capital : Nil

b) Recurring : Nil

c) Total : Nil

d) Total R&D expenditure as percentage of total turnover : Nil

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:

1. Efforts in brief towards technology absorption, : Development of a skilled team of engineers in the area of radio

adaptation, innovation engineering, installation of base station and operation of mobile

telecom services.

2. Benefits derived as a result of the above efforts : Cost of installation of base station reduced due to better network

planning and designing. Achieved better coverage and high quality

of reception.

3. Particulars of imported technology in the last five years :

a) Technology imported : No import of technology. However, GSM equipments are imported

on regular basis.

b) Year of import : Ongoing

c) Has the technology been fully absorbed : Not applicable

If not fully absorbed areas where this has

not taken place, reasons thereof and future

plans of action

4. Foreign exchange earnings and outgo : Earnings: Rs. 686.60 mn

(Outgo includes CIF value of imports) Outgo: Rs. 19,699.99 mn


Place: Mumbai Kumar Mangalam Birla

Date: October 27, 2009 Chairman


14

The exercise price was determined by

averaging the daily closing price of the

Company’s equity shares during 7 days

immediately preceding the date of grant

and discounting it by 15%.

Exercise price - Rs.112.57 per option

The exercise price was determined by

averaging the daily closing price of the

Company’s equity shares during 7 days

immediately preceding the date of

grant.

Exercise price - Rs.84.03 per option

Annexure ‘A’ to the Directors’ Report

Disclosure pursuant to the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme and Emloyee

Stock Purchase Scheme) Guidelines, 1999

Particulars ESOS - 2006

Tranche I (December 31, 2007) Tranche II (July 24, 2008)

a) Options granted 1,99,31,000 61,31,250

b) The pricing formula

c) Options vested 49,82,750 NIL

d) Options exercised NIL NIL

e) The total number of shares arising as a Not Applicable Not Applicable

result of exercise of options

f) Options lapsed 26,55,000 4,54,750

g) Variation of terms of options NIL NIL

h) Money realized by exercise of options NIL NIL

i) Total number of options in force 1,72,76,000 56,76,500

j) Employeewise details of options granted:

i) Senior managerial personnel: Mr. Sanjeev Aga: 17,12,000 Mr. Sanjeev Aga: 4,28,000

ii) Any other employee who received a NIL NIL

grant in any one year of option

amounting to 5% or more of options

granted during that year

iii) Identif ied employees who were NIL NIL

granted option, during any one year,

equal to or exceeding 1% of the issued

capital (excluding outstanding

warrants and conversions) of the

Company at the time of grant

k) Diluted Earnings Per Share Not Applicable, Since no option exercised


15

Weighted-average exercise prices and

weighted-average fair values of options

whose exercise price is less than the

market price of the stock

Not Applicable

Not Applicable

Particulars ESOS - 2006

Tranche I (December 31, 2007) Tranche II (July 24, 2008)

l) D i f fe r e n c e b etw e e n t h e e m p l oye e Rs. 423.72 million

compensation cost, computed using the

intrinsic value of the stock options and the

employee compensation cost that shall have

been recognised if the fair value of the

options was used.

The impact of this difference on profits and The effect of adopting the fair value on the net income and earnings per share for 2008-09

on EPS of the company is as presented below :

Particulars Rs. in million

Net profit after tax but before exceptional items 10,012.11

Add: Intrinsic Value compensation cost 144.74

Less: Fair Value compensation cost 568.46

Adjusted Net Income 9,588.39

Earnings Per Share (Rs.) Basic Diluted

As Reported 3.42 3.42

As Adjusted 3.27 3.27

m) (i) Weighted-average exercise prices and


whose exercise price equals the market

price of the stock

(ii) Weighted-average Weighted-average

exercise price: Rs. 112.57 exercise price: Rs. 84.03

Weighted-average Weighted-average

fair value of options: Rs. 68.99 fair value of options: Rs. 48.25

(iii) Weighted-average exercise prices and


whose exercise price exceeds the market

price of the stock

n) A description of the method and significant Black – Scholes Method

assumptions used during the year to estimate

the fair values of options, including the

following weighted-average information:

(i) risk-free interest rate (%) 7.78 7.50

(ii) expected life (No. of Years) 6 years 6 months 6 years 6 months

(iii) expected volatility (%) 40.00 45.80

(iv) dividend yield (%) Nil Nil

(v) the price of the underlying share in Rs. 139.10 Rs. 87.75

market at the time of option grant


16

Corporate Governance Report

Governance Philosophy

The Aditya Birla Group is committed to the adoption of best

governance practices and its adherence in the true spirit, at all

times. Our governance practices are a product of self desire,

reflecting the culture of the trusteeship that is deeply ingrained

in our value system and reflected in our strategic thought

process. At a macro level, our governance philosophy rests on

five basic tenets, viz., Board accountability to the Company and

shareholders, strategic guidance and effective monitoring by

the Board, protection of minority interests and rights, equitable

treatment of all shareholders, as well as superior transparency

and timely disclosure.

In line with this philosophy, Idea Cellular Limited, an Aditya

Birla Group Company, continuously strives for excellence through

adoption of best governance and disclosure practices. Your

Company is fully compliant with all the provisions of Clause 49

of the Listing Agreement entered into with the Stock

Exchange(s). The details of the compliance are as follows:

Compliance with Corporate Governance Guidelines

1. BOARD OF DIRECTORS

Composition of the Board

Your Company has a balanced Board, comprising of Executive

and Non-Executive Directors which includes independent

professionals. The Board of your Company comprises of 12

Directors as on March 31, 2009, comprising of a Non-Executive

Chairman, a Managing Director, 6 Independent Directors and 4

Non-Executive Directors. Clause 49 of the Listing Agreement as

amended in April, 2008, requires that if the Non-Executive

Chairman is related to any promoter, than atleast one – half of

the Board of the Company shall consist of independent directors.

Your Company has duly complied with the above requirement

of Clause 49 of the Listing Agreement.

The Members of the Board are from diversified backgrounds

and have varied expertise and considerable experience in their

respective fields.

None of the Directors on the Board is a Member of more than

10 Committees or a Chairman of more than 5 Committees (as

specified in Clause 49), across all the companies in which he/

she is a Director. All the Directors have intimated periodically

about their Directorship and Membership on the Board

Committees of other companies, which are within the

permissible limits of the Companies Act, 1956.

The composition of the Board of Directors and the number

of Directorships and Committee positions held by them is as

under:

Name of Director Category No. of Outside Directorship(s) Held1

Outside Committee Positions Held2

Public Private Member Chairman/

Chairperson

Mr. Kumar Mangalam Birla Non-Executive 9 13 - -

Mrs. Rajashree Birla Non-Executive 6 12 - -

Mr. M.R. Prasanna3

Non-Executive 9 4 - -

Mr. Saurabh Misra Non-Executive 2 1 - -

Mr. Biswajit A. Subramanian Non-Executive 1 - - -

Mr. Arun Thiagarajan Independent 11 4 6 1

Mr. G.P. Gupta Independent 12 1 5 2

Mr. Mohan Gyani Independent - - - -

Ms. Tarjani Vakil Independent 5 2 2 4

Mr. R.C. Bhargava4

Independent 8 1 5 4

Mr. P. Murari4

Independent 14 - 5 -

Dr. Shridhir Sariputta Hansa Non-Executive 1 - - -

Wijayasuriya4

Mr. Sanjeev Aga Managing Director 6 1 - 1

1. The Directorships held by the Directors, as mentioned above excludes alternate directorships, directorships in foreign companies, companies

under Section 25 of the Companies Act, 1956 and Private Limited companies, which are not the subsidiaries of Public Limited companies.

2. Represents Membership/ Chairmanship of two Committees viz. Audit Committee and Shareholders’/ Investors’ Grievance Committee.

3. Mr. M. R. Prasanna resigned as a Director w.e.f. October 1, 2008.

4. Mr. R. C. Bhargava, Mr. P. Murari and Dr. Shridhir Sariputta Hansa Wijayasuriya were appointed as Additional Directors w. e. f. October 20, 2008.


17

Board Meetings and Procedure

The Board of Directors plays the primary role in ensuring good

governance and functioning of the Company. The Meetings are

governed by a structured agenda. All the agenda items are

backed by comprehensive agenda notes, containing all the vital

information, so as to enable the Directors to have focused

discussion at the meeting and to take informed decisions. All

the relevant information as enumerated in Annexure IA to Clause

49 of the Listing Agreement is placed before the Board. The

agenda and agenda notes are circulated to all the Directors in

advance of each meeting of the Board of Directors. Where it is

not practical to send the relevant information as a part of the

agenda papers, the same is tabled at the meeting. The

presentations covering the Company’s performance, operations

and business strategy are also made to the Board.

The Board also reviews periodically the compliance status of all

the applicable laws. All the decisions are taken after detailed

discussions by the Board Members at the meetings. The

Members of the Board have complete freedom to express their

opinion and have unfettered and complete access to information

in the Company.

The Board meets at least once in a quarter to review the quarterly

financial results and operations of the Company. Apart from

the above, additional Board Meetings are convened to address

the specific needs of the Company.

During the financial year 2008-09, six meetings of the Board

were held on April 24, 2008, May 22, 2008, June 25, 2008,

July 24, 2008, October 20, 2008 and January 22, 2009. The

time gap between two meetings did not exceed four months.

The Board Meetings are generally held in Mumbai.

The details of attendance of Directors at Board Meetings and at

the last Annual General Meeting are as under:

Name of Director No. of Board Meetings Attended

held during the tenure Last AGM

Held Attended

Mr. Kumar Mangalam Birla 6 6 No

Mrs. Rajashree Birla 6 5 No

Mr. M.R. Prasanna 4 4 Yes

Mr. Saurabh Misra 6 4 No

Mr. Biswajit A. Subramanian 6 6 No

Mr. Arun Thiagarajan 6 3 Yes

Mr. G.P. Gupta 6 6 No

Mr. Mohan Gyani 6 1 No

Ms. Tarjani Vakil 6 5 No

Mr. R.C.Bhargava 2 2 No

Mr. P. Murari 2 1 No

Dr. Shridhir Sariputta Hansa

Wijayasuriya 2 2 No

Mr. Sanjeev Aga 6 6 Yes

Code of Conduct:

The Board of Directors play an important role in ensuring good

governance and have laid down the Code of Conduct for all the

Board Members and Senior Managerial Personnel of the

Company, which is also uploaded on the website of the Company

(www.ideacellular.com). All Board Members and Senior

Managerial Personnel have affirmed compliance to the Code of

Conduct. A declaration signed by the Managing Director

affirming the compliance with the Code of Conduct by the Board

Members and Senior Management Personnel of the Company

is appended at the end of this report.

2. COMMITTEES OF THE BOARD

A. Audit Committee

Composition, Meetings and Attendance

The Company has an Audit Committee at the Board level with

the powers and role that are in accordance with Clause 49 of

the Listing Agreement and Section 292A of the Companies Act,

1956. The Committee acts as a link between the Management,

the Statutory Auditors, Internal Auditors and the Board of

Directors to oversee the financial reporting process. The Audit

Committee consists of four members, of which three members

including the Chairman are Independent Directors and one

Member is a Non-Executive Director. The majority of the Audit

Committee members have accounting and financial

management expertise. The Company Secretary acts as a

Secretary to the Committee.

The Managing Director and the Chief Financial Officer of the

Company are permanent invitees of the Audit Committee

Meetings and representatives of the Statutory Auditors and Internal

Auditors of the Company are also invited to the Audit Committee

Meetings. In addition, other Senior Management Members are

also invited to the Committee meetings to present reports on the

respective items being discussed at the meeting from time to time.

The Audit Committee observes and controls the financial

reporting process of the Company with a view to provide

accurate and proper disclosures. The Committee reviews the

internal audit reports periodically as well as the action taken

report. The Committee also gives directions to the management

in areas that needs to be strengthened. The recommendations

of the Audit Committee are binding on the Board.

During the financial year 2008-09, six meetings of the Audit

Committee were held on April 2, 2008, April 24, 2008, July 24,

2008, October 20, 2008, December 22, 2008, and January 22,

2009.

The composition of the Audit Committee as on March 31, 2009

and the attendance of the members at the meetings are as under:

Name of Director Category No. of No. of meetings

Meetings held attended

during the tenure

Mr. G.P. Gupta

(Chairman) Independent 6 6

Mr. Arun Thiagarajan Independent 6 5

Ms. Tarjani Vakil Independent 6 6

Dr. Shridhir Sariputta

Hansa Wijayasuriya Non Executive 3 1

Powers of Audit Committee

As enumerated in Clause 49 of the Listing Agreement, the Audit

Committee has the following powers:

1. To investigate any activity within its terms of reference;

2. To seek information from any employee;

3. To obtain outside legal or other professional advice, and

4. To secure attendance of outsiders with relevant expertise,

if it considers necessary.


18

Terms of reference

The broad terms of reference of Audit Committee includes the

following, as mandated in Clause 49 of the Listing Agreement

and Section 292A of the Companies Act, 1956:

a. Oversight of the Company’s financial reporting process and

the disclosure of its financial information to ensure that

the financial statement is correct, sufficient and credible;

b. Recommending to the Board, the appointment,

re-appointment and if required, the removal of external

auditor, determination of audit fee and also approval of

payment for any other services;

c. Reviewing with the management, the annual financial

statements before submission to the Board, with particular

reference to:

• Changes in accounting policies and practices;

• Major accounting entries based on exercise of

judgment by the management;

• Qualifications in Draft Audit Report;

• Significant adjustments made in financial statements

arising out of audit findings;

• The Going Concern assumption;

• Compliance with Accounting Standards;

• Compliance with listing and other legal requirements

concerning financial statements;

• Any related party transactions i.e. transactions of the

Company of material nature, with promoters or the

management, their subsidiaries or relatives etc., that

may have potential conflict with the interests of

Company at large;

• Matters required to be included in the Directors’

Responsibility Statement, in terms of Section 217 (2AA)

of the Companies Act, 1956.

d. Reviewing the adequacy of internal audit function, including

the structure of the internal audit department, staffing and

seniority of the official heading the department, reporting

structure, coverage and frequency of internal audit;

e. Discussion with internal auditors on any significant findings

and follow-up thereon;

f. Reviewing the findings of any internal investigations by

the internal auditors into matters where there is suspected

fraud or irregularity or a failure of internal control systems

of a material nature and reporting the matter to the Board;

g. Reviewing with the management, the performance of

external and internal auditors, and the adequacy of internal

control systems;

h. Discussion with external auditors before the audit

commences on the nature and scope of audit as well as

having post-audit discussions to ascertain any area of

concern;

i. Reviewing with the management, the quarterly financial

statements before submission to the Board for approval;

j. Reviewing the reasons for substantial defaults in the

payment to the depositors, debenture holders, shareholders

(in case of non-payment of declared dividends) and

creditors;

k. Review of Management Discussion and Analysis of financial

condition and results of operations;

l. Review of Management Letters / Letters of Internal Control

Weaknesses issued by the Statutory / Internal Auditors;

m. Reviewing of functioning of ‘Whistle Blower Mechanism’ in

case the same exists; and

n. Carrying out any other function as and when referred by

the Board.

B. Remuneration Committee

The Company has constituted a Remuneration Committee

comprising of three Non-Executive Directors, all of whom are

Independent Directors. The Company Secretary acts as Secretary

to the Committee. As on March 31, 2009, the Committee

comprised of Mr. Arun Thiagarajan, Ms. Tarjani Vakil and

Mr. G.P. Gupta.

During the financial year 2008-09, the Remuneration Committee

met once on December 22, 2008 and all the three members

attended the said meeting.

Terms of reference

The broad terms of reference of Remuneration Committee

includes the following:

a. Review of remuneration payable to the Directors and senior

officials of the Company;

b. Reviewing and advising the Board over the remuneration

policies of the Company generally; and

c. Such other matters as may be decided by the Board from

time to time.

Remuneration of Directors

(i) Remuneration to the Managing Director

The remuneration package of Mr. Sanjeev Aga, Managing

Director was recommended by the Remuneration

Committee, approved by the Board of Directors and the

same was approved by the members of the Company and

also by the Central Government.

The remuneration package of Managing Director comprises

of a fixed salary component and a performance linked

bonus.

Executive Director Relationship Business Remuneration during 2008-09

with other relationship All elements of Fixed Service Stock

Directors with the Company, remuneration component & Contract, Option

if any package i.e. performance linked notice details,

salary, benefits, incentives, along period, if any

bonuses, pension with performance severance fee

etc. criteria

Mr. Sanjeev Aga None Managing Director Rs. 49.40 See note (a) See note (b) See note (c)

a. Mr. Sanjeev Aga was paid a sum of Rs.12.46 Million towards performance incentive linked to achievement of targets.

b. The appointment is for a period of five years w.e.f. November 1, 2006. The appointment is subject to termination by three months

notice on either side. No severance fees is payable to the Managing Director. For the revised terms of his remuneration, members’

approval is being sought at the ensuing Annual General Meeting.

c. During the year 2008-09, the Company granted 4,28,000 stock options at an exercise price of Rs.84.03 per option to Mr. Sanjeev Aga.

17,12,000 stock options were granted on 31st

December, 2007 at an exercise price of Rs. 112.57 per option. Each option is convertible

into one Equity Share of the Company upon vesting. These options will vest in 4 equal annual instalments after one year of the grant

and shall be exercisable within a period of 5 years from the date of the vesting. No options have been exercised by Mr. Sanjeev Aga.


19

The composition of the Shareholders’/Investors’ Grievance

Committee as on March 31, 2009 and the attendance of the

members at the meeting held are as follows:

Name of Category No. of No. of

Director Meetings meetings

held during attended

the tenure

Mr. Sanjeev Aga Executive 1 1

Mr. Saurabh Misra Non-Executive 1 1

Compliance Officer

Mr. Pankaj Kapdeo, Vice President (Legal) & Company Secretary,

acts as the Compliance Officer of the Company. The Compliance

Officer can be contacted at:

“Windsor”, 5th

Floor,

Off CST Road,

Near Vidya Nagari,

Kalina, Santacruz (East),

Mumbai – 400 098

Tel: +91-9594003434

Fax: +91-22-26527080

Email: [email protected]

D. Compensation Committee

A Compensation Committee known as (“ESOS Compensation

Committee”) has been constituted in accordance with SEBI

(Employee Stock Option Scheme and Employee Stock Purchase

Scheme) Guidelines, 1999, for formulation of an Employee Stock

Option Scheme.

The Committee oversees the formulation of ESOP plans, the

implementation of the Scheme, its administration, supervision,

and formulating detailed terms and conditions in accordance

with the SEBI Guidelines.

The Compensation Committee comprises three Non-Executive

Directors, of whom two members are Independent Directors.

As on March 31, 2009, the Committee comprised of Mr. Kumar

Mangalam Birla, Mr. Arun Thiagarajan and Ms. Tarjani Vakil.

During the financial year 2008-09, the Committee met once on

July 24, 2008 and all the three members attended the said

meeting.

E. Finance Committee

The Company has constituted a Finance Committee to approve

the matters relating to availing of financial facilities. The

Committee comprises of two Directors, one of whom is a Non-

Executive Director. As on March 31, 2009, the Committee

comprised of Mr. Saurabh Misra and Mr. Sanjeev Aga.

During the financial year 2008-09, three meetings of the Finance

Committee were held on October 20, 2008, December 22, 2008

and December 26, 2008 and all the members attended the said

meetings.

F. IPO Committee

The IPO Committee of the Company was constituted to give

effect to the Initial Public Offering of the Company and issue of

further equity shares. The Committee comprises of two Directors,

one of whom is a Non-Executive Director. As on March 31,

2009, the Committee comprised of Mr. Saurabh Misra and Mr.

Sanjeev Aga.

During the financial year 2008-09, three meetings of the IPO

Committee were held on August 6, 2008, August 12, 2008 and

August 13, 2008 and all the members attended the said meetings.

(ii) Remuneration to Non-Executive Directors

The Non-Executive Directors are not paid any remuneration

except sitting fees for attending the Board Meetings and

Committee Meetings. The sitting fees, as determined by

the Board, is presently Rs. 20,000/- for each meeting of the

Board and Rs.10,000/- for each Committee Meeting.

The details of the sitting fees paid to Non-Executive

Directors for the financial year ended March 31, 2009 are

as under:

Name of the Non-Executive Director Sitting Fees (Rs.)

Mr. Kumar Mangalam Birla 130,000

Mrs. Rajashree Birla 100,000

Mr. M.R. Prasanna 130,000

Mr. Saurabh Misra* -

Mr. Biswajit A. Subramanian 120,000

Mr. Arun Thiagarajan 130,000

Mr. G.P. Gupta 190,000

Mr. Mohan Gyani 20,000

Ms. Tarjani Vakil 180,000

Mr. R.C. Bhargava 40,000

Mr. P.Murari 20,000

Dr. Shridhir Sariputta Hansa Wijayasuriya 50,000

* Mr. Saurabh Misra had expressed his unwillingness to

accept sitting fees. He was not paid any sitting fees for

attending the meetings of the Board and Committee.

Details of Shareholding of Directors:

The details of shareholding of Directors as on March 31, 2009

are as under:

Name of the Director No. of Equity Shares#

Mr. Kumar Mangalam Birla 233,333

Mr. G.P. Gupta 4,192

Ms. Tarjani Vakil 147

Mr. Sanjeev Aga 182,868

# shares held singly or as a first shareholder are only considered

C. Shareholders’/Investors’ Grievance Committee

In order to ensure quick redressal of the complaints of the

stakeholders, Company has in due compliance with clause 49

of the Listing Agreement constituted a Shareholders’/Investors’

Grievance Committee. The Committee comprises of two

members one of whom is a Non Executive Director. The

Company Secretary acts as a Secretary to the Committee.

The Committee oversees the process of share transfer and

monitors redressal of shareholders’/ investors’ complaints/

grievances viz. non-receipt of annual report, dividend payment,

issue of duplicate share certificates, transmission of shares and

other related complaints. In addition, the Committee also

monitors other issues including status of dematerlisation /

rematerialisation of shares issued by the Company.

During the financial year 2008-09, the Shareholders’/Investors’

Grievance Committee met once on October 20, 2008 to

deliberate on various matters referred above.


20

3. SUBSIDIARY COMPANIES

The Company does not have any material non-listed Indian

subsidiary, whose turnover or net worth (paid-up capital

and free reserves) exceeds 20% of the consolidated turnover

or net worth respectively of the Company. The minutes of

the Board meetings as well as statement of all significant

transactions of the unlisted subsidiary companies are placed

before the Board of Directors for their review.

4. DISCLOSURES

a. Disclosure on materially significant related party

transactions

The related party transactions are placed before Audit

Committee as well as to the Board of Directors on a

quarterly basis. For the financial year ended March 31,

2009, there were no transactions of material nature

entered into with related parties which were not on

the arm’s length basis or that may have potential

conflict with the interest of the Company at large. The

particulars of related party transactions have been

disclosed under Note 26 of Schedule 22B of the Balance

Sheet forming part of the Annual Report.

b. Disclosure of Accounting Treatment

The Company has followed all relevant Accounting

Standards while preparing the financial statements,

other than the accounting treatment for the court

approved Scheme(s) of Arrangement for which

necessary disclosures have been made in the relevant

notes to the Accounts.

c. Details of non-compliance with regard to the Capital

Market

The Company has complied with all the requirements

of the Stock Exchanges as well as the regulations and

guidelines prescribed by the Securities and Exchange

Board of India (SEBI). There were no penalties or

strictures imposed on the Company by Stock Exchanges

or SEBI or any statutory authority on any matter related

to capital markets during the last three years.

d. Board Disclosures - Risk Management

The Company has an integrated approach to manage

the risks inherent in the various aspects of business.

The Audit Committee of the Board is regularly informed

about the business risks and steps taken to mitigate

the same.

e. Proceeds from Public Issue, Preferential Issue etc.

The Company discloses to the Audit Committee, the

uses / application of proceeds / funds raised from Initial

Public Offering (IPO) and Preferential Issue as part of

the quarterly review of financial results.

Further, in terms of the approval granted by the

members in the Extra Ordinary General Meeting held

on July 30, 2008, the unutilised IPO proceeds have

been utilised for approved purposes, in addition to the

objects of IPO stated in the prospectus.

During the financial year 2008-09, the Company issued

464,734,670 equity shares of Rs. 10/- each for cash at

an issue price of Rs. 156.96 per equity share on a

preferential basis to an Overseas Corporate Body in

terms of Chapter XIII of the Securities and Exchange

Board of India (Disclosure and Investor Protection)

Guidelines, 2000, the proceeds of which too have been

utilised / are being utilised in terms of the stated objects

of the said issue.

5. MANAGEMENT DISCUSSION AND ANALYSIS

A detailed Management Discussion and Analysis forms part

of the Directors’ Report.

6. SHAREHOLDERS INFORMATION

i) Disclosure regarding appointment or

re-appointment of Directors

The Company has provided brief resume(s) of the

Directors seeking appointment or re-appointment at

the ensuing Annual General Meeting, in the notice

attached with the Annual Report.

ii) Communication to Shareholders

The Company’s quarterly financial results, presentation

made to Institutional Investors / Analysts, official news

releases and other general information about the

Company are uploaded on the Company’s website

(www.ideacellular.com).

The quarterly financial results of the Company are

generally published in The Economic Times (all

editions) and Western Times (a regional daily published

from Gujarat).

At the end of each quarter, the Company organises

earnings call with analysts and investors and the

transcripts are uploaded on the website thereafter.

iii) General Body Meetings

The last three Annual General Meetings were held as

under:

Financial Date Time Venue Particulars of Special Resolution

Year

2007-08 September 29, 2008 2.00 p.m. Emerald Hall, • Alteration of Articles of Association of

Haveli Arcade, the Company due to increase in

Hotel Haveli, Sector 11, Authorised Share Capital

Gandhinagar - 382 011.

2006-07 December 12, 2007 2.00 p.m. Emerald Hall, • Increase in Remuneration of

Haveli Arcade, Managing Director

Hotel Haveli, • Alteration of Articles of Association of

Sector 11, the Company due to increase in

Gandhinagar - 382 011. Authorised Share Capital

• Amendment in the Articles of

Association of the Company

2005-06 September 30, 2006 11.30 a.m. Suman Tower, None

Plot No. 18, Sector 11,

Gandhinagar - 382 011.


21

Extra Ordinary General Meeting

During the financial year 2008-09, an Extra Ordinary

General Meeting of the Company was held on July 30,

2008, for passing the following special resolutions:

• Further issue of Capital

• Utilisation of IPO proceeds of Equity Shares

Postal Ballot

There was no Special Resolution passed through Postal

Ballot during the financial year 2008-09

iv) Details of unclaimed shares in terms of Clause 5A of

the Listing Agreement

As per the terms of newly inserted clause 5A of the Listing

Agreement, the Company would take necessary steps for

crediting the shares allotted pursuant to the Initial Public

Offering (IPO) of the Company in year 2007, which are

unclaimed and are lying in escrow account to a demat

suspense account and the details thereof as required to be

disclosed in the Annual Report are given below:

Particulars No. of No. of

cases shares

Aggregate number of shareholders and

the outstanding shares lying in the

suspense account at the beginning of

the year i.e. as on April 1, 2008 192 35598

Number of shareholders who

approached to the Issuer / Registrar for

transfer of shares from suspense account

during the Financial Year 2008-09 74 13058

Number of shareholders to whom shares

were transferred from suspense account

during the Financial Year 2008-09 47 7933

Aggregate number of shareholders and

the outstanding shares lying in the

suspense account at the end of the

year i.e. as on March 31, 2009 145 27665

7. CEO/CFO CERTIFICATION

As required by Clause 49 of the Listing Agreement, the

CEO/CFO certification is appended as an Annexure to this

report.

8. REPORT ON CORPORATE GOVERNANCE

This Corporate Governance Report forms part of the Annual

Report. The Company is in full compliance with all the

provisions of Clause 49 of the Listing Agreement entered

into with the Stock Exchange(s).

9. COMPLIANCE

A Certificate from the Statutory Auditors of the Company,

confirming compliance with the conditions of Corporate

Governance, as stipulated in Clause 49 of the Listing

Agreement of the Stock Exchange(s) is annexed and forms

part of this Annual Report. As far as adoption of non-

mandatory requirements are concerned, the Board has

constituted a Remuneration Committee of Directors

comprising of Non-Executive and Independent Directors.

GENERAL SHAREHOLDERS’ INFORMATION

1. Annual General Meeting

Day and Date : Monday, December 21, 2009

Time : 12:00 noon

Venue : Cambay Spa and Resort,

Plot No. X-22/23, GIDC

Electronic Estate, Sector 25,

Gandhinagar – 382 044,

Gujarat

2. Financial Calendar for 2009-10 (Tentative)

Financial reporting for the quarter: End July 2009

ending June 30, 2009

Financial reporting for the quarter: End October 2009

ending September 30, 2009

Financial reporting for the quarter: End January 2009

ending December 31, 2009

Financial reporting for the quarter: End April 2010

ending March 31, 2010

Annual General Meeting for the : July / August 2010

year 2009-10

3. Book Closure Date : December 14, 2009 to

December 21, 2009

(both days inclusive)

4. Dividend Payment Date : Not Applicable

(Since no dividend

is proposed for the Financial

Year 2008-09)

5. Registered Office : Suman Tower,

Plot No. 18, Sector-11,

Gandhinagar – 382 011,

Gujarat, India.

Tel: +91-79-66714000

Fax: +91-79-23232251

6. Plant Locations : The Company being a

service provider, has no

Plant Locations.

7. Listing Details

The Equity Shares of the Company are listed on the

following Stock Exchanges:

Name of Stock Exchanges

National Stock Exchange of Bombay Stock Exchange Limited

India Limited Phiroze Jeejeebhoy Towers,

“Exchange Plaza”, Dalal Street,

Bandra-Kurla Complex, Mumbai – 400 001

Bandra (East),

Mumbai – 400 023

The Company’s payment of Listing Fees is up-to-date.

8. Stock Codes

Stock Code Reuters Bloomberg

Bombay Stock Exchange 532822 IDEA.BO IDEA IN

National Stock Exchange IDEA IDEA.NS NIDEA IN

ISIN INE669E01016


22

9. Market Price Data

Month Bombay Stock Exchange Limited National Stock Exchange of India Limited

High Low Close Avg. Vol. High Low Close Avg. Vol.

(in Rs.) (in Rs.) (in Rs.) (in Nos.) (in Rs.) (in Rs.) (in Rs.) (in Nos.)

April – 08 112.50 96.60 105.50 2123631 112.50 96.55 105.55 9375300

May – 08 113.90 100.00 108.90 5926764 114.00 100.00 108.90 14320177

June – 08 112.00 92.40 93.10 2290985 112.00 92.65 93.40 6619318

July – 08 95.00 74.20 88.30 2959158 97.60 74.00 88.05 7518864

Aug – 08 92.60 80.05 82.50 1628785 93.45 79.50 82.40 4877007

Sept – 08 87.50 67.90 75.35 1469282 87.70 66.50 75.15 5178128

Oct – 08 78.15 34.05 42.75 2417920 78.40 34.00 42.55 6790556

Nov – 08 52.60 40.00 47.00 1443274 53.40 39.90 46.85 4503507

Dec – 08 58.35 42.20 52.65 1022018 58.40 37.10 52.65 3729929

Jan – 09 54.80 41.30 47.00 969306 54.90 41.20 47.00 3872367

Feb – 09 52.20 43.20 46.90 1282551 52.50 43.10 47.00 4431396

Mar – 09 53.25 41.85 50.15 1437507 53.35 42.00 50.25 4940030

10. Stock Performance

a. Comparison of the Company’s share price with BSE Sensex

b. Comparison of the Company’s share price with NSE Nifty

25

40

55

70

85

100

115

8000

10000

12000

14000

16000

18000

Idea Share Price BSE Sensex

Mar

20

09

Feb

20

09

Jan

20

09

Dec

20

08

Nov

20

08

Oct

20

08

Sep

20

08

Au

g 2

00

8

Jul 2

00

8

Jun

20

08

May

20

08

Apr

20

08

25

40

55

70

85

100

115

Mar

20

09

Feb

20

09

Jan

20

09

Dec

20

08

Nov

20

08

Oct

20

08

Sep

20

08

Au

g 2

00

8

Jul 2

00

8

Jun

20

08

May

20

08

Apr

20

08

25

40

55

70

85

100

115

2500

3000

3500

4000

4500

5000

5500

Idea Share Price NSE Nifty


23

15. Shareholding Pattern

The shareholding pattern of the Company as on

March 31, 2009 is as follows:

Category No. of % Share-

Shares holding

Promoters 1,522,937,212 49.13

Foreign Institutional

Investors 215,410,202 6.95

Non-Resident Indians/

Overseas Corporate

Bodies 989,521,356 31.92

Mutual Funds, Insurance

Companies, Financial

Institutions & Banks 242,685,212 7.82

Bodies Corporate 37,809,754 1.22

Resident Indians & Others 91,731,473 2.96

16. Dematerialisation of Shares and Liquidity

The Shares of the Company are compulsorily traded in

dematerialised form. The shares of the Company are

admitted for trading under both the Depository Systems in

India – NSDL and CDSL. A total number of 3,100,077,108

Equity Shares of the Company constituting over 99.99% of

the issued, subscribed and paid-up share capital were in

dematerialised form as on March 31, 2009.

17. Outstanding GDRs / ADRs etc.

No GDRs/ADRs/Warrants or Convertible Instruments are

outstanding as on March 31, 2009.

18. Investor Correspondence

In order to facilitate quick redressal of the grievances /

queries, the Investors and Shareholders may contact the

Company Secretary at the under mentioned address for

any assistance:

Mr. Pankaj Kapdeo

Vice President (Legal) & Company Secretary

Idea Cellular Limited

“Windsor” 5th

Floor,

Off CST Road, Near Vidya Nagari,

Kalina, Santacruz (East),

Mumbai – 400 098

Tel: +91-9594003434

Fax: +91-22-26527080

E-Mail: [email protected]

11. Registrar and Share Transfer Agents

M/s. Bigshare Services Private Limited

E/2 Ansa Industrial Estate,

Sakivihar Road,

Saki Naka,

Andheri (East),

Mumbai – 400 072

Tel: +91-22-28470652

Fax: +91-22-28475207

12. Share Transfer System

Transfer of shares in physical form are processed within a

period of 12 days from the date of the lodgement subject

to documents being valid and complete in all respects. There

have been no instances of transfer of shares in the physical

form during the financial year 2008-09.

13. Investor Services

The status of investors’ complaints as on March 31, 2009 is

as follows:

No. of complaints as on April 1, 2008 6

No. of complaints received during the

financial year 2008-09 228

No. of complaints resolved upto March 31, 2009 234

No. of complaints pending as on March 31, 2009 0

14. Distribution of Shareholding

The distribution of shareholding of the Company as on

March 31, 2009 is as follows:

Number of Number % to total No. of % to

Equity Shares of Share- Share- Shares total

held holders holders held Share-

holding

Upto 5000 3,81,560 95.05 53,632,040 1.73

5000 – 10000 11,525 2.87 9,035,797 0.29

10001– 20000 4,309 1.07 6,420,138 0.21

20001 – 30000 1,364 0.34 3,493,358 0.11

30001 – 40000 498 0.13 1,768,244 0.06

40001 – 50000 522 0.13 2,470,992 0.08

50001 – 100000 794 0.20 5,654,971 0.18

100001 & above 858 0.21 3,017,619,669 97.34

Total 4,01,430 100.00 3,100,095,209 100.00


24

Declaration

As provided under Clause 49 of the Listing Agreement entered into with the Stock Exchange(s), it is hereby confirmed that all the

Board Members and Senior Management Personnel of the Company have affirmed the compliance with the Code of Conduct for

the year ended March 31, 2009

Place: Mumbai Sanjeev Aga

Date: October 26, 2009 Managing Director

CEO/CFO Certification

To the Board of Directors


a) We have reviewed the financial statements and cash flow statement of Idea Cellular Limited for the year ended March 31,

2009 and to the best of our knowledge and belief:

i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that

might be misleading;

ii) these statements together present a true and fair view of the Company’s affairs and are in compliance with existing

Accounting Standards, applicable laws and regulations, other than the accounting treatment in respect of court approved

Scheme(s) of Arrangement which have been explained in the relevant notes to the Accounts.

b) To the best of our knowledge and belief, no transactions are entered into by the Company during the year ended March 31,

2009, which are fraudulent, illegal or violative of the Company’s Code of Conduct.

c) We accept responsibility for establishing and maintaining internal controls for financial reporting and we have evaluated the

effectiveness of internal control system of the Company pertaining to financial reporting. We have disclosed to the Auditors

and the Audit Committee, deficiencies in the design and operations of such internal controls, if any, of which we are aware

and steps that have been taken to rectify these deficiencies.

d) We have indicated to the Auditors and the Audit Committee:

i) Significant changes in the internal control over financial reporting during the year;

ii) Significant changes in the accounting policies during the year and that the same has been disclosed in the notes to the

financial statements; and

iii) Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management

or any employee having a significant role in the Company’s internal control system over financial reporting.

Place: Mumbai Sanjeev Aga Akshaya Moondra

Date: October 26, 2009 Managing Director Chief Financial Officer

Auditors’ Certificate

To the Members of


We have examined the compliance of conditions of Corporate Governance by Idea Cellular Limited, for the year ended

March 31, 2009, as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has been

limited to review of the procedures and implementation thereof adopted by the Company for ensuring compliance with the

conditions of Corporate Governance as stipulated in the said Clause. It is neither an audit nor an expression of opinion on the

financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us and the representations made by

the Directors and the management, we certify that the Company has complied with the conditions of Corporate Governance as

stipulated in Clause 49 of the above mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or

effectiveness with which the management has conducted the affairs of the Company.

For Deloitte Haskins & Sells


Hemant M. Joshi

Partner

Membership No:38019

Place: Mumbai

Date: October 26, 2009


25

Persons constituting group coming within the definition of “Group” for the purpose of regulation 3(1)(e)(i) of Securities

and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, include the following:

1 Abha Investments Pte Limited

2 Aditya Birla Financial Services Pte Limited

3 BGH Exim Limited

4 Big Banyan Investments Pte Limited

5 Birla Group Holdings Private Limited

6 Birla TMT Holdings Private Limited

7 Blue Bucks Investments Pte Limited

8 Calyx Investments Pte Limited

9 Essel Mining & Industries Limited

10 Green Acre Agro Services Private Limited

11 Gwalior Properties And Estates Private Limited

12 Heritage Housing Finance Limited

13 IGH Holdings Private Limited

14 Indogenious Holdings Pte Limited

15 Infocyber India Private Limited

16 Kiran Investments Pte Limited

17 Mangalam Carbide Limited

18 Mangalam Services Limited

19 Naman Finance & Investments Private Limited

20 Pilani Investment and Industries Corporation Limited

21 Seshasayee Properties Private Limited

22 SKI Investments Pte Limited

23 Surya Abha Investments Pte Limited

24 Surya Kiran Investments Pte Limited

25 Surya Viniyog Pte Limited

26 TGS Investment & Trade Private Limited

27 Trapti Trading & Investments Private Limited

28 Turquoise Investments and Finance Private Limited

29 Umang Commercial Company Limited


26

Auditors’ Report

To the Members of


1. We have audited the attached Balance Sheet of Idea Cellular

Limited (‘the Company’) as at March 31, 2009, the Profit

and Loss Account and the Cash Flow Statement of the

Company for the year ended on that date, both annexed

thereto (together referred to as ‘financial statements’). These

financial statements are the responsibility of the Company’s

management. Our responsibility is to express an opinion

on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing

standards generally accepted in India. These Standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial

statements are free of material misstatements. An audit

includes examining, on a test basis, evidence supporting

the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles

used and the significant estimates made by management,

as well as evaluating the overall financial statement

presentation. We believe that our audit provides a

reasonable basis for our opinion.

3. Without qualifying our opinion, we draw attention to Note

B4 of schedule 22 to the financial statements. As explained

in the said note, the difference between the carrying value

of the licenses and consideration, or impairment loss, if

any would be adjusted with the securities premium account.

The impact of the above on the Reserve and Surplus of the

Company is not ascertainable at this stage.

4. As required by the Companies (Auditor’s Report) Order,

2003, (‘the said Order’) issued by the Central Government

in terms of Section 227(4A) of the Companies Act, 1956,

we enclose in the annexure a statement on the matters

specified in the paragraphs 4 and 5 of the said Order.

5. Further to our comments in the Annexure referred to in

paragraph 3 above, we report that:

(a) we have obtained all the information and explanations,

which to the best of our knowledge and belief were

necessary for the purposes of our audit;

(b) in our opinion, proper books of account as required by

law have been kept by the Company so far as it appears

from our examination of those books;

(c) the Balance Sheet, the Profit and Loss Account and

the Cash Flow Statement dealt with by this report are

in agreement with the books of account;

(d) in our opinion, the Balance Sheet, the Profit and Loss

Account and the Cash Flow Statement dealt with by

this report comply with the Accounting Standards

referred to in Section 211(3C) of the Companies Act,

1956;

(f) in our opinion and to the best of our information and

according to the explanations given to us, the said

financial statements read together with the notes

thereon give the information required by the

Companies Act, 1956 in the manner so required and

give a true and fair view in conformity with the

accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of

affairs of the Company as at March 31, 2009;

(ii) in the case of the Profit and Loss Account, of the

profit of the Company for the year ended on that

date; and

(iii) in the case of the Cash Flow Statement, of the

cash flows of the Company for the year ended on

that date.

6. on the basis of the written representations received from

the directors, as on March 31, 2009 and taken on record

by the Board of Directors, we report that none of the

directors is disqualified as on March 31, 2009 from being

appointed as a director in terms of Section 274 (1)(g) of

the Companies Act, 1956;



Hemant M. Joshi

Partner

Membership No: 38019

Place: Mumbai



27

(Referred to in paragraph 3 of our report of even date)

1. In respect of its fixed assets:

a) The Company has maintained proper records showing

full particulars, including quantitative details and

situation of fixed assets.

b) Fixed Assets have been physically verified by the

management according to the regular programme of

periodical verification in phased manner which in our

opinion is reasonable having regard to the size of the

Company and the nature of its fixed assets. In

accordance with this policy, the Company has physically

verified certain fixed assets during the year. The

Company is in the process of reconciling the results of

such physical verification with the fixed assets register.

Management believes that differences if any, arising

out of such reconciliation are not expected to be

material.

c) The Company, during the year, demerged certain

Passive infrastructure assets to its Subsidiary Company

as per the scheme sanctioned by the High Court.

According to the information and explanations given

to us, we are of the opinion that the demerger of the

Passive Infrastructure assets although substantial has

not affected the going concern status of the Company.

(Refer Note B6 of schedule 22 to the financial

statements)

2. In respect of its inventories:

a) The inventories, except for those lying with the third

parties, have been physically verified by the

management at the year-end. In our opinion, the

frequency of such verification is reasonable.

b) In our opinion and according to the information and

explanations given to us, the procedures of physical

verification of inventories followed by the management

are reasonable and adequate in relation to the size of

the Company and the nature of its business.

c) On the basis of our examination of the records of

inventory and according to the information and

explanations given to us, we are of the opinion that

the Company is maintaining proper records of

inventory. The discrepancies noticed on verification

between the physical stock and the book records were

not material.

3. According to the information and explanations given to us,

the Company has not granted / taken any loans, secured or

unsecured, to / from companies, firms or other parties

covered in the register maintained under section 301 of

the Companies Act, 1956.

4. In our opinion, and according to the information and

explanations given to us, having regard to explanation that

major capital goods and spares thereof purchased are of

special nature and suitable alternative sources do not exist

for obtaining comparable quotations, there are adequate

internal control procedures commensurate with the size of

the Company and the nature of its business with regard to

purchase of inventory and fixed assets and for the sale of

goods and services. During the course of our audit we have

not observed any continuing failure to correct major

weaknesses in such internal controls systems with regard

to purchase of inventory and fixed assets and for the sale

of goods and services.

5. In our opinion and according to the information and

explanations given to us, there were no contracts,

particulars of which needed to be entered in the register

maintained under section 301 of the Companies Act, 1956

and hence provisions of paragraph 4(v)(b) of the said Order

relating to reasonableness of price having regard to

prevailing market price is not applicable to the Company.


explanations given to us, the Company has not accepted

any deposits from the public to which the directives issued

by the Reserve Bank of India and the provisions of sections

58A and 58AA of the Companies Act, 1956 and the rules

framed there under are applicable.

7. In our opinion, the Company has an internal audit system

commensurate with the size and nature of its business.

8. We have broadly reviewed the books of account maintained

by the Company pursuant to the rules prescribed by the

Central Government for maintenance of cost records under

section 209(1)(d) of the Companies Act, 1956 in respect

of telecommunication activities and are of the opinion that

prima facie, the prescribed accounts and records have been

made and maintained. However, we have not made a

detailed examination of the records.

9. In respect of statutory dues:

a) According to the information and explanations given

to us and the records of the Company examined by us,

in our opinion, the Company is generally regular in

depositing the undisputed statutory dues including

provident fund, employees’ state insurance, income-

tax, sales tax, wealth tax, service tax, customs duty,

cess and any other statutory dues as applicable with

the appropriate authorities. As explained to us, the

Company did not have any dues on account of Excise

duty and Investor Education and Protection Fund.

b) According to the information and explanations given

to us, no undisputed amount payable in respect of

provident fund, employees’ state insurance, income-

tax, sales tax, wealth tax, service tax, customs duty,

excise duty, cess and any other statutory dues

applicable to it were in arrears, as at March 31, 2009

for a period of more than six months from the date

they became payable.

c) According to the information and explanations given

to us, there are no dues of Excise duty, Wealth tax,

Customs duty, Employees’ State Insurance which have

not been deposited on account of any dispute. The

dues of Income tax, Entry tax, Service tax and Sales

tax as disclosed below have not been deposited by the

Company on account of disputes.

Annexure to the Auditors’ Report


28

Name of the Statute Nature of Period to which Amount Forum where the

Dues the amount pertains (Rs. Million) dispute is pending

Income Tax Act, 1961 Income tax 2002-03, 2004-05, 53.27 Commissioner of Income Tax

2006-07, 2007-08, (Appeals)

2008-09

Kerala Sales Tax Act, 1963 Sales tax 1998-99 0.06 Deputy Commissioner

Kerala Sales Tax Act, 1963 Sales tax 2005-06 to 2007-08 0.03 Deputy Commissioner, (Appeals)

Kerala Sales Tax Act, 1963 Sales tax 1997-98 0.39 Sales Tax Appellate Tribunal

Andhra Pradesh General Sales tax 1997-98, 2002-03 227.46 Andhra Pradesh High Court

Sales Tax Act, 1957 to 2004-05

Andhra Pradesh Value Sales tax 2005-06 to 2007-08 81.95 Andhra Pradesh High Court

Added Tax, 2005

Delhi Sales Tax Act, 1975 Sales tax 2003-04,2004-05 92.74 Additional Commissioner

(Appeals)

Gujarat Sales Tax Act, 1969 Sales tax 1998-99 to 2001-02 7.04 Sales Tax Tribunal

Gujarat Sales Tax Act, 1969 Sales tax 2006-07 0.83 Assessing officer

Madhya Pradesh Commercial Sales tax 2000-01 , 2002-03 1.05 Appellate Board

Tax Act, 1994

Madhya Pradesh Commercial Sales tax 2001-02 , 2003-04 7.29 Appellate Deputy Commissioner

Tax Act, 1994 to 2005-06

Madhya Pradesh Commercial Sales tax 2004-05 3.12 Assistant Commissioner

Tax Act, 1994

Madhya Pradesh Commercial Sales tax 2003-04 0.63 Madhya Pradesh Commercial Tax

Tax Act, 1994 Tribunal

Uttar Pradesh Trade Tax Act, 1948 Sales tax 2004-05 0.05 Joint Commissioner (Appeals)

Uttar Pradesh Trade Tax Act, 1948 Sales tax 2005-06 0.43 Joint Commissioner (Appeals)

Finance Act, 1994 Service tax 2004-05 31.32 Central Excise, Service Tax

(Service Tax provisions) Appellate Tribunal

Finance Act, 1994 Service tax 2007-08 10.53 Central Excise, Service Tax


Finance Act, 1994 Service tax 2004-05 to 2007-08 171.76 Central Excise, Service Tax


Finance Act, 1994 Service tax 2003-04, 2006-07, 6.50 Commissioner (Appeals)

(Service Tax provisions) 2007-08

Finance Act, 1994 Service tax 1999-2000 to 3.10 Supreme Court

(Service Tax provisions) 2003-04

Finance Act, 1994 Service tax 2005-06 to 2007-08 32.59 Commissioner (Appeals)

(Service Tax provisions)

Finance Act, 1994 Service tax 2005-06 2.68 Commissioner (Appeals)

(Service Tax provisions)

Customs Act, 1962 Custom duty 2003-04 1.15 Central Excise, Service Tax

Appellate Tribunal

Haryana Land Development Tax Entry tax 2002-03 9.52 Tribunal

Act, 2001

MP Entry Tax Act, 1976 Entry tax 2003-04 to 2005-06 8.59 Appellate Deputy Commissioner

MP Entry Tax Act, 1976 Entry tax 1998-99,1999-2000, 0.13 Assistant Commissioner

2000-01

MP Entry Tax Act, 1976 Entry tax 1998-99 to 2002-03 4.70 Madhya Pradesh Commercial Tax

Tribunal

The Uttar Pradesh Tax on Entry of Entry tax 2004-05 2.08 Joint Commissioner (Appeals)

Goods Act, 2000

The Uttar Pradesh Tax on Entry of Entry tax 1999-2000, 2001-02 8.89 Trade Tax Tribunal

Goods Act, 2000 to 2003-04

Uttar Pradesh Trade Tax Act, 1948 Entry tax 2001-02 to 2003-04 1.14 Joint Commissioner (Appeals)

Uttar Pradesh Trade Tax Act, 1948 Entry tax 1999-2000, 2000-01, 11.72 Trade Tax Tribunal

2002-03, 2007-08


29

10. The accumulated losses of the Company are less than fifty

percent of its net worth and the Company has not incurred

cash losses during the current financial year covered by

our audit and the immediately preceding financial year.


explanations given to us, the Company has not defaulted

in repayment of dues to the financial institutions and banks.

12. According to the information and explanations given to us,

the Company has not granted loans and advances on the

basis of security by way of pledge of shares, debentures

and other securities.

13. The Company is not a chit fund or a nidhi / mutual benefit

fund / society. Therefore, the provisions of paragraph 4(xiii)

of the said Order are not applicable to the Company.


explanations given to us, the Company is not dealing in or

trading in shares, securities, debentures and other

investments.


explanations given to us, the terms and conditions of the

guarantees given by the Company for loans taken by others

from banks and financial institutions are not prima facie

prejudicial to the interest of the Company.


explanations given to us, the term loans taken by the

Company have been applied for the purpose for which they

were raised to the extent utilised.

17. On the basis of an overall examination of the balance sheet

of the Company, in our opinion and according to the

information and explanations given to us, as at the balance

sheet date funds amounting to Rs.15,000 million raised on

the short term basis have been used for long term purpose.

18. The Company has not made preferential allotment of shares

to parties and companies covered in the register maintained

under section 301 of the Companies Act, 1956, during the

year.

19. The Company has not issued any debentures during the

year.

20. The management has disclosed the end use of money raised

by public issue and the same has been verified by us.

21. During the course of our examination of the books of

account, carried out in accordance with generally accepted

auditing practices in India, and according to the information

and explanations given to us, we have neither come across

any incidence of material fraud on or by the Company,

noticed or reported during the year, nor have we been

informed of any such case by the management.



Hemant M. Joshi

Partner


Place: Mumbai



30

Balance Sheet as at March 31, 2009

(Rupees in Million)

As at As at

Schedules March 31, 2009 March 31, 2008

SOURCES OF FUNDS

Shareholders’ Funds

Share Capital 1 31,000.95 26,353.61

Outstanding Employee Stock Options 182.33 37.59

Reserves and Surplus 2 85,813.71 23,134.00

116,996.99 49,525.20

Loan Funds

Secured 3 55,649.32 53,154.17

Unsecured 4 20,144.34 11,993.42

75,793.66 65,147.59

Deferred Tax Liability (Net) (Refer Note B 29 to Schedule 22) 1,425.38 661.85

TOTAL 194,216.03 115,334.64

APPLICATION OF FUNDS

Fixed Assets

Gross Block (At Cost) 5 155,627.51 132,043.01

Less: Depreciation & Amortisation 47,398.61 42,214.97

Net Block 108,228.90 89,828.04

Capital Work-in-Progress 17,218.18 16,257.17

125,447.08 106,085.21

Investments 6 49,288.08 5,699.31

Current Assets, Loans and Advances

Current Assets

Inventories 7 427.29 276.15

Sundry Debtors 8 3,295.87 1,985.93

Cash and Bank Balances 9 23,444.29 4,970.55

Other Current Assets 10 1,330.84 520.66

Loans and Advances 11 19,140.17 7,986.73

47,638.46 15,740.02

Less: Current Liabilities and Provisions 12

Current Liabilities 31,223.91 25,436.63

Provisions 986.51 818.21

32,210.42 26,254.84

Net Current Assets/(Liabilities) 15,428.04 (10,514.82)

Profit and Loss Account 4,052.83 14,064.94

TOTAL 194,216.03 115,334.64

Significant Accounting Policies and Notes to the Financial Statements 22

The Schedules referred to above form an integral part of the Balance Sheet

As per our report of even date attached

For Deloitte Haskins & Sells For and on behalf of the Board


Hemant M. Joshi Tarjani Vakil Biswajit Subramanian

Partner Director Director

Membership No.: 38019

Place: Mumbai Sanjeev Aga Akshaya Moondra Pankaj Kapdeo

Date: October 26, 2009 Managing Director Chief Financial Officer Company Secretary


31

(Rupees in Million)

Schedules For the year ended For the year ended

March 31, 2009 March 31, 2008

INCOME

Service Revenue 98,383.47 67,199.83

Sales of Trading Goods 187.33 0.07

Other Income 13 215.77 174.55

TOTAL 98,786.57 67,374.45

OPERATING EXPENDITURE

Cost of Trading Goods Sold 14 189.64 0.06

Personnel Expenditure 15 4,676.85 3,417.82

Network Operating Expenditure 16 20,761.57 10,469.53

Licence and WPC Charges 17 10,958.96 6,851.03

Roaming & Access Charges 18 18,158.81 11,334.41

Subscriber Acquisition & Servicing Expenditure 19 8,145.66 6,469.63

Advertisement and Business Promotion Expenditure 4,265.71 3,224.29

Administration & other Expenses 20 3,824.93 2,895.03

70,982.13 44,661.80

PROFIT BEFORE FINANCE CHARGES, DEPRECIATION, 27,804.44 22,712.65

AMORTISATION & TAXES

Finance and Treasury Charges (Net) 21 4,507.24 2,776.42

Depreciation 5A 10,967.22 7,568.52

Amortisation of Intangible Assets 5B 1,461.34 1,199.10

Non Compete Fee (Refer note B 5 to Schedule 22) 5,439.75

Less: Amount Withdrawn from Securities Premium

(Refer note B 5 to Schedule 22) (5,439.75) – –

Loss on De-merger of Passive Infrastructure to Idea Cellular Towers

Infrastructure Limited (Refer note B 6 to Schedule 22) 16,227.76

Less: Amount withdrawn from Reserve for Business Restructuring


PROFIT BEFORE TAX 10,868.64 11,168.61

Provision for taxation - Current 1,268.99 425.33

- Deferred 763.53 651.30

- Fringe Benefit Tax 93.00 73.69

- MAT Credit (1,268.99) (425.33)

PROFIT AFTER TAX 10,012.11 10,443.62

Balance of Loss brought forward from previous year (14,064.94) (24,508.56)

BALANCE OF LOSS CARRIED FORWARD TO BALANCE SHEET (4,052.83) (14,064.94)

EARNINGS PER SHARE (Refer note B 28 to Schedule 22)

Basic 3.42 3.96

Diluted 3.42 3.96

Significant Accounting Policies and Notes to the

Financial Statements 22

The Schedules referred to above form an integral part of the Profit & Loss Account









Profit and Loss Account for the year ended March 31, 2009


32

Schedules forming part of the Accounts

(Rupees in Million)

As at As at

March 31, 2009 March 31, 2008

SCHEDULE 1

SHARE CAPITAL

Authorised (Refer note B 1(a) to Schedule 22)

6,775,000,000 (Previous year 4,275,000,000) Equity Shares of Rs.10 each 67,750.00 42,750.00

1500 (Previous year 1500) Redeemable Cumulative Non Convertible Preference Shares 15,000.00 15,000.00

of Rs.10 Mn. Each

82,750.00 57,750.00

Issued, Subscribed and Paid-Up

Equity Share Capital (Refer note B 1(b) to Schedule 22)

3,100,095,209 (Previous year 2,635,360,539) Equity Shares of Rs. 10 each fully paid up 31,000.95 26,353.61

31,000.95 26,353.61

SCHEDULE 2

RESERVES AND SURPLUS

Amalgamation Reserve 643.57 643.57

Capital Reserve 1,414.56 1,414.56

Security Premium Account

Opening Balance 21,075.87 18,313.36

Add: Premium on issue of Preferential allotment (Refer note B 1(b) to Schedule 22) 68,297.40 –

Add: Premium on issue of shares under Green Shoe Option – 2,762.51

Less: Share Issue Expenses (177.94) –

Less: Withdrawals (Refer note B 5 to Schedule 22) (5,439.75) –

83,755.58 21,075.87

Reserve for Business Restructuring (Refer Note B 6 to Schedule 22)

Opening Balance – –

Additions during the year 16,227.76 –

Less: Transferred to Profit and Loss Account during the year 16,227.76 –

– –

85,813.71 23,134.00

SCHEDULE 3

SECURED LOANS

Term Loan (Refer note B 8 to Schedule 22)

Foreign Currency Loan

- From Banks 4,268.34 4,268.04

- From Financial Institutions 4,279.80 –

Rupee Loan

- From Banks 40,071.95 41,480.20

- From Financial Institutions 6,682.76 7,099.70

(Repayable within one year Rs. 4,275.59 Mn, Previous Year Rs. 1,425.20 Mn)

Vehicle Loan 346.47 306.23

(Repayable within one year Rs. 142.04 Mn, Previous Year Rs. 103.08 Mn)

55,649.32 53,154.17

SCHEDULE 4

UNSECURED LOANS

Term Loan


- From Banks 3,386.98 1,390.16

Rupee Loan

- From Others (Refer note B 12 to Schedule 22) 1,757.36 1,757.36

Short Term Loan

Rupee Loan from Banks – 8,845.90

Others 15,000.00 –

20,144.34 11,993.42


33

Sch

ed

ule

s fo

rm

in

g p

art o

f th

e A

cco

un

ts

SC

HE

DU

LE

5

- F

IX

ED

A

SS

ET

S (R

efe

r n

ote

B

6

&

2

2 to

S

ch

ed

ule

2

2)

A. TA

NG

IB

LE

A

SS

ET

S(R

up

ee

s in

M

illio

n)

Gro

ss B

lock

De

pre

cia

tio

nN

et B

lock

Pa

rtic

ula

rs

As a

tA

dd

itio

ns fo

rD

ele

tio

ns o

nS

ale

/Ad

justm

en

tA

s a

tA

s a

tA

dd

itio

ns fo

rD

ele

tio

ns o

nS

ale

/Ad

justm

en

tA

s a

tA

s a

tA

s a

t

Ap

ril

1

, 2

00

8 th

e Y

ea

r e

nd

ed

acco

un

t o

ffo

r th

e Y

ea

r e

nd

ed

Ma

rch

3

1,

20

09

Ap

ril

1

, 2

00

8th

e Y

ea

r e

nd

ed

acco

un

t o

ffo

r th

eM

arch

3

1,

20

09

Ma

rch

3

1,

20

09

Ma

rch

3

1,

20

08

Ma

rch

3

1,

20

09

de

-me

rg

er

Ma

rch

3

1,

20

09

Ma

rch

3

1,

20

09

de

-me

rg

er

Ye

ar e

nd

ed

Ma

rch

3

1,

20

09

La

nd

77

.7

61

4.2

0-

-9

1.9

6-

--

--

91

.9

67

7.7

6

Le

ase

ho

ld La

nd

20

9.9

91

9.9

6-

3.8

22

26

.1

36

7.9

41

1.9

5-

3.5

77

6.3

21

49

.8

11

42

.0

5

Bu

ild

ing

57

7.6

87

7.0

9-

1.8

26

52

.9

51

65

.8

03

2.9

8-

1.8

21

96

.9

64

55

.9

94

11

.8

8

Pla

nt &

M

ach

ine

ry

10

7,3

41

.4

44

5,0

65

.8

92

1,1

87

.5

32

,1

77

.8

81

29

,0

41

.9

22

9,9

25

.7

31

0,5

96

.4

75

,1

89

.0

62

,0

10

.9

73

3,3

22

.1

79

5,7

19

.7

57

7,4

15

.7

1

Fu

rn

itu

re

&

F

ixtu

re

75

0.9

82

41

.8

5-

1.6

09

91

.2

33

97

.0

29

2.5

1-

1.1

24

88

.4

15

02

.8

23

53

.9

6

Offic

e E

qu

ipm

en

t6

44

.8

31

30

.9

4-

4.6

37

71

.1

44

91

.9

97

9.8

5-

4.0

45

67

.8

02

03

.3

41

52

.8

4

Ve

hic

les

52

0.2

12

44

.7

3-

80

.2

46

84

.7

01

89

.9

71

55

.9

8-

33

.4

53

12

.5

03

72

.2

03

30

.2

4

Su

b-To

ta

l1

10

,1

22

.8

94

5,7

94

.6

62

1,1

87

.5

32

,2

69

.9

91

32

,4

60

.0

33

1,2

38

.4

51

0,9

69

.7

45

,1

89

.0

62

,0

54

.9

73

4,9

64

.1

69

7,4

95

.8

77

8,8

84

.4

4

Le

ss:

Pre

-o

pe

ra

tiv

e

Ch

arg

e C

ap

ita

lize

d2

.5

2

TO

TA

L1

10

,1

22

.8

94

5,7

94

.6

62

1,1

87

.5

32

,2

69

.9

91

32

,4

60

.0

33

1,2

38

.4

51

0,9

67

.2

25

,1

89

.0

62

,0

54

.9

73

4,9

64

.1

69

7,4

95

.8

77

8,8

84

.4

4

Pre

vio

us Y

ea

r7

0,4

69

.2

84

2,4

41

.3

6-

2,7

87

.7

51

10

,1

22

.8

92

6,3

05

.6

77

,5

68

.5

2-

2,6

35

.7

43

1,2

38

.4

57

8,8

84

.4

4

No

te

s:

1.

Pla

nt &

M

ach

ine

ry in

clu

de

s a

sse

ts h

eld

fo

r d

isp

osa

l- G

ro

ss B

lock R

s.

38

.51

M

n.

(P

re

vio

us Y

ea

r - R

s.

1,9

88

.03

M

n) a

nd

N

et B

lock N

il (P

re

vio

us Y

ea

r R

s.

45

.00

M

n)

2.

Pla

nt &

M

ach

ine

ry in

clu

de

s G

ro

ss B

lock o

f a

sse

ts ca

pit

alise

d u

nd

er fin

an

ce

le

ase

R

s.

2,2

19

.73

M

n (P

re

vio

us Ye

ar R

s.9

75

.01

M

n) a

nd

co

rre

sp

on

din

g A

ccu

mu

late

d D

ep

re

cia

tio

n b

ein

g R

s.

64

0.6

2 M

n (P

re

vio

us Ye

ar R

s.

13

4.4

3 M

n)

B - IN

TA

NG

IBL

E A

SS

ET

S(R

up

ee

s in

M

illio

n)

Gro

ss B

lock

Am

ortis

atio

nN

et B

lock

Pa

rtic

ula

rs

As a

tA

dd

itio

ns fo

rD

ele

tio

ns o

nS

ale

/Ad

justm

en

tA

s a

tA

s a

tA

dd

itio

ns fo

rD

ele

tio

ns o

nS

ale

/Ad

justm

en

tA

s a

tA

s a

tA

s a

t

Ap

ril

1

, 2

00

8 th

e Y

ea

r e

nd

ed

acco

un

t o

ffo

r th

e Y

ea

r e

nd

ed

Ma

rch

3

1,

20

09

Ap

ril

1

, 2

00

8th

e Y

ea

r e

nd

ed

acco

un

t o

ffo

r th

eM

arch

3

1,

20

09

Ma

rch

3

1,

20

09

Ma

rch

3

1,

20

08

Ma

rch

3

1,

20

09

de

-me

rg

er

Ma

rch

3

1,

20

09

Ma

rch

3

1,

20

09

de

-me

rg

er

Ye

ar e

nd

ed

Ma

rch

3

1,

20

09

En

try/L

ice

nse

F

ee

s2

0,7

06

.7

2-

--

20

,7

06

.7

21

0,2

49

.6

51

,0

61

.3

6-

-1

1,3

11

.0

19

,3

95

.7

11

0,4

57

.0

7

Co

mp

ute

r - S

oftw

are

1,1

22

.4

56

49

.9

9-

3.2

51

,7

69

.1

97

16

.6

63

57

.4

2-

3.4

71

,0

70

.6

16

98

.5

84

05

.7

9

Ba

nd

wid

th

90

.9

56

00

.6

2-

-6

91

.5

71

0.2

14

2.6

2-

-5

2.8

36

38

.7

48

0.7

4

Su

b-To

ta

l2

1,9

20

.1

21

,2

50

.6

1-

3.2

52

3,1

67

.4

81

0,9

76

.5

21

,4

61

.4

0-

3.4

71

2,4

34

.4

51

0,7

33

.0

31

0,9

43

.6

0

Le

ss:

Pre

-o

pe

ra

tiv

e

Ch

arg

e C

ap

ita

lize

d0

.0

6

TO

TA

L2

1,9

20

.1

21

,2

50

.6

1-

3.2

52

3,1

67

.4

81

0,9

76

.5

21

,4

61

.3

4-

3.4

71

2,4

34

.4

51

0,7

33

.0

31

0,9

43

.6

0

Pre

vio

us Y

ea

r1

4,7

10

.5

87

,2

35

.5

92

6.0

52

1,9

20

.1

29

,7

95

.7

91

,1

99

.1

0-

18

.3

71

0,9

76

.5

21

0,9

43

.6

0

Gra

nd

To

ta

l1

32

,0

43

.0

14

7,0

45

.2

72

1,1

87

.5

32

,2

73

.2

41

55

,6

27

.5

14

2,2

14

.9

71

2,4

28

.5

65

,1

89

.0

62

,0

58

.4

44

7,3

98

.6

11

08

,2

28

.9

0

No

te

s:

1.

Co

mp

ute

r - S

oftw

are

in

clu

de

G

ro

ss B

lock o

f a

sse

ts ca

pit

alise

d u

nd

er fin

an

ce

le

ase

R

s.

27

0.3

2 M

n.

(P

re

vio

us Ye

ar R

s.3

8.2

8 M

n.)

a

nd

co

rre

sp

on

din

g A

ccu

mu

late

d D

ep

re

cia

tio

n b

ein

g R

s.

89

.69

M

n.

(P

re

vio

us Ye

ar R

s.

4.8

8 M

n.)

2.

Th

e re

ma

inin

g a

mo

rtis

atio

n p

erio

d o

f li

ce

nse

fe

es a

s a

t M

arch

3

1,

20

09

ra

ng

es b

etw

ee

n 7

to

1

9 ye

ars b

ase

d o

n th

e re

sp

ectiv

e Te

leco

m S

erv

ice

Lic

en

se

p

erio

d.


34


SCHEDULE 6

INVESTMENTS

Long-term Trade Investment (Unquoted)

Investments in Shares of Subsidiaries

Aditya Birla Telecom Limited (Refer note B 6 to Schedule 22) 16,327.76 100.00

10,000,000 fully paid equity shares of Rs 10 each

Idea Cellular Infrastructure Services Limited 0.50 0.50

50,000 fully paid equity shares of Rs 10 each

Idea Cellular Services Limited 0.50 0.50


Swinder Singh Satara & Company Limited 38.31 38.31


Long-term Trade Investment (Quoted)

Investment in Joint Venture

Spice Communications Limited (Refer note B 3 to Schedule 22) 22,041.87 –

283,489,350 fully paid equity shares of Rs. 10 each

(Market value - Rs. 16,343.16 Mn)

Current Investment

Investments in Units of Mutual Funds (Refer note B 19 to Schedule 22) 10,879.14 5,560.00

(Includes unutilised Initial Public Offer proceed of Rs.Nil, Previous Year Rs.4,885.90 Mn)

49,288.08 5,699.31

SCHEDULE 7

INVENTORIES

(At lower of cost or estimated realisable value)

Trading Goods (Refer note B 18 to Schedule 22) – 0.45

Sims and Other Cards 427.29 275.70

427.29 276.15

SCHEDULE 8

SUNDRY DEBTORS

Debts outstanding for over six months

Unsecured - Considered good 77.44 95.31

- Considered doubtful 2,640.99 2,356.33

2,718.43 2,451.64

Other Debts

Unsecured - Considered good 3,218.43 1,890.62

- Considered doubtful 153.73 106.80

3,372.16 1,997.42

Less: Provision for doubtful debts 2,794.72 2,463.13

Total 3,295.87 1,985.93

Sundry Debtors include certain parties from whom Security Deposits of Rs.246.51Mn.

(Previous Year Rs. 225.77 Mn) have been taken and are lying with the Company

SCHEDULE 9

CASH AND BANK BALANCES

Cash and Cheques on Hand 205.99 296.92

Balances with Scheduled Banks

- in Current Accounts 1,202.60 1,179.81

- in Deposit Accounts 22,035.70 3,493.82

[Includes unutilised Initial Public Offer proceeds of Rs.NIL, (Previous year 3,150.00 Mn)

and Rs. 35.55 Mn. (Previous year Rs. 71.90 Mn) as margin money]

23,444.29 4,970.55

(Rupees in Million)

As at As at

March 31, 2009 March 31, 2008


35

SCHEDULE 10

OTHER CURRENT ASSETS

Unbilled Revenue 523.72 476.82

Interest Receivable on Deposits with Scheduled Banks 807.12 43.84

1,330.84 520.66

SCHEDULE 11

LOANS AND ADVANCES

(Unsecured, considered good unless otherwise stated)

Advances recoverable in cash or kind or for value to be received

- Considered good 6,173.57 6,286.75


Less: Provision for doubtful advances 90.75 90.75

6,173.57 6,286.75

Deposits with Body Corporates 8,922.08 –

Deposits with Subsidiaries 748.03 272.16

Deposits and Balances with Govt. Authorities 204.74 241.10

Deposits with others 1,305.52 609.58

Advance Income Tax

(Net of provision of Rs. 1,268.99 Mn., Previous year Rs. 425.33 Mn) 91.91 151.81

MAT Credit Entitlement 1,694.32 425.33

19,140.17 7,986.73

SCHEDULE 12

CURRENT LIABILITIES AND PROVISIONS

Current Liabilities

Sundry Creditors (Refer note B 20 to Schedule 22) 19,938.74 16,854.57

Book Bank Overdraft 1,089.05 2,255.71

Advances from Customers 5,416.55 4,054.32

Deposits from Customers and Others 1,423.21 1,268.38

Other Liabilities 1,802.76 910.94

Interest accrued but not due 1,553.60 92.71

31,223.91 25,436.63

Provisions

Gratuity (Refer note B 24(a) to Schedule 22) 17.55 23.38

Leave Encashment 490.87 315.28

Asset Retirement Obligation (Refer note B 31 to Schedule 22) 470.89 473.58

Provision for Fringe Benefit Tax

(Net of Advance of Rs. 92.00 Mn., Previous Year Rs.174.66 Mn) 7.20 5.97

986.51 818.21

Total 32,210.42 26,254.84


(Rupees in Million)

As at As at

March 31, 2009 March 31, 2008


36


(Rupees in Million)

For the year ended For the year ended

March 31, 2009 March 31, 2008

SCHEDULE 13

OTHER INCOME

Liabilities / Provisions no longer required written back 156.78 139.73

Miscellaneous Receipts 58.99 34.82

215.77 174.55

SCHEDULE 14

COST OF TRADING GOODS SOLD (Refer note B 18 to Schedule 22)

Opening Stock 0.45 0.45

Add: Purchases 189.19 0.06

Less: Closing Stock - 0.45

189.64 0.06

SCHEDULE 15

PERSONNEL EXPENDITURE

Salaries and Allowances etc. 4,174.17 3,022.78

Contribution to Provident and Other Funds 215.82 147.41

Staff Welfare 194.56 158.57

Recruitment and Training 92.30 89.06

4,676.85 3,417.82

SCHEDULE 16

NETWORK OPERATING EXPENDITURE

Security Service Charges 686.21 777.55

Power and Fuel 5,335.42 2,244.04

Repairs and Maintenance - Plant and Machinery 2,377.02 1,330.28

Switching & Cellsites Rent 1,711.96 829.38

Lease Line and Connectivity Charges 3,461.89 2,268.96

Network Insurance 41.39 26.50

Passive Infrastructure Charges 6,858.66 2,843.50

Other Network Operating expenses 289.02 149.32

20,761.57 10,469.53

SCHEDULE 17

LICENCE AND WPC CHARGES

Licence Fees 7,245.71 4,150.85

WPC and Spectrum Charges 3,713.25 2,700.18

10,958.96 6,851.03

SCHEDULE 18

ROAMING & ACCESS CHARGES

Roaming Charges 958.63 1,017.89

Access Charges 17,200.18 10,316.52

18,158.81 11,334.41


37


(Rupees in Million)


March 31, 2009 March 31, 2008

SCHEDULE 19

SUBSCRIBER ACQUISITION & SERVICING EXPENDITURE

Cost of Sim and Other Cards 955.83 532.97

Commission and Discount to dealers & recharge expenses 4,287.26 4,561.69

Customer Verification Expenses 358.92 192.86

Collection & Telecalling Expenses 2,438.46 1,121.32

Customer Retention & Customer loyalty Expenses 105.19 60.79

8,145.66 6,469.63

SCHEDULE 20

ADMINISTRATION & OTHER EXPENSES

Repairs and Maintenance - Building 19.02 17.18

- Others 1,220.74 961.78

Other Insurance 30.46 21.02

Non Network Rent 473.28 341.57

Rates and Taxes 59.81 87.11

Electricity 188.09 110.44

Printing and Stationery 87.40 62.88

Communication Expenses 145.57 124.20

Traveling and Conveyance 438.13 407.60

Provision for bad and doubtful debts / advances 331.59 244.94

Bank Charges 117.85 97.31

Directors Sitting Fees 1.11 0.91

Legal and Professional Charges 266.39 171.18

Audit Fees (Refer note B 13 to Schedule 22) 25.70 22.00

Loss on Sale of Fixed Assets / Assets disposed off 17.57 8.89

Miscellaneous expenses 402.22 216.02

3,824.93 2,895.03

SCHEDULE 21

FINANCE AND TREASURY CHARGES (NET)

Interest

- On Fixed Period Loan

(Net of Rs.190.39 Mn capitalised, Previous year Rs.147.47 Mn) 8,247.09 4,348.77

- Others 47.49 32.48

Financing Charges 189.20 211.02

8,483.78 4,592.27

Less:

Interest Received (Gross of Tax) 2,330.36 849.52

Profit on Sale of Other Investments 2,227.48 431.79

Gain / (Loss) on Foreign Exchange Fluctuation (Refer note B 22 to Schedule 22) (581.30) 534.54

4,507.24 2,776.42


38

SCHEDULE 22

A. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Preparation of Financial Statements:

The Financial Statements have been prepared under the

historical cost convention on accrual basis. The mandatory

applicable accounting standards in India and the provisions

of the Companies Act, 1956 have been followed in

preparation of these financial statements.

2. Fixed Assets:

Fixed assets are stated at cost of acquisition and installation

less accumulated depreciation. Cost is inclusive of freight,

duties, levies and any directly attributable cost of bringing

the assets to their working condition for intended use.

Asset retirement obligations are capitalized based on a

constructive obligation as a result of past events, when it

is probable that an outflow of resources will be required to

settle the obligation and a reliable estimate of the amount

can be made. Such costs are depreciated over the

remaining useful life of the asset.

3. Expenditure during pre-operative period of license:

Expenses incurred on Project and other charges during

construction period are included under pre-operative

expenditure (grouped under Capital Work in Progress) and

are allocated to the cost of Fixed Assets on the

commencement of commercial operations.

4. Depreciation and amortization:

Depreciation on fixed assets is provided on straight-line

method (except stated otherwise) on the basis of estimated

useful economic lives as given below: -

Tangible Assets Years

Buildings 9 to 30

Network Equipments 10 to 13

Optical Fibre 15

Other Plant and Machineries 5

Office Equipments 3 to 9

Computers 3

Furniture and Fixtures 3 to 10

Motor Vehicles upto 5

Leasehold improvements Period of lease

Intangible Assets are amortised on straight-line method as

under:-

i) Cost of Rights and Licences including the fees paid on

fixed basis prior to revenue share regime is amortised

on straight-line method on commencement of

operations over the period of license.

ii) Software, which is not an integral part of Hardware, is

treated as Intangible asset and is amortized over their


useful economic lives as estimated by the management

between 3 to 5 years.

iii) Bandwidth / Fibre taken on Indefeasible Right of Use

(IRU) is amortised over the agreement period.

Assets costing upto Rs. 5,000/- are depreciated fully in the

month of purchase.

5. Inventories:

Inventories are valued at cost or net realisable value, whichever

is lower. Cost is determined on weighted average basis.

6. Foreign currency transactions:

Transactions in foreign currency are recorded at the

exchange rates prevailing at the dates of the transactions.

As per the transitional provisions given in the notification

issued by Ministry of Corporate Affairs dated 31st

March

2009, the company has opted for the option of adjusting

the exchange difference on long term foreign currency

monetary items to the cost of the assets acquired out of

these foreign currency monetary items. The company has

aligned its accounting policy based on this notification.

Exchange difference arising out of fluctuation in exchange

rates on settlement / period end is accounted based on

the nature of transaction as under:

1) Short term foreign currency monetary assets and

liabilities: recognised in the Profit and Loss account.

2) Long term foreign currency monetary liabilities used

for acquisition of fixed assets: adjusted to the cost of

the fixed assets and amortised over the remaining

useful life of the asset.

3) Other Long term foreign currency monetary liabilities:

recognised in “Foreign Currency Monetary Item

Translation Difference Account” and amortised over

the period of liability not exceeding 31st

March 2011.

7. Taxation:

a) Current Tax: Provision for current income tax is made

on the taxable income using the applicable tax rates

and tax laws.

b) Deferred Tax: Deferred tax arising on account of

timing differences and which are capable of reversal

in one or more subsequent periods is recognised using

the tax rates and tax laws that have been enacted or

substantively enacted. Deferred tax assets are not

recognised unless there is virtual certainty with respect

to the reversal of the same in future years.

c) Minimum Alternative Tax (MAT) credit: is recognised

as an asset only when and to the extent there is

convincing evidence that the Company will pay normal

income tax during the specified period. In the year in


39

which the MAT credit becomes eligible to be

recognized as an asset in accordance with the

recommendations contained in Guidance Note issued

by the ICAI, the said asset is created by way of a credit

to the Profit and Loss account and shown as MAT Credit

Entitlement. The Company reviews the same at each

balance sheet date and writes down the carrying

amount of MAT Credit Entitlement to the extent there

is no longer convincing evidence to the effect that

Company will pay normal Income Tax during the

specified period.

8. Retirement Benefits:

Contributions to Provident and pension funds are funded

with the appropriate authorities and charged to the profit

and loss account.

Contributions to superannuation are funded with the Life

Insurance Corporation of India and charged to the profit

and loss account.

Liability for gratuity as at the year end is provided on the

basis of actuarial valuation and funded with Life Insurance

Corporation of India.

Provision in accounts for leave benefits to employees is

based on actuarial valuation done by projected accrued

benefit method at the period end.

9. Revenue Recognition and Receivables:

Revenue on account of mobile telephony services and sale

of handsets and related accessories is recognized net of

rebates, discount, service tax, etc. on rendering of services

and supply of goods respectively. Recharge fees on

recharge vouchers is recognized as revenue as and when

the recharge voucher is activated by the subscriber.

Unbilled receivables, represent revenues recognized from

the bill cycle date to the end of each month. These are

billed in subsequent periods as per the terms of the billing

plans.

Debts (net of security deposits outstanding there against)

due from subscribers, which remain unpaid for more than

90 days from the date of bill and/or other debts which are

otherwise considered doubtful, are provided for.

Provision for doubtful debts on account of Interconnect

Usage Charges (IUC), Roaming Charges and passive

infrastructure sharing from other telecom operators is made

for dues outstanding more than 180 days from the date of

billing other than cases when an amount is payable to

that operator or in specific case when management is of

the view that the amount is recoverable.

10. Investments:

Current Investments are stated at lower of cost or fair value

in respect of each separate investment.

Long-term investments are stated at cost less provision for

diminution in value other than temporary, if any.

11. Borrowing Cost:

Interest and other costs incurred in connection with the

borrowing of the funds are charged to revenue on accrual

basis except those borrowing costs which are directly

attributable to the acquisition or construction of those fixed

assets, which necessarily take a substantial period of time

to get ready for their intended use. Such costs are

capitalized with the fixed assets.

12. Licence Fees – Revenue Share:

With effect from August 1, 1999 the variable Licence fee

computed at prescribed rates of revenue share is being

charged to the profit and loss account in the Period in

which the related revenue arises. Revenue for this purpose

comprises adjusted gross revenue as per the licence

agreement of the licence area to which the licence pertains.

13. Use of Estimate :

The preparation of financial statements in conformity with

generally accepted accounting principles requires estimates

and assumptions to be made that affect the reported

amounts of assets and liabilities and disclosure of

contingent liabilities on the date of the financial statements

and the reported amounts of revenues and expenses during

the reporting year. Differences between actual results and

estimates are recognised in the periods in which the results

are known / materialise.

14. Leases:

a) Operating: Lease of assets under which significant

risks and rewards of ownership are effectively retained

by the lessor are classified as operating leases. Lease

payments under an operating lease are recognised as

expense in the profit and loss account, on a straight-

line or other systematic basis over the lease term.

b) Finance: Leased assets acquired on which significant

risk and reward of ownership effectively transferred

to the Company are capitalised at lower of fair value

or the amounts paid under such lease arrangements.

Such assets are amortised over the period of lease or

estimated life of such assets whichever is less.

15. Earnings Per Share:

The earnings considered in ascertaining the Company’s EPS

comprises the net profit after tax, after reducing dividend

on Cumulative Preference Shares for the Period (irrespective

of whether declared, paid or not), as per Accounting

Standard 20 on “Earning Per Share”, issued by the Institute

of Chartered Accountants of India. The number of shares

used in computing basic EPS is the weighted average number

of shares outstanding during the Period. The diluted EPS is

calculated on the same basis as basic EPS, after adjusting

for the effects of potential dilutive equity shares unless the

effect of the potential dilutive equity shares is anti-dilutive.

16. Impairment of Assets:

Assets are reviewed for impairment whenever events or

changes in circumstances indicate that the carrying amount


40

may not be recoverable. An impairment loss is recognized

in accordance for AS-28 “Impairment of Assets”, for the

amount by which the asset’s carrying amount exceeds its

recoverable amount as on the carrying date. The

recoverable amount is higher of the asset’s fair value less

costs to sell vis-à-vis value in use. For the purpose of

impairment, assets are grouped at the lowest levels for

which there are separately identifiable cash flows.

17. Contingent Liability:

Provisions are recognized when the Company has a present

obligation as a result of past events; it is more likely than

not that an outflow of resources will be required to settle

the obligation; and the amount has been reliably estimated.

Disclosures for contingent liabilities are considered to the

extent of notices / demands received by the Company.

18. Issue Expenditure:

Expenses incurred in connection with issue of equity shares

are adjusted against share premium.

19. Employee Stock Option:

In respect of stock option granted pursuant to the

company’s Employee Stock Option Scheme, the intrinsic

value of the option is treated as discount and accounted

as employee compensation cost over the vesting period.

B. NOTES TO AUDITED ACCOUNTS

1 Equity Share Capital

a) Increase in Authorised Equity Share Capital : At the

Annual General Meeting held on 29th

September, 2008,

members of the company passed a resolution to

increase Authorised Equity Share Capital by

Rs. 25,000.00 Mn. to Rs. 67,750.00 Mn.

b) Preferential Allotment

At the Extra-ordinary General Meeting (EGM) held on

30th

July 2008, members passed a resolution to issue

on a preferential basis to TMI Mauritius Limited,

464,734,670 Equity Shares of face value of Rs. 10/-

each for cash at a premium of Rs. 146.96 per Equity

Share, aggregating to Rs. 72,945 Mn. Accordingly,

413,094,098 and 51,640,572 shares were allotted on

12th

August 2008 and 13th

August 2008 respectively.

The objects of the issue was towards augmentation of

the long term resources of the Company in meeting

the fund requirements for growth plans, to supplement

working capital resources and for general corporate

purposes.

During the year ended 31st

March 2009, Rs. 62,230

Mn. has been utilised towards the specified objects of

the issue. The unutilized balance of Rs. 10,715 Mn. as

on 31st

March 2009 is lying in deposits with banks

and mutual funds.

2 The status of utilisation of IPO proceeds and Green Shoe

amount up to 31st

March 2009 is as under:

(Rs. Mn.)

Activity To be Utilisation Utilisation

financed up to from

through March 31, April

the issue 2008 2008 to

proceeds March

2009

Building strengthening and

expanding network and

related services in the

New Circles 9,708.00 8,121.98 979.57#

Capital expenditure

for NLD operations 808.00 – 7.62#

Roll out for services in

Mumbai Circle 6,470.00 828.12 1,415.12#

Redemption of Preference

Shares 7,563.26 7,563.26 –

Issue Expenses 620.04 620.04 –

General Corporate

purpose ** 3,018.20 3,018.20 5,633.59#

Total 28,187.50 20,151.60 8,035.90

# At the EGM held on 30th

July 2008, members approved

balance unutilized proceeds of IPO for mergers, acquisitions

and other general corporate purposes, in addition to the

objects of IPO, therefore the balance unutilised amounts

of the said objects has been utilised for general corporate

purposes.

** Including repayment of short term loans

3 Investment in Spice Communications Limited

During the year, the company has acquired from MCorp

Global Communications Private Limited (MCPL) their entire

40.8% stake in Spice Communications Limited (Spice)

(having operations in Punjab and Karnataka Telecom

circles). The company along with TMI India Limited, TMI

Mauritius Limited, Axiata Group Berhad (formerly known

as TM International Berhad) and Green Acre Agro Services

Private Limited, collectively referred to as “The acquirers”

had made a public offer to acquire upto 20% equity stake

in Spice from other public shareholders. The said offer

was opened on 17th

September 2008 and closed on

6th

October 2008. The acquirers have since made the

payment on 15th

October 2008 to all eligible shareholders

of Spice who had validly tendered their shares under the

said offer. Consequently, the stake of the Company in Spice

stands at 41.09% as of date. A scheme of amalgamation

of Spice with the Company has been filed with Hon’ble

High Court of Gujarat at Ahmedabad on 11th

May, 2009.

The scheme shall be effective on and from last of the

dates on which all required approvals are obtained and

the sanctioned scheme is filed with the Registrar of

Companies at Ahmedabad and Delhi respectively.


41

4 Demerger of Licenses

The Company, inter alia, has been granted UAS Licenses

by the Department of Telecommunications (DoT) for Punjab

and Karnataka Service Areas which overlap with operational

UAS Licenses of Spice in respect of same Service Areas.

Since the Company has decided to merge Spice into itself,

it has filed a scheme of arrangement on 11th

May, 2009

with an appointed date of 1st

December, 2008 in the

Hon’ble High Court of Gujarat at Ahmedabad to de-merge

its own UAS Licenses for Punjab and Karnataka service

areas to an eligible entity. Upon the scheme becoming

effective, the difference between the carrying values and

the consideration for de-merger of these UAS Licenses is

proposed to be adjusted against the balance in the

Securities / Share Premium Account through the Profit &

Loss account. The Company has, in the meanwhile sought

a deferment of the proceedings from Hon’ble High Court

of Gujarat at Ahmedabad due to regulatory clarity on the

subject. Upon clarity in the matter and Company deciding

to go ahead with the Scheme, the aforesaid appointed

date may undergo a change.

Further, the Scheme of Amalgamation of Spice with the

Company, as mentioned in Note 3 above, provides for the

adjustment of the amount of loss arising out of impairment

or sale, disposal or any other arrangement in connection

with these licenses against the balance in the Securities /

Share Premium Account in the event the Scheme of De-

merger for the above mentioned overlapping licenses not

being pursued or not becoming effective for any reason

whatsoever. In such an event, the net-worth of the

Company may diminish to that extent, which is currently

not ascertainable. These UAS Licenses have therefore been

carried at cost (Rs. 3,585.80 Mn.) as on 31st

March, 2009.

5 The Company has paid Non-Compete Fee of Rs. 5,439.75

Mn. to MCPL in July 2008 pursuant to the Non-Compete

Agreement entered into as a part of the acquisition of

40.8% equity in Spice as mentioned in Note 3 above. A

Scheme of Arrangement was filed by the Company with

the Hon’ble High Court of Gujarat at Ahmedabad with an

appointed date of 1st

July, 2008, to adjust the Non-Compete

fee paid to MCPL against the balance in Securities / Share

Premium Account through the Profit & Loss account. The

said scheme was approved by the Hon’ble High Court on

31st

August 2009 and became effective on 21st

September

2009, pursuant to filing of the High Court order with

Registrar of Companies, Gujarat. The scheme has been

given effect to in these financial statements by debiting

Non-Compete Fee to Profit & Loss Account and setting off

from an equal amount withdrawn from the Securities

Premium account. Had the scheme not mandated the above

accounting treatment, the Non-Compete Fee would have

been capitalised as intangible asset and amortised over

the non-compete period. In such an event, Intangible Assets

and Securities Premium would have been higher by

Rs. 4,071.05 Mn. and Rs. 5,439.75 Mn. respectively and

Profit after Tax for the year would have been lower by

Rs. 1,368.70 Mn. on account of amortisation.

6 De-merger of Passive Infrastructure

A Scheme of Arrangement was filed with the Hon’able

High Court of Gujarat at Ahmedabad to de-merge Passive

Infrastructure (PI) assets in the telecom service areas of

Andhra Pradesh, Delhi, Gujarat, Uttar Pradesh (both East &

West including Uttaranchal), Haryana, Kerala, Rajasthan

and Mumbai at nil consideration with an appointed date

of 1st

January 2009 to Idea Cellular Towers Infrastructure

Limited (ICTIL), a 100% subsidiary of Aditya Birla Telecom

Limited (ABTL). ABTL is a 100% subsidiary of the company.

The Hon’ble High Court of Delhi at New Delhi and the

Hon’ble High Court of Gujarat at Ahmedabad approved

the scheme on 3rd

August 2009 and 31st

August 2009

respectively. The scheme became effective on

29th

September 2009. As per the scheme:-

i) PI assets having book value of Rs. 16,227.76 Mn. as

on 31st

December 2008 has been debited to the Profit

& Loss account,

ii) Investment in ABTL has been increased by the book

value of PI assets vested with ICTIL as part of this

scheme, by creating “Reserve for Business Restructuring”,

iii) An amount equal to net book values of PI assets as

per point (i) above, has been withdrawn from “Reserve

for Business Restructuring” recognized as per point

(ii) above.

Had the scheme not mandated the above accounting

treatment, the value of investment in ABTL would not

have included the book values of Rs. 16,227.76 Mn.

of the PI assets de-merged to ICTIL but would have

remained at Rs. 100.00 Mn. Consequently, there would

have been no creation of “Reserve for Business

Restructuring” of Rs. 16,227.76 Mn. and withdrawal

of the same to the credit of P&L.

7 Rollout of services in Mumbai Circle

On 20th

August, 2008, the Company has commenced its

commercial operations in Mumbai service area.

8 Secured Loans

a) Foreign Currency and Rupee Loans

Foreign Currency Loans amounting to Rs. 8,548.14

Mn. (Previous year Rs. 4,268.04 Mn.) and Rupee Loans

amounting to Rs. 46,754.71 Mn. (Previous year

Rs. 48,579.90 Mn.) are secured by way of first charge

/ assignment ranking pari-passu interse the lenders,

as under:

i. First charge by mortgage on all the movable and

immovable properties of the Company,

ii. A first priority charge over all intangible assets of

the Company,


42

iii. Assignment of the rights, titles and interest, on

deposits, investments, bank accounts, book debts,

insurance covers, other general assets, letters of

credit and guarantee or performance bond,

provided in favour of the Company.

b) Vehicle Loan

Vehicle Loan amounting to Rs. 346.47 Mn. (Previous

year Rs. 306.23 Mn.) is secured by hypothecation of

Vehicles against which the loans have been taken.

9 Interest from Department of Telecommunications

The Company had recognised an income of Rs. 802.27

Mn. during the year ended 31st

March, 2003 being refund

of excess interest charged by DoT on the licence fee payable

by the Company pursuant to the judgement dated 9th

April,

2002 of Telecom Disputes Settlement and Appellate

Tribunal (TDSAT). During the previous years, DoT arbitrarily

acknowledged an amount of Rs. 758.76 Mn. against

Company’s claim of Rs. 802.27 Mn. The Company has

represented this matter with DoT. The Company has not

provided for the difference of Rs. 43.51 Mn., as in the

opinion of the management, the amount is recoverable

from DoT.

The Company is also entitled to interest on the amount of

the refund so accrued in terms of the Supreme Court

Judgment; the recognition of revenue on account of the

same has been postponed pending acceptance in this

respect by DoT. As of 31st

March, 2009, this case is pending

before the H’ble Supreme Court.

10 Contingent Liabilities

a) During the financial year 2006-07, the WPC Wing of

the DoT had raised demands towards monthly

compounded interest on WPC charges for the period

upto the financial year 2002-03 in respect of the

telecom service areas of the erstwhile Idea Mobile

Communication Limited (IMCL) and BTA Cellcom Ltd

amounting to Rs. 405.02 Mn., which were deposited

under protest in November 2006. The details of the

same are given below.

Telecom operators had paid WPC Royalty and license

fees towards GSM frequency, access and back-bone

frequency charges on circle area basis as provided in

the license terms from inception till financial year

2002-03 while the DoT demands were on city basis.

The above matter was disputed by the operators and

contested in TDSAT. DoT proposed a change in the

basis of levy of spectrum charges based on revenue

share vide their letter dated 18th

April, 2002 on the

condition of its acceptance in entirety and withdrawal

of all legal proceedings by the operators. Vide their

letter dated 26th

March, 2002, DoT had also given time

to the operators to deposit the earlier principal

demands by 15th

April, 2002.The operators accepted

the offer of change to revenue share basis on

23rd

August, 2002. The interest demand now raised

by WPC wing of DoT for the period before 15th

April,

2002 is contrary to the DoT proposal in 2002. During

the year, the Company along with other telecom

operators have approached TDSAT vide petition no.

123 of 2008 challenging this demand. Following

submission of reply by DoT, the matter is expected to

be heard in November 2009.

The Company has also taken up with the erstwhile

promoter of IMCL for Rs. 348.79 Mn. (refer note 12

below)

b) Under Export Promotion Credit Guarantee Scheme,

Company had saved aggregated differential duty

amounting to Rs. 37.72 Mn. against which company

had export obligation amounting to Rs. 301.06 Mn.

The company has fulfilled its export obligation and is

awaiting formal acknowledgement from Director

General of Foreign Trade for the same.

c) Other Matters not provided for

(Rs. Mn.)

Particulars As on As on

March 31, March 31,

2009 2008

Income Tax Matters not

acknowledged as debts 107.29 18.75

Sales Tax, Entry Tax &

Service Tax Matters not

acknowledged as debts 1,452.82 1,254.06

Other claims not

acknowledged as debts 1,345.07 1,117.18

d) Estimated amount of contracts (net of advance)

remaining to be executed on capital account and not

provided for.

(Rs. Mn.)


March 31, March 31,

2009 2008

Estimated amount of

contracts (net of advance) 11,007.00 17,555.13

11 Details of guarantees given

(Rs. Mn.)


March 31, March 31,

2009 2008

Bank guarantees given 9,233.51 9,868.26

Corporate Guarantee

given to others on behalf

of Subsidiaries &

Joint Ventures 8,881.93 2,820.00

12 In accordance with an assignment agreement entered

between the original promoters of the amalgamated

subsidiary Idea Mobile Communications Limited (IMCL) i.e.

Escorts Ltd. and First Pacific Company Ltd., IMCL had issued

interest free unsecured Bond of Rs. 1,757.36 Mn. to Escorts


43

16 Earning in Foreign Currency (on receipt basis) :

(Rs. Mn.)

Particulars For the For the

year ended year ended

March 31, March 31,

2009 2008

International Roaming Services* 686.60 789.08

Others – 1.18

* On accrual basis Rs.669.60 Mn. for current year and

Rs.863.27 Mn. for previous year.

17 Managerial Remuneration under section 198 of the

Companies Act, 1956 paid or payable during the financial

year is as under:

(Rs. Mn.)



March 31, March 31,

2009 2008

Salary including perquisites 33.69 23.59

Contribution to provident and

other fund 3.25 2.65

Performance incentive 12.46 14.40

Total 49.40 40.64

The above remuneration excludes gratuity & leave

encashment amounts as the same is been based on

actuarial valuation.

18 Quantitative details of goods traded:

Particulars For the year ended For the year ended

March 31, 2009 March 31, 2008

Nos. Value Nos. Value

(Rs. Mn.) (Rs. Mn.)

Handsets/Data cards

Opening Stock 108 0.45 108 0.45

Purchases (Net of returns) 92,595 189.19 13 0.06

Sale 92,703 187.33 13 0.06

Closing stock – – 108 0.45

Limited vide a Loan agreement dated 15th

January, 2004.

This bond was in lieu of the loans from the original

promoters and included accrued interest of Rs. 857.36 Mn.

on 10th

June, 2004. This Bond is repayable on 15th

January,

2014 and carries a put option for Escorts Limited for a

period of thirty days commencing on 15th

January, 2010

to redeem the entire amount or part thereof at a price

which would have been payable by the Company had the

Company opted for an early redemption in accordance with

the terms of the said agreement. The Company is entitled

to pre payment and set off against certain contingent

liabilities that may crystallise after 10th

June, 2004. On the

request of Escorts Ltd, the Company on 21st

July, 2006 has

consented to release the redemption proceeds of the above

loan to Axis Bank on the same terms and conditions, as

mentioned in the above Loan agreement.

Escorts Limited have approached the Company for a pre-

payment settlement after adjusting agreed contingent

liabilities and demands in September 2009.

13 Auditors’ Remuneration (excluding of service tax):

(Rs. Mn.)



March 31, March 31,

2009 2008

Statutory audit fees 25.70 20.00

Certification and other matters

(incl. in legal and professional

charges) 1.40 1.50

Out of pocket expenses

(incl. in misc expenses) 0.30 0.40

Total Remuneration 27.40 21.90

14 CIF Value of imports:

(Rs. Mn.)



March 31, March 31,

2009 2008

Capital Goods (including spares) 19,095.14 16,030.04

Trading Goods 189.19 –

15 Expenditure in Foreign Currency (on remittance basis):

(Rs. Mn.)



March 31, March 31,

2009 2008

Interest 5.79 25.06

Travel 7.40 8.48

Professional and Consultancy fees 24.49 53.58

International Roaming services 163.10 136.99

Others 214.88 88.35


44

19

a) During the year, the Company has purchased and sold following units:

During the year ended March 31, 2009 During the year ended March 31, 2008

Qty in Rs. in Qty in Rs. in Qty in Rs. in Qty in Rs. in

Particulars ‘000 Mn. ‘000 Mn. ‘000 Mn. ‘000 Mn.

Units Purchase Units Sale Units Purchase Units Sale

Purchased Value Sold Value Purchased Value Sold Value

ABN AMRO Cash Fund - IP - Growth 49,406 500 49,406 500 203,736 2,050 203,736 2,051

ABN Amro Interval Fund - Monthly Plan A 23,865 250 23,865 252 - - - -

ABN AMRO Money Plus IP Fund - Growth 20,556 250 20,556 252 129,650 1,500 129,650 1,510

Birla Cash Plus - I P - Growth 614,998 13,960 629,127 14,299 194,831 4,030 180,701 3,724

Birla Cash Plus - Institutional Premium Plan - Growth 12,173,456 163,858 12,118,699 163,196 2,416,417 30,384 2,338,918 29,441

Birla Floating Rate Fund - LTP - Growth 112,340 1,530 112,340 1,535 158,499 2,050 158,499 2,064

Birla Sun Life Liquid Plus - IP - Growth 5,717,108 92,529 5,782,799 93,740 - - - -

Birla SunLife Cash Manager - I P - Growth 1,234,364 17,936 722,848 10,443 433,326 5,613 433,326 5,623

Birla Sunlife Interval Income Fund - Monthly Plan - Series I - - 48,574 504 122,503 1,250 73,929 755

Birla SunLife Liquid Plus - IP - Growth - - - - 440,485 6,605 374,793 5,644

Birla Sunlife Monthly Interval Fund - Series 2 - - 122,373 1,261 122,373 1,250 - -

Birla Sunlife Quarterly Interval Fund - Series 6 19,548 200 19,548 204 - - - -

Birla Sunlife Quarterly Interval Fund - Series 8 - - 50,000 512 50,000 500 - -

BSL Credit Oppurtunities - Growth 10,573,312 106,026 10,573,312 107,209 - - - -

BSL Dynamic Bond Fund - Growth 379,666 5,020 379,666 5,059 - - - -

BSL Monthly Interval Series 1 Growth 186,764 2,000 186,764 2,016 - - - -

DBS Chola Liquid Fund - Institutional Plus - Growth 15,100 250 15,100 250 - - - -

DBS Chola Liquid Fund - Super IP - Growth 73,847 830 73,847 832 144,256 1,540 144,256 1,542

DSP Merrill Lynch Cash Plus Fund - IP - Growth 105,371 1,120 105,371 1,121 14,811 150 14,811 151

DSP Merrill Lynch Liquidity Fund - IP - Growth 95,882 1,140 95,882 1,145 13,103 150 13,103 150

DSP Merrill Lynch Liquidity Fund - Regular Plan - Growth 12,632 250 12,632 250 - - - -

DSP ML Liquid Plus Fund - IP - Growth - - - - 13,590 150 13,590 150

DWS Insta Cash Plus Fund - IP - Growth 76,289 1,000 76,289 1,002 310,745 3,783 310,745 3,787

DWS Insta Cash Plus Fund - Super IP - Growth 1,057,200 11,350 1,057,200 11,410 - - - -

DWS Money Plus Fund - IP - Growth - - - - 123,236 1,335 123,236 1,349

DWS Ultra Short Term Fund - Institutional - Growth 24,447 250 24,447 252 - - - -

Fidelity Cash Fund - IP - Growth 59,614 690 59,614 690 940 10 940 10

Fidelity Cash Fund - Super IP - Growth 318,595 3,720 318,595 3,725 18,167 200 18,167 200

Fidelity Liquid Plus Fund - Super IP - Growth 46,319 500 46,319 506 19,348 200 19,348 200

HDFC Cash Mgmt Fund - Call Plan - Growth - - - - 11,042 150 11,042 150

HDFC Cash Mgmt Fund - Savings Plan - Growth 646,221 11,640 646,221 11,660 9,110 150 9,110 150

HDFC Liquid Fund - Premium Plan - Growth 1,009,545 16,650 1,009,545 16,673 65,745 1,050 65,745 1,051

HSBC Cash Fund - I P - Growth 36,392 500 36,392 501 11,577 150 11,577 150

HSBC Cash Fund - Institutional Plus - Growth 719,743 9,350 719,743 9,362 414,559 5,064 414,559 5,069

HSBC Liquid Plus Fund - IP Plus - Growth - - - - 109,735 1,180 109,735 1,187

ICICI Prudential Flexible Income Plan - Growth 966,269 15,537 983,034 15,827 334,388 4,917 317,623 4,718

ICICI Prudential Liquid - I P - Growth 112,531 2,320 112,531 2,326 - - - -

ICICI Prudential Liquid - Inst Plus - Growth 91,971 1,900 91,971 1,907 - - - -

ICICI Prudential Liquid - Super IP - Growth 5,631,205 69,670 5,631,205 69,769 - - - -

IDFC Cash Fund - Plan C - Super I P - Growth 1,145,180 12,000 1,145,180 12,004 - - - -

IDFC Fixed Maturity Plan - Growth 45,011 450 45,011 454 - - - -

IDFC Money Manager - Treasury Plan - Plan C - Growth 188,194 1,950 188,194 1,952 - - - -

ING Liquid Fund - IP - Growth 53,621 690 53,621 692 135,933 1,660 135,933 1,662

ING Liquid Fund - Super IP - Growth 788,313 9,680 788,313 9,694 415,780 4,840 415,780 4,847

ING Vysya Liquid Plus Fund - IP - Growth - - - - 110,565 1,150 110,565 1,154

JM Fixed Maturity Fund – Series XII – Monthly Plan 3 45,011 450 45,011 454 - - - -

JM High Liquidity - I P - Growth 384,369 5,390 384,369 5,396 34,577 450 34,577 451

JM High Liquidity - Super I P - Growth 438,756 5,820 438,756 5,833 289,658 3,577 289,658 3,582

JM Money Manager Fund - Super Plus Plan - Growth 63,249 750 63,249 754 290,147 3,181 290,147 3,213

Kotak Flexi Debt Fund - Growth - - - - 65,862 809 65,862 818

Kotak Floater - LT - Growth 18,220 250 18,220 253 - - - -

Kotak Liquid - Inst Premium Plan - Growth 14,192 250 14,192 250 135,828 2,128 135,828 2,130

Kotak QIP Series 21,992 253 - - - - - -

Kotak Quarterly FMP - Series 5 48,861 500 48,861 511 - - - -

LIC MF FMP Series 30 - - - - 150,000 1,500 150,000 1,533


45

LIC MF Liquid Fund - Growth 15,724 250 15,724 251 279,375 3,930 279,375 3,936

LIC MF Liquid Fund - IP - Growth 31,111 500 15,557 250 - - - -

Lotus India Liquid Fund - Institutional Plus - Growth - - - - 14,076 150 14,076 150

Lotus India Liquid Fund - IP - Growth 44,788 500 44,788 501 95,846 1,050 95,846 1,051

Lotus India Liquid Fund - IP Plus - Growth - - - - 39,963 430 39,963 430

Lotus India Liquid Fund - Super IP - Growth 120,047 1,360 120,047 1,363 131,110 1,440 131,110 1,441

PRINCIPAL Cash Mgmt Fund LO- I P - Growth 77,965 1,050 77,965 1,051 8,758 110 8,758 110

PRINCIPAL Cash Mgmt Fund LO- Inst Prem. Plan - Growth 285,240 3,730 285,240 3,739 314,170 3,800 314,170 3,803

PRINCIPAL Floating Rate Fund - FMP - IP - Growth 19,526 250 19,526 254 62,486 770 62,486 773

Prudential ICICI Interval Fund II Quarterly Interval Plan - B - - - - 100,000 1,000 100,000 1,021

Prudential ICICI Liquid - I P - Growth - - - - 21,110 400 21,110 401

Prudential ICICI Liquid - Inst Plus - Growth - - - - 43,606 850 43,606 852

Prudential ICICI Liquid – Super IP - Growth - - - - 815,170 9,416 815,170 9,441

Prudential ICICI Monthly Interval Fund - Series 1 - - 47,126 505 47,126 500 - -

Reliance Liquid Fund - TP – IP - Growth 95,991 1,950 95,991 1,956 53,070 1,030 53,070 1,031

Reliance Liquid Plus Fund – IP - Growth - - 22,905 251 146,585 1,562 123,681 1,326

Reliance Liquidity Fund - Growth 1,992,435 24,730 1,992,435 24,761 198,705 2,361 198,705 2,363

Reliance Medium Term Fund - Growth 13,291 240 13,291 241 - - - -

SBI Magnum Insta Cash - Cash Plan - - - - 39,967 700 39,967 701

SBI Magnum Insta Cash Fund - Liquid Floater Plan - Growth - - - - 49,511 660 49,511 660

SBI Premier Liquid Fund - Super IP - Growth 18,411 250 18,411 250 43,591 550 43,591 551

Standard Chartered Liquidity Manager Fund -Growth - - - - 13,889 150 13,889 150

Standard Chartered Liquidity Manager Fund Plus - Growth 429,659 5,050 429,659 5,054 472,939 5,280 472,939 5,283

Tata Fixed Income Portfolio Fund - A3 - - - - 49,607 500 49,607 504

Tata Liquid Fund - HIP - Growth - - - - 207,452 2,670 207,452 2,672

Tata Liquid Fund - RIP - Growth - - - - 5,462 100 5,462 100

Tata Liquid Fund - SHIP - Growth - - - - 225,051 3,210 225,051 3,216

TATA Liquidity Management Fund - Growth - - - - 59,224 650 59,224 651

Templeton India TMA - IP - Growth 84,681 1,080 84,681 1,082 157,603 1,940 157,603 1,942

Templeton India TMA - Super IP - Growth 492,515 6,000 492,515 6,010 276,475 3,180 276,475 3,186

UTI Liquid Fund - Cash Plan - IP - Growth 1,267,544 17,210 1,267,544 17,232 122,293 1,580 122,293 1,585

UTI Liquid Plus Fund - IP - Growth 222,920 2,600 222,920 2,613 - - - -

UTI Money Market – Growth 479,171 11,610 479,171 11,624 52,293 1,130 52,293 1,132

UTI Fixed Income Interval Fund-MIP Series-IP Growth 88,048 1,000 - - - - - -

Grand Total 51,238,591 670,521 50,934,288 667,430 11,661,031 145,806 11,195,969 140,678

b) As at 31st March, 2009 the closing balance in mutual fund units are as follows:

Particulars As at March 31, 2009 As at March 31, 2008

Qty in ‘000 Rs in Mn. Qty in ‘000 Rs in Mn.

Closing Units Closing Value Closing Units Closing Value

Birla Sunlife Cash Plus - I P - Growth - - 14,129 310

Birla Sunlife Cash Plus - Institutional Premium Plan - Growth 132,255 1,860 77,499 1,000

Birla Sunlife Cash Manager - IP - Growth 511,516 7,516 - -

Birla Sunlife Interval Income Fund - Monthly Plan - Series I - - 48,574 500

Birla Sunlife Liquid Plus - IP - Growth - - 65,692 1,000

Birla Sunlife Monthly Interval Fund - Series 2 - - 122,373 1,250

Birla Sunlife Quarterly Interval Fund - Series 8 - - 50,000 500

ICICI Prudential Flexible Income Plan - Growth - - 16,765 250

Kotak QIP Series 21,993 253 - -

LIC MF Liquid Fund - IP - Growth 15,554 250 - -

Prudential ICICI Monthly Interval Fund - Series 1 - - 47,126 500

Reliance Liquid Plus Fund – IP - Growth - - 22,905 250

UTI Fixed Income Interval Fund-MIP Series-IP Growth 88,048 1,000 - -

Total 769,366 10,879 465,063 5,560

During the year ended March 31, 2009 During the year ended March 31, 2008

Qty in Rs. in Qty in Rs. in Qty in Rs. in Qty in Rs. in

Particulars ‘000 Mn. ‘000 Mn. ‘000 Mn. ‘000 Mn.

Units Purchase Units Sale Units Purchase Units Sale

Purchased Value Sold Value Purchased Value Sold Value


46

20 As per the requirement of Section 22 of The Micro, Small and Medium Enterprises Development Act, 2006, following

information are disclosed:

(Rs. Mn.)

Particulars 2008-09 2007-08

a) (i) The principal amount remaining unpaid to any supplier at the end of

accounting year included in sundry creditors. 22.71 3.08

(ii) The interest due on above. Nil Nil

The total of (i) & (ii) 22.71 3.08

b) The amount of interest paid by the buyer in terms of section 16 of the Act. Nil Nil

c) The amount of the payment made to the supplier beyond the appointed day during

the accounting year Nil Nil

d) The amounts of interest accrued and remaining unpaid at the end of financial year Nil Nil

e) The amount of interest due and payable for the period of delay in making payment

(which have been paid but beyond the due date during the year) but without

adding the interest specified under this Act. Nil Nil

21 During the year, under ESOS 2006, 6,131,250 options have been granted as ‘Tranche II’ to the eligible employees as on

24th

July 2008. Each option when exercised would be converted into one equity share of Rs. 10/- each, fully paid up, of the

Company. The options will vest in 4 equal annual installments after one year of the grant. The maximum period of exercise is

5 years from the date of vesting.

The compensation costs of stock options granted to employees have been accounted by the Company using the intrinsic

value method.

Summary of Stock Option

No. of Stock Options

Particulars March 31, 2009 March 31, 2008

Tranche I Tranche II Tranche I

Options Outstanding as on April 1, 2008 19,667,000 – –

Options Granted during the year – 6,131,250 19,931,000

Option forfeited/lapsed during the year 2,391,000 454,750 264,000

Options exercised during the year – – –

Options Outstanding as on March 31, 2009 17,276,000 5,676,500 19,667,000

Personnel Expenditure includes Rs. 144.74 Mn. (Previous Year Rs. 37.59 Mn.) being the amortisation of intrinsic value for the

period ending 31st

March, 2009.

Had the compensation cost for the Company’s stock based compensation plan been determined as per fair value approach

(calculated using Black & Scholes Option Prising Model), the Company’s net income would be lower by Rs. 423.72 Mn.

(Previous Year: Rs. 100.93 Mn) and earnings per share as reported would be lower as indicated below:

(Rs. Mn.)


March 31, 2009 March 31, 2008

Net profit after tax but before exceptional items 10,012.11 10,443.62

Add: Total stock-based employee compensation expense determined

under intrinsic value base method 144.74 37.59

Less: Total stock-based employee compensation expense determined

under fair value base method 568.46 138.52

Adjusted net profit 9,588.39 10,342.69

Basic Earnings Per Share (in Rs.)

- As reported 3.42 3.96

- Adjusted 3.27 3.93

Diluted Earnings Per Share (in Rs.)




47

The fair value of each option is estimated on the date of grant based on the following assumptions:




Dividend yield (%) Nil Nil Nil

Expected life 6 yrs 6 months 6 yrs 6 months 6 yrs 6 months

Risk free interest rate (%) 7.78% 7.50% 7.78%

Volatility (%) 40.00 45.80 40.00

22 As per the transitional provisions given in the notification issued by Ministry of Corporate Affairs dated 31st March 2009, the

company has opted for the option of adjusting the exchange difference on long term foreign currency monetary items to the

cost of the assets acquired out of these foreign currency monetary items. During the year, company has capitalised exchange

difference amounting to Rs. 189.10 Mn. on restatement of long term loans used for acquiring fixed assets. Due to this, profit for

the year is higher by Rs. 186.10 Mn.

23 Details of foreign currency exposures:

a) Hedged by a derivative instrument:

(Amount in Mn.)


Foreign Currency Loan*

Foreign Currency Loan in USD 30.00 30.00

Foreign Currency Loan in JPY 17,727.73 12,630.73

The Equivalent INR of Foreign Currency Loans 7,655.32 5,658.20

*Fully hedged for interest and principal repayments

b) Not hedged by a derivative instrument or otherwise:

(Amount in Mn.)

Particulars As on March 31, 2009 As on March 31, 2008


Foreign Currency Loan in USD 84.00 –

Interest accrued on above in USD 0.55 –

The Equivalent INR of Foreign Currency Loan 4,307.76 –

Sundry Creditors:

Sundry Creditors in USD 63.36 48.78

Sundry Creditors in EURO 0.31 0.42

The Equivalent INR of sundry creditors in Foreign Currency 3,249.24 1976.23

Sundry Debtors:

Sundry Debtors in USD 3.65 4.56

Sundry Debtors in EURO 0.01 0.03

The Equivalent INR of sundry debtors in Foreign Currency 186.64 184.16

Bank Deposits:

Bank Deposits in USD – 6.79

The Equivalent INR of Bank Deposits in Foreign Currency – 271.48


48

24 Employee Benefits:

a) Defined Benefit Plan: The Company provides for its liability towards gratuity as per the actuarial valuation carried by the Life

Insurance Corporation of India (LIC). The present value of the accrued gratuity minus fund value is provided in the books of accounts.

(Rs. Mn.)

Sr. Particulars For the year ended For the year ended

No. March 31, 2009 March 31, 2008

1 Assumptions

Discount Rate 8.00% 8.00%

Salary Escalation 6%-7% 5%-7%

2 Table showing changes in present value of obligations

Present value of obligations as at beginning of year 84.92 81.97

Interest cost 6.79 6.18

Current Service Cost 25.25 16.93

Benefits Paid 11.85 8.65

Actuarial (Gain)/ Loss on obligations 27.58 (11.48)

Present value of obligations as at end of year 132.69 84.92

3 Table showing changes in the fair value of plan assets

Fair value of plan assets at beginning of year 80.33 61.80

Expected return on plan assets 8.04 6.07

Contributions 48.03 21.12

Benefits paid 11.85 8.65

Actuarial Gain/ (Loss) on Plan assets NIL NIL

Fair value of plan assets at the end of year 124.55 80.33

4 Table showing fair value of plan assets

Fair value of plan assets at beginning of year 80.33 61.80

Actual return on plan assets 8.04 6.07

Contributions 48.03 21.12

Benefits Paid (11.85) 8.65

Fair value of plan assets at the end of year 124.55 80.33

Funded status 8.14 (4.60)

Excess of Actual over estimated return on plan assets NIL NIL

(Actual rate of return = Estimated rate of return as ARD falls on March 31)

5 Actuarial Gain/ Loss recognized

Actuarial Gain/ (Loss) for the year -Obligation (27.58) 11.48

Actuarial (Gain)/ Loss for the year - plan assets NIL NIL

Total (Gain)/ Loss for the year 27.58 (11.48)

Actuarial (Gain)/ Loss recognized in the year 27.58 (11.48)

6 The amounts to be recognized in the Balance Sheet and

statements of profit and loss

Present value of obligations as at the end of year 132.69 84.92

Fair value of plan assets as at the end of the year 124.55 80.33

Funded status 8.14 (4.60)

Net Asset/ (Liability) recognized in Balance Sheet (17.55) (23.38)

7 Expenses Recognised in statement of Profit & Loss

Current Service cost 25.25 16.93

Interest Cost 6.79 6.18

Expected return on plan assets (8.04) 6.07

Net Actuarial (Gain)/ Loss recognised in the year 27.58 (11.48)

Expenses recognised in statement of Profit & Loss 51.58 5.55

b) Defined Contribution Plan : During the year, the Company has recognised the following amounts in the Profit and Loss account:

(Rs. Mn)


March 31, 2009 March 31, 2008

Employers’ Contribution to Provident Fund 129.47 97.20

Employers’ Contribution to Superannuation Fund 31.41 25.00


49

25 Segment Reporting

1. Primary Segments:

The Company operates in two business segments:

a) Mobility Services

b) Long Distance (LD)

2. Secondary Segment:

The Company caters only to the needs of Indian market representing a singular economic environment with similar risks

and rewards and hence there are no reportable geographical segments

Primary Business Information (Business Segments) for the year ended March 31, 2009.

(Rs. Mn.)

Particulars Business Segments Elimination Total

Mobility LD

Revenue

External Revenue 98,540.27 30.53 - 98,570.80

Inter-segment Revenue 260.04 7,080.18 (7,340.22) -

Total Revenue 98,800.31 7,110.71 (7,340.22) 98,570.80

Segment result 14,209.32 1,166.56 - 15,375.88

Interest & financing charges (Net) - - - 4,507.24

Profit before Tax - - - 10,868.64

Provision for tax (Net) - - - 856.53

Profit after tax - - - 10,012.11

Other information

Segment assets 142,458.35 6,556.42 (10,190.08) 138,824.69

Unallocated corporate assets - - - 83,548.93

Total assets 142,458.35 6,556.42 (10,190.08) 222,373.62

Segment liabilities 97,797.07 5,389.89 (10,190.08) 92,996.88

Unallocated corporate liabilities - - - 16,432.58

Total liabilities 97,797.07 5,389.89 (10,190.08) 109,429.46

Capital expenditure 47,128.02 878.26 - 48,006.28

Depreciation & amortisation 12,410.98 17.58 - 12,428.56


(Rs. Mn.)


Mobility LD

Revenue

External Revenue 67,199.90 - - 67,199.90

Inter-segment Revenue - 3,536.67 (3,536.67) -

Total Revenue 67,199.90 3,536.67 (3,536.67) 67,199.90

Segment result 13,220.23 724.80 - 13,945.03

Interest & financing charges (Net) - - - 2,776.42

Profit before Tax - - - 11,168.61

Provision for tax (Net) - - - 724.99

Profit after tax - - - 10,443.62

Other information

Segment assets 117,539.17 1,402.16 (1,120.93) 117,820.40

Unallocated corporate assets - - - 9,704.14

Total assets 117,539.17 1,402.16 (1,120.93) 127,524.54

Segment liabilities 91,996.79 520.60 (1,120.93) 91,396.46

Unallocated corporate liabilities - - - 667.82

Total liabilities 91,996.79 520.60 (1,120.93) 92,064.28

Capital expenditure 54,023.05 0.02 - 54,023.07

Depreciation & amortisation 8,766.37 1.25 - 8,767.62


50

26 Related Party Transactions

As per Accounting Standard-18 on “Related Party Disclosure”, related parties of the Company are disclosed below:

A. List of related Parties:

Promoters

Hindalco Industries Limited

Grasim Industries Limited

Aditya Birla Nuvo Limited

Birla TMT Holdings Pvt. Limited

Subsidiaries

Swinder Singh Satara & Co. Limited (SSS & Co)

Aditya Birla Telecom Limited (ABTL)

Idea Cellular Services Limited (ICSL)

Idea Cellular Infrastructure Services Limited (ICISL)

Idea Cellular Towers Infrastructure Limited (ICTIL)

Joint Venture

Spice Communications Limited (SCL) (from 16th

October 2008)

Indus Towers Limited (ITL)

Key Management Personnel

Mr. Sanjeev Aga, MD

Mr. AJS Jhala, CFO (upto 30th

June 2008)

Mr. Akshaya Moondra, CFO (from 1st

July 2008)


51

B. Transactions with Related Parties

(Rs. Mn.)

Nature of Relationship

Promoters Joint Venture SubsidiariesKey

Particulars Hindalco Grasim Aditya ITL SCL ABTL ICSL ICISL ICTIL SSS & Manage-

Industries Industries Birla Nuvo Co. ment

Limited Limited Limited Personnel

Deposit Taken - - - - - 774.38 - - - - -

(-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Remuneration - - - - - - - - - - 63.09

(-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (61.48)

Security Deposit Given - - - 684.69 - - - - - - -

(-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Purchase of Fixed Assets - - - 1.01 - 42.08 - 0.05 - - -

(-) (0.13) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Sale of Fixed Assets - - - 131.37 4.75 30.30 - 28.92 - - -

(-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Investments - - - - - - - - - - -

(-) (-) (-) (-) (-) (-) (0.50) (0.50) (-) (-) (-)

Purchase of Service/ goods 0.12 - 0.33 2,291.15 167.34 29.78 228.02 - - 2.73 -

(-) (-) (-) (-) (-) (-) (51.02) (-) (-) (-) (-)

Sale of Service/ goods 5.36 7.67 0.52 - 95.90 23.60 - - - 116.07 -

(-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Unsecured Loan/ ICD Taken - - - - - 1,000.00 - - - - -

(-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Unsecured Loan/ ICD Repaid - - - - - 1,000.00 - - - - -

(-) (-) (-) (-) (-) (40.00) (-) (-) (-) (-) (-)

Unsecured Loans/ ICD given - - 750.00 4,188.80 - 3,285.88 - 208.90 7.54 52.37 -

(-) (-) (-) (-) (-) (253.03) (37.34) (0.79) (-) (-) (-)

Unsecured Loans/ ICD repaid by - - 750.00 - - 2,500.00 - 19.21 355.38 52.37 -

(-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Interest on Unsecured loans Given - - 7.97 160.30 - - - - - - -

(-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Pass through and reimbursement of - - - 339.15 - - - - - - -

expenses incurred on behalf of (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Pass through and reimbursement of - - - 2,027.90 - - - - - - -

expenses incurred on company’s behalf by (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Advance given - - - - - - - - 355.38 - -

(-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Expense incurred by Company - - - - 24.71 174.23 - 1.34 - 1.01 -

on behalf of (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Expenses incurred on Company’s 0.13 1.49 - - - - - - - - -

behalf by (3.93) (2.00) (0.18) (-) (-) (-) (-) (-) (-) (-) (-)

Rent Paid - - - - - - - - - 2.70 -

(-) (-) (-) (-) (-) (-) (-) (-) (-) (2.70) (-)

(Figures in bracket are for the year ended March 31, 2008)

C. Outstanding as on March 31, 2009

(Rs. Mn.)

Nature of Relationship

Promoters Joint Venture SubsidiariesKey

Particulars Hindalco Grasim Aditya ITL SCL ABTL ICSL ICISL ICTIL SSS & Manage-

Industries Industries Birla Nuvo Co. ment

Limited Limited Limited Personnel

Deposit Taken - - - - - 774.38 - - - - -

(-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Unsecured Loan taken - - - - - - - - - - -

(-) (-) (-) (-) (-) (-) (-) (-) (-) (2.47) (-)

Unsecured Loan/ Advances given - - - 5,275.13 - 1,201.65 - 220.70 7.54 - -

(-) (-) (-) (-) (-) (260.60) (10.77) (0.79) (-) (-) (8.00)

Remuneration Payable - - - - - - - - - - 17.44

(-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (24.20)

Accounts Receivable - - - - 33.38 0.95 - - - 94.17 -

(-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-)

Accounts Payable - - - 1,853.55 - - 13.30 - - - -

(0.08) (-) (-) (-) (-) (-) (22.91) (-) (-) (-) (-)

Corporate Guarantee - - - - 5,246.73 3,635.20 - - - - -

(-) (-) (-) (-) (-) (2,820.00) (-) (-) (-) (-) (-)

(Figures in bracket are as of March 31, 2008)


52

D. Disclosures of amounts at the year end and the maximum amount of loans & advances outstanding during the year

(Rs. Mn.)

Name of the Party Outstanding Maximum Outstanding Maximum

as at Outstanding as at Outstanding

March 31, 2009 during the year March 31, 2008 during the year

2008-09 2007-08

Subsidiary :

Aditya Birla Telecom Limited (ABTL) 1,201.65 3,292.42 260.60 260.60

Idea Cellular Services Limited (ICSL) – 59.02 10.77 26.87

Idea Cellular Infrastructure Services Limited (ICISL) 220.70 2,243.10 0.79 0.79

Idea Cellular Towers Infrastructure Limited (ICTIL) 7.54 362.92 – –

Joint Venture:

Indus Towers Limited 4,595.85 4,595.85 – –

27 The Company has entered into non-cancellable operating leases for periods ranging from 36 months to 240 months. For the

current Year, total minimum lease payments amounting to Rs.1,927.44 Mn. (Previous Year Rs. 263.63 Mn.) are included in the

rental expenditure head.

The future lease payments in respect of the above are as follows.

(Rs. Mn.)

Particulars Not later than Later than one year but Later than five years

one year not later than five years

Minimum Lease payments 2,040.21 5,281.44 1,127.33

(313.24) (1,120.97) (902.12)


28 Basic & Diluted Earnings Per Share


March 31, 2009 March 31, 2008

Nominal value of Equity Shares (Rs.) 10/- 10/-

Profit after Tax (Rs. Mn.) 10,012.11 10,443.62

Profit attributable to equity shareholders (Rs. Mn.) 10,012.11 10,443.62

Weighted average number of equity shares outstanding during the period 2,930,612,054 2,634,896,058

Basic Earnings Per Share (Rs.) 3.42 3.96

Dilutive effect on weighted average number of equityshares

outstanding during the year – 483,044

Weighted average number of diluted equity shares 2,930,612,054 2,635,379,102

Diluted Earnings Per Share (Rs.) 3.42 3.96

29 Deferred Tax

As of March 31, 2009, the Company has deferred tax liability of Rs. 3,736.48 Mn. and deferred tax asset of Rs. 2,311.10 Mn. as under:

(Rs. Mn.)


Deferred Tax Liability:

Depreciation of Fixed Assets 3,525.12 1,588.36

Amortisation of Entry & Licence Fee (Net) 211.36 74.84

Total Deferred Tax Liability 3,736.48 1,663.20

Deferred Tax Asset:

Provision for Doubtful Debts 949.93 837.22

Expenses allowable on payment basis 166.85 64.30

Brought Forward losses 1,124.00 –

Others 70.32 99.83

Total Deferred Tax Asset 2,311.10 1,001.35

Net Deferred Tax Liability 1,425.38 661.85


53

30 During the financial year 2007-08, company had entered into a composite IT outsourcing agreement wherein fixed assets and

services related to IT has been supplied by the vendor. Such fixed assets received have been accounted for as a finance lease.

Correspondingly, such assets are recorded at fair value of these assets at the time of receipt and depreciated on the stated

useful life applicable to similar assets of the company.

As at 31st

March, 2009, an amount of Rs. 939.12 Mn. towards the supply of fixed assets during the year stands outstanding

and will be paid during financial year 2009-10.

31 The movement in the Asset Retirement Obligation is set out as follows:

(Rs. Mn.)


March 31, 2009 March 31, 2008

Opening Balance 473.58 253.26

Additional Provision – 220.32

Utilisation (2.69) –

Closing Balance 470.89 473.58

32 Previous year’s figures have been regrouped / rearranged wherever necessary to conform to the current period grouping.


Sanjeev Aga Tarjani Vakil Biswajit Subramanian

Managing Director Director Director

Akshaya Moondra Pankaj Kapdeo

Chief Financial Officer Company Secretary

Place: Mumbai



54

Cash Flow Statement for the year ended March 31, 2009

(Rupees in Million)


March 31, 2009 March 31, 2008

A) Cash Flow from Operating Activities

Net Profit after tax 10,012.11 10,443.62

Adjustments For

Depreciation 10,967.22 7,568.52

Amortisation of Intangible assets 1,461.34 1,199.10

Interest charge and Forex 8,483.78 4,592.27

Profit on sale of current investment (2,227.48) (431.79)

Provision for Bad & Doubtful Debts/Advances 331.59 244.94

Employee Stock Option Cost 144.74 37.59

Provision for Gratuity, Leave Encashment 169.76 53.53

Provision for Fringe Benefit Tax 93.00 73.69

Provision for Deferred Tax 763.53 651.30

Liability no longer required written back (156.78) (139.73)

Interest received (2,330.36) (849.52)

(Profit) / Loss on sale of fixed assets/ assets disposed off 17.57 8.89

17,717.91 13,008.79

Operating profit before working capital changes 27,730.02 23,452.41

Changes in Current Assets and Current Liabilities

(Increase)/Decrease in Sundry Debtors (1,641.53) (706.10)

(Increase)/Decrease in Inventories (151.14) (97.05)

(Increase)/Decrease in Other Current Assets (46.90) 163.33

(Increase)/Decrease in Loans and Advances (10,173.64) (3,585.68)

Increase /(Decrease) in Current Liabilities 4,221.45 6,223.50

(7,791.76) 1,998.00

Cash generated from operations 19,938.26 25,450.41

Tax paid ( including FBT & TDS ) (1,300.86) (428.20)

Net cash from operating activities 18,637.40 25,022.21

B) Cash Flow from Investing Activities

Purchase of Fixed assets & Intangible assets (including CWIP) (47,744.67) (55,506.36)

Proceeds from sale of Fixed assets 197.23 150.80

Payment for Non Compete Fee (5,439.75) –

Payment for purchase of Shares (22,041.87) (1.00)

Sale/ (Purchase) of Other Investments (3,091.66) (5,128.21)

Interest and Dividend Received 1,567.08 922.93

Net cash from / (used in) investing activities (76,553.64) (59,561.84)


55

Cash Flow Statement for the year ended March 31, 2009

(Rupees in Million)


March 31, 2009 March 31, 2008

C) Cash Flow from Financing Activities

Proceeds from issue of Share Capital 72,944.74 3,187.52

Share Issue Expenses (177.94) –

Proceeds from Long Term Borrowings 7,504.42 20,627.09

Repayment of Long Term Borrowings (3,012.45) (1,480.44)

Proceeds from Short Term Loan 40,952.10 22,120.90

Repayment of Short Term Loan (34,798.00) (18,625.00)

Interest Paid (7,022.89) (4,517.17)

Net cash from / (used in) financing activities 76,389.98 21,312.90

Net increase / (decrease) in cash and cash equivalent 18,473.74 (13,226.73)

Cash and cash equivalent at the beginning 4,970.55 18,197.28

Cash and cash equivalent at the end 23,444.29 4,970.55

Notes to Cash flow Statement for the Year ended 31st March, 2009

1. Cash and cash equivalent includes





23,444.29 4,970.55

2. The above cash flow statement has been prepared under the indirect method as set out in Accounting Standard 3 on Cash

Flow Statement.

3. Previous year’s figures have been rearranged/regrouped wherever necessary.










56

I Registration Details

Registration No. 3 0 9 7 6 State Code 0 4

Balance Sheet Date 3 1 0 3 0 9

Date Month Year

II Capital raised during the year (Amount in Rs. Thousands)

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L 4 6 4 7 3 4 0

III Position of Mobilisation and Deployment of Fund (Amount in Rs. Thousands)

Total Liabilities Total Assets

1 9 4 2 1 6 0 3 0 1 9 4 2 1 6 0 3 0

Source of Funds

Paid up Capital Reserves and Surplus

3 1 0 0 0 9 5 0 8 5 8 1 3 7 1 0

Secured Loans Unsecured Loans

5 5 6 4 9 3 2 0 2 0 1 4 4 3 4 0

Application of Funds

Net Fixed Assets Investments

1 2 5 4 4 7 0 8 0 4 9 2 8 8 0 8 0

Net Current Assets/(Liability) Misc. Expenditure

1 5 4 2 8 0 4 0 N I L

Accumulated Losses

4 0 5 2 8 3 0

IV Performance of Company (Amount in Rs. Thousands)

Turnover Total Expenditure

9 8 7 8 6 5 7 0 8 7 9 1 7 9 3 0

+ - Profit/Loss before tax + - Profit/Loss after tax

� 1 0 8 6 8 6 4 0 � 1 0 0 1 2 1 1 0

(Please tick appropriate box + for profit, - for loss)

Earnings per share in Rs. Dividend Rate

3 . 4 2 0 0

V Generic names of the three principal products/Services of company (as per monetary terms)

Items Code No. N O T A P P L I C A B L E

(ITC Code)

Product T E L E C O M S E R V I C E S

Description


Sanjeev Aga Tarjani Vakil Biswajit Subramanian

Managing Director Director Director



Place: Mumbai


Balance Sheet Abstract and Company’s General Business Profile


57

Auditors’ Report on the Consolidated Financial Statements

To the Board of Directors of


1. We have audited the attached Consolidated Balance Sheet

of Idea Cellular Limited (‘the Company’), its subsidiaries and

joint ventures (collectively referred as “the Group”) as at

March 31, 2009 and also the Consolidated Profit and Loss

account and the Consolidated Cash Flow Statement for the

year ended on that date annexed thereto (all together

referred to as “the consolidated financial statements”). These

financial statements are the responsibility of the Company’s

management and have been prepared by the Management

on the basis of separate financial statements and other

financial information regarding components. Our

responsibility is to express an opinion on these consolidated

financial statements based on our audit.

2. We conducted our audit in accordance with the auditing

standards generally accepted in India. Those Standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial

statements are prepared, in all material respects, in

accordance with an identified financial reporting framework

and are free of material misstatement. An audit includes,

examining on a test basis, evidence supporting the amounts

and disclosures in the financial statements. An audit also

includes assessing the accounting principles used and

significant estimates made by the Management, as well as

evaluating the overall financial statement presentation. We

believe that our audit provides a reasonable basis for our

opinion.

3. We did not audit the financial statements of Spice

Communications Limited, joint venture of the Company and

Indus Towers Limited, joint venture of Aditya Birla Telecom

Limited whose financial statements reflect total assets (net)

of Rs.16,509.54 million as at March 31, 2009, total revenue

of Rs.4,619.84 million and net cash inflow amounting to

Rs.246.43 million for the year ended on that date as

considered in the consolidated financial statements.

These financial statements and other financial information

have been audited by other auditor whose reports have

been furnished to us by the Management of the Group,

and our opinion, is based solely on the reports of the

other auditor.

4. Without qualifying our opinion, we draw attention to Note

B4 of schedule 22 to the financial statements. As explained

in the said note, the difference between the carrying value

of the licenses and consideration, or impairment loss, if

any would be adjusted with the securities premium account.

The impact of the above on the Reserve and Surplus of the

Group is not ascertainable at this stage.

5. We report that the consolidated financial statements have

been prepared by the Company’s Management in

accordance with the requirements of Accounting Standard

21 ‘Consolidated Financial Statements’ and Accounting

Standard (AS) 27, Financial Reporting of interest in Joint

Venture issued by the Institute of Chartered Accountants of

India.

6. Based on our audit and on consideration of reports of other

auditor on separate financial statements and on the other

financial information of the components, and to the best

of our information and explanations given to us, we are of

the opinion that the attached consolidated financial

statements give a true and fair view in conformity with the

accounting principles generally accepted in India:

a) in the case of the Consolidated Balance Sheet, of the

state of affairs of the Group as at March 31, 2009;

b) in case of the Consolidated Profit and Loss Account, of

the profits of the Group for the year ended on that

date; and

c) in the case of the Consolidated Cash Flow Statement,

of the cash flows of the Group for the year ended on

that date.



Hemant M. Joshi

Partner


Place: Mumbai



58

Consolidated Balance Sheet as at March 31, 2009

(Rupees in Million)

As at As at

Schedules March 31, 2009 March 31, 2008

SOURCES OF FUNDS

Shareholders’ Funds

Share Capital 1 31,000.95 26,353.61

Outstanding Employee Stock Options 182.33 37.59

Reserves and Surplus 2 106,713.99 23,134.00

137,897.27 49,525.20

Compulsorily Convertible Preference Shares issued by Subsidiary Company 19.25 –

(Refer note B 7 to schedule 22)

Loan Funds

Secured 3 65,452.04 53,158.59

Unsecured 4 23,670.32 11,995.44

89,122.36 65,154.03

Net Deferred Tax Liabilities 1,425.38 661.85

Less: Net Deferred Tax Assets (295.47) (0.83)

Deferred Tax Liability (Net) (Refer note B 25 to schedule 22) 1,129.91 661.02

TOTAL 228,168.79 115,340.25

APPLICATION OF FUNDS

Fixed Assets

Gross Block (At Cost) 5 205,234.23 132,164.24

Less: Depreciation and Amortisation 59,970.79 42,218.89

Net Block 145,263.44 89,945.35

Capital Work-in-Progress 21,408.63 17,217.42

166,672.07 107,162.77

Goodwill on Consolidation 22,457.37 61.20

Investments 6 20,451.89 5,560.00

Current Assets, Loans and Advances

Current Assets

Inventories 7 521.26 276.15

Sundry Debtors 8 3,617.91 1,985.93

Cash and Bank Balances 9 30,863.96 4,974.51

Other Current Assets 10 1,861.42 520.76

Loans and Advances 11 16,820.64 7,742.16

53,685.19 15,499.51

Less: Current Liabilities and Provisions 12

Current Liabilities 38,636.76 26,203.11

Provisions 1,724.37 819.31

40,361.13 27,022.42

Net Current Assets 13,324.06 (11,522.91)

Profit and Loss Account 5,263.40 14,079.19

TOTAL 228,168.79 115,340.25


The Schedules referred to above form an integral part of Balance Sheet










59

Consolidated Profit and Loss Account for the year ended March 31, 2009

(Rupees in Million)

Schedules For the For the


March 31, 2009 March 31, 2008

INCOME

Service Revenue 101,169.13 67,199.83

Sale of Trading Goods 143.72 0.07

Other Income 13 230.94 174.56

TOTAL 101,543.79 67,374.46

OPERATING EXPENDITURE

Cost of Trading Goods Sold 14 147.90 0.06

Personnel Expenditure 15 5,245.00 3,463.57

Network Operating Expenditure 16 21,078.31 10,470.11

Licence and WPC Charges 17 11,239.32 6,851.03

Roaming & Access Charges 18 18,442.09 11,334.41

Subscriber Acquisition & Servicing Expenditure 19 8,270.69 6,424.23

Advertisement and Business Promotion Expenditure 4,572.77 3,224.86

Administration & other Expenses 20 4,183.26 2,913.58

73,179.34 44,681.85

PROFIT BEFORE FINANCE CHARGES, DEPRECIATION, AMORTISATION & TAX 28,364.45 22,692.61

Finance and Treasury Charges (Net) 21 4,945.22 2,776.20

Depreciation 5 A 12,472.70 7,569.01

Amortisation of Intangible Assets 5 B 1,555.23 1,199.10

Non Compete Fee (Refer note B 5 to Schedule 22) 5,439.75

Less: Amount Withdrawn from Securities Premium


PROFIT BEFORE TAX 9,391.30 11,148.30

Provision for taxation - Current 1,273.29 425.93

- Deferred 468.97 650.47

- Fringe Benefit tax 102.24 74.13

- MAT Credit (1,268.99) (425.33)

PROFIT AFTER TAX 8,815.79 10,423.10

Balance of Loss brought forward from previous year (14,079.19) (24,502.29)

BALANCE OF LOSS CARRIED FORWARD TO BALANCE SHEET (5,263.40) (14,079.19)

EARNINGS PER SHARE (in Rupees) (Refer Note B 24 to schedule 22)

Basic 3.01 3.96

Diluted 3.01 3.96


The Schedules referred to above form an integral part of Profit & Loss Account










60

Schedules forming part of the Consolidated Accounts

(Rupees in Million)

As at As at

March 31, 2009 March 31, 2008

SCHEDULE 1

SHARE CAPITAL

AUTHORISED

6,775,000,000 (Previous year 4,275,000,000) Equity Shares of Rs.10 each 67,750.00 42,750.00

1500 (Previous year 1500) Redeemable Cumulative Non Convertible Preference Shares 15,000.00 15,000.00

of Rs.10 Mn. each

82,750.00 57,750.00

ISSUED, SUBSCRIBED and PAID-UP

Equity Share Capital

3,100,095,209 (Previous year 2,635,360,539) Equity Shares of Rs. 10 each fully paid up 31,000.95 26,353.61

31,000.95 26,353.61

SCHEDULE 2

RESERVES AND SURPLUS

Amalgamation Reserve 643.57 643.57

Capital Reserve 1,414.56 1,414.56

Security Premium Account

Opening Balance 21,075.87 18,313.36

Add: Premium on issue of shares under GSO – 2,762.51

Add: Premium on issue of Preferential allotment (Refer note B 1(b) to Schedule 22) 68,297.40 –

Add: Premium on issue of Compulsorily Convertible Preference Shares by Subsidiary

(Refer note B 7 to Schedule 22) 20,963.25 –

Less: Share Issue Expenses (240.91) –

Less: Withdrawals (Refer note B 5 to Schedule 22) (5,439.75) –

104,655.86 21,075.87

106,713.99 23,134.00

SCHEDULE 3

SECURED LOANS

Term Loan


-From Banks 5,315.11 4,268.04

-From Financial Institutions 5,095.00 –

Rupee Loan

-From Banks 43,311.95 41,480.20

-From Financial Institutions 7,402.76 7,099.70

(Repayable within one year Rs. 4,275.59 Mn, Previous year Rs. 1,425.20 Mn)

Vehicle Loan (Repayable within one year Rs.148.70 Mn., Previous year Rs. 104.83 Mn) 362.68 310.65

Finance Lease Liability 2,034.65 –

Vendor Finance (Repayable within one year Rs. 865.34 Mn., Previous year Rs.Nil) 1,929.89 –

65,452.04 53,158.59

SCHEDULE 4

UNSECURED LOANS

Term Loan


- From Banks 3,386.98 1,390.16

Rupee Loan

- From Others 1,757.36 1,757.36

Short Term Loan

Rupee Loan from Banks 2,963.47 8,845.90

Others 15,073.09 2.02

Vendor Finance 489.42 –

23,670.32 11,995.44


61

Sch

ed

ule

s fo

rm

in

g p

art o

f th

e C

on

so

lid

ate

d A

cco

un

ts

SC

HE

DU

LE

5

- F

IX

ED

A

SS

ET

S

A. TA

NG

IB

LE

A

SS

ET

S(R

up

ee

s in

M

illio

n)

Gro

ss B

lock

De

pre

cia

tio

nN

et B

lock

Pa

rtic

ula

rs

As a

tA

dd

itio

ns

Ad

dit

ion

sS

ale

/A

s a

tA

s a

tA

dd

itio

ns

A

dd

itio

ns

Sa

le

/A

s a

tA

s a

tA

s a

t

Ap

r 1

, 2

00

8o

n a

cco

un

td

urin

g th

e Y

ea

rA

dju

stm

en

tM

ar 3

1,

20

09

Ap

r 1

, 2

00

8 o

n a

cco

un

td

urin

g th

e Y

ea

rA

dju

stm

en

tM

ar 3

1,

20

09

Ma

r 3

1,

20

09

Ma

r 3

1,

20

08

of JV

du

rin

g th

e Y

ea

ro

f JV

du

rin

g th

e Y

ea

r

La

nd

77

.7

60

.3

11

4.2

0-

92

.2

7-

--

--

92

.2

77

7.7

6

Le

ase

ho

ld La

nd

21

0.2

70

.0

94

8.9

53

.8

22

55

.4

96

7.9

40

.0

11

4.7

63

.5

77

9.1

41

76

.3

51

42

.3

3

Bu

ild

ing

58

4.4

91

79

.1

38

1.6

52

.5

28

42

.7

51

66

.4

63

0.7

13

7.2

72

.4

82

31

.9

66

10

.7

94

18

.0

3

Pla

nt &

M

ach

ine

ry

10

7,3

41

.5

38

,3

29

.5

16

0,5

12

.5

92

,0

93

.0

91

74

,0

90

.5

42

9,9

25

.7

23

,1

18

.0

61

2,0

75

.6

02

,0

25

.6

54

3,0

93

.7

31

30

,9

96

.8

17

7,4

15

.8

1

Fu

rn

itu

re

&

F

ixtu

re

75

1.2

95

1.5

72

82

.5

11

.6

51

,0

83

.7

23

97

.2

94

4.1

89

5.9

31

.1

45

36

.2

65

47

.4

63

54

.0

0

Offic

e E

qu

ipm

en

t6

52

.4

94

30

.8

21

61

.6

81

5.2

41

,2

29

.7

54

93

.6

54

00

.6

39

1.7

91

1.6

09

74

.4

72

55

.2

81

58

.8

4

Ve

hic

les

52

6.3

03

.0

12

70

.2

68

1.4

47

18

.1

31

91

.3

01

.7

01

61

.8

03

4.1

73

20

.6

33

97

.5

03

35

.0

0

Su

b-To

ta

l1

10

,1

44

.1

38

,9

94

.4

46

1,3

71

.8

42

,1

97

.7

61

78

,3

12

.6

53

1,2

42

.3

63

,5

95

.2

91

2,4

77

.1

52

,0

78

.6

14

5,2

36

.1

91

33

,0

76

.4

67

8,9

01

.7

7

Le

ss :

Pre

-o

pe

ra

tiv

e

Ch

arg

e C

ap

ita

lise

d4

.4

5

To

ta

l Ta

ng

ible

A

sse

ts

11

0,1

44

.1

38

,9

94

.4

46

1,3

71

.8

42

,1

97

.7

61

78

,3

12

.6

53

1,2

42

.3

63

,5

95

.2

91

2,4

72

.7

02

,0

78

.6

14

5,2

36

.1

91

33

,0

76

.4

67

8,9

01

.7

7

Pre

vio

us Y

ea

r7

0,4

76

.4

1-

42

,4

55

.4

72

,7

87

.7

51

10

,1

44

.1

32

6,3

06

.2

4-

7,5

71

.8

82

,6

35

.7

63

1,2

42

.3

67

8,9

01

.7

7

No

te

s:

1.

Pla

nt &

M

ach

ine

ry in

clu

de

s a

sse

ts h

eld

fo

r d

isp

osa

l- G

ro

ss B

lock R

s.

78

3.2

3 M

n.

(P

revio

us ye

ar R

s.

1,9

88

.03

M

n.)

a

nd

N

et B

lock N

il (P

re

vio

us ye

ar R

s.

45

.00

M

n.)

2.

Pla

nt &

M

ach

ine

ry in

clu

de

s G

ro

ss B

lock o

f a

sse

ts ca

pit

alise

d u

nd

er fin

an

ce

le

ase

R

s.

43

38

.62

M

n.

(P

re

vio

us Y

ea

r R

s.9

75

.01

M

n) a

nd

co

rre

sp

on

din

g A

ccu

mu

late

d D

ep

re

cia

tio

n b

ein

g

Rs.

95

0.5

5 M

n.

(P

re

vio

us Ye

ar R

s.

13

4.4

3 M

n )

B. IN

TA

NG

IB

LE

A

SS

ET

S(R

up

ee

s in

M

illio

n)

Gro

ss B

lock

Am

ortis

atio

nN

et B

lock

Pa

rtic

ula

rs

As a

tA

dd

itio

ns

Ad

dit

ion

sS

ale

/A

s a

tA

s a

tA

dd

itio

ns

A

dd

itio

ns

Sa

le

/A

s a

tA

s a

tA

s a

t

Ap

r 1

, 2

00

8o

n a

cco

un

td

urin

g th

e Y

ea

rA

dju

stm

en

tM

ar 3

1,

20

09

Ap

r 1

, 2

00

8 o

n a

cco

un

td

urin

g th

e Y

ea

rA

dju

stm

en

tM

ar 3

1,

20

09

Ma

r 3

1,

20

09

Ma

r 3

1,

20

08

of JV

du

rin

g th

e Y

ea

ro

f JV

du

rin

g th

e Y

ea

r

En

try/

Lic

en

se

F

ee

s2

0,8

06

.7

23

,1

18

.9

6-

-2

3,9

25

.68

10

,2

49

.6

61

,8

72

.8

41

,1

40

.0

0-

13

,2

62

.50

10

,6

63

.18

10

,55

7.0

6

Co

mp

ute

r - S

oftw

are

1,1

22

.4

43

60

.8

36

56

.6

03

.2

82

,1

36

.59

71

6.6

63

33

.4

23

68

.7

83

.4

81

,4

15

.38

72

1.2

14

05

.78

Ba

nd

wid

th

90

.95

-7

68

.36

-8

59

.31

10

.2

1-

46

.5

1-

56

.72

80

2.5

98

0.7

4

Su

b-T

ota

l2

2,0

20

.11

3,4

79

.79

1,4

24

.96

3.2

82

6,9

21

.58

10

,9

76

.53

2,2

06

.26

1,5

55

.29

3.4

81

4,7

34

.60

12

,1

86

.98

11

,0

43

.58

Le

ss :

Pre

-op

era

tiv

e

Ch

arg

e C

ap

ita

lise

d0

.06

To

ta

l In

ta

ng

ible

A

sse

ts2

2,0

20

.11

3,4

79

.79

1,4

24

.96

3.2

82

6,9

21

.58

10

,9

76

.53

2,2

06

.26

1,5

55

.23

3.4

81

4,7

34

.60

12

,1

86

.98

11

,04

3.5

8

Pre

vio

us Y

ea

r1

4,8

10

.56

-7

,2

35

.60

26

.05

22

,0

20

.11

9,7

95

.79

-1

,1

99

.10

18

.36

10

,9

76

.53

11

,0

43

.58

Gra

nd

To

ta

l1

32

,1

64

.24

12

,4

74

.23

62

,7

96

.80

2,2

01

.04

20

5,2

34

.23

42

,2

18

.89

5,8

01

.55

14

,0

27

.93

2,0

82

.09

59

,9

70

.79

14

5,2

63

.44

No

te

s:

1.

Co

mp

ute

r - S

oftw

are

in

clu

de

G

ro

ss B

lock o

f a

sse

ts ca

pit

alise

d u

nd

er fin

an

ce

le

ase

R

s.

27

0.3

2 M

n.

(P

re

vio

us Y

ea

r R

s.3

8.2

8 M

n ) a

nd

co

rre

sp

on

din

g A

ccu

mu

late

d D

ep

re

cia

tio

n b

ein

g R

s.

89

.69

M

n.

(P

re

vio

us Y

ea

r R

s.4

.88

M

n )

2.

Th

e re

ma

inin

g a

mo

rtis

atio

n p

erio

d o

f lice

nse

fe

es a

s a

t M

arch

3

1,

20

09

ran

ge

s b

etw

ee

n 7

to

1

9 ye

ars b

ase

d o

n th

e re

sp

ectiv

e Te

leco

m S

ervic

e Lic

en

se

p

erio

d


62

(Rupees in Million)

As at As at

March 31, 2009 March 31, 2008

SCHEDULE 6

INVESTMENTS

Unquoted

Share in investment of Spice in Subsidiary Company (Refer note B 14 to Schedule 22) 0.21 –

Units of Mutual Funds (Current) (Refer note B 13 to schedule 22) 20,451.68 5,560.00

(Includes unutilised Initial Public Offer proceed of Rs. Nil, Previous Year Rs. 4,885.90 Mn)

20,451.89 5,560.00

SCHEDULE 7

INVENTORIES

(At lower of cost or estimated realisable value)

Trading Goods 46.65 0.45

Sim Cards and Others 474.61 275.70

521.26 276.15

SCHEDULE 8

SUNDRY DEBTORS

Debts outstanding for over six months

Unsecured - Considered good 87.66 95.31

- Considered doubtful 2,744.18 2,356.33

2,831.84 2,451.64

Other Debts

Unsecured - Considered good 3,530.23 1,890.62


3,699.43 1,997.42

Less: Provision for doubtful debts 2,913.36 2,463.13

Total 3,617.91 1,985.93

Sundry Debtors include certain parties from whom Security Deposits of Rs. 246.51 Mn

(Previous Year Rs. 225.77 Mn) have been taken and are lying with the Company

SCHEDULE 9

CASH AND BANK BALANCES





Balances with Other Banks

- in Deposit Accounts 0.41 –

[Includes unutilised Initial Public Offer proceeds of Rs. 127.54 Mn.,

(Previous year 3,150.00 Mn) and Rs.111.93 Mn.

(Previous year Rs. 71.90 Mn) as margin money]

30,863.96 4,974.51



63


(Rupees in Million)

As at As at

March 31, 2009 March 31, 2008

SCHEDULE 10

OTHER CURRENT ASSETS

Unbilled Revenue 1,057.59 476.82

Interest Receivable on Deposits 803.83 43.94

1,861.42 520.76

SCHEDULE 11

LOANS AND ADVANCES

(Unsecured, considered good unless otherwise stated)

Advances recoverable in cash or kind or for value to be received

- Considered good 7,349.90 6,295.25


Less: Provision for doubtful advances 96.29 90.75

7,349.90 6,295.25

Deposits with Body Corporates 5,474.28 -

Deposits and Balances with Govt. Authorities 892.97 242.50

Deposit with others 1,001.58 620.56

Advance Income Tax (Net of provision of Rs. 1,274.77 Mn., Previous year Rs. 425.33 Mn) 407.59 158.52

MAT Credit Entitlement 1,694.32 425.33

16,820.64 7,742.16

SCHEDULE 12

CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES

Sundry Creditors 25,965.24 17,598.80

Book Bank Overdraft 1,264.72 2,272.97

Advances from Customers 5,763.79 4,054.32

Deposits from Customers and Others 1,496.59 1,268.38

Other Liabilities 2,115.82 915.93

Interest accrued but not due 2,030.60 92.71

38,636.76 26,203.11

Provisions

Gratuity (Refer note B 18 to schedule 22) 34.38 23.38

Leave Encashment 510.39 316.09

Asset Retirement Obligation (Refer note B 27 to schedule 22) 1,173.05 473.58

Provision for Fringe Benefit Tax

(Net of Advance Tax of Rs. 104.15 Mn, Previous year Rs. 174.72 Mn.) 6.55 6.26

1,724.37 819.31

40,361.13 27,022.42


64


(Rupees in Million)


March 31, 2009 March 31, 2008

SCHEDULE 13

OTHER INCOME

Liabilities/Provisions no longer required written back 160.31 139.73

Miscellaneous Receipts 70.63 34.83

230.94 174.56

SCHEDULE 14

COST OF TRADING GOODS SOLD

Opening Stock 0.45 0.45

Add: Opening Stock on acquisition of JV 0.78 –

Add: Purchases 193.32 0.06

Less: Consumption – –

Closing Stock 46.65 0.45

147.90 0.06

SCHEDULE 15

PERSONNEL EXPENDITURE

Salaries and Allowances etc. 4,666.07 3,060.62

Contribution to Provident and Other Funds 246.68 150.40

Staff Welfare 212.31 158.66

Recruitment and Training 119.94 93.89

5,245.00 3,463.57

SCHEDULE 16

NETWORK OPERATING EXPENDITURE

Security Service Charges 1,028.07 777.67

Power and Fuel 5,557.40 2,244.04

Repairs and Maintenance - Plant and Machinery 3,089.41 1,330.33

Switching & Cellsites Rent 2,758.17 829.70

Lease Line and Connectivity Charges 3,633.72 2,269.05

Network Insurance 44.33 26.50

Passive Infrastructure Charges 4,648.73 –

Other Network Operating expenses 318.48 2,992.82

21,078.31 10,470.11

SCHEDULE 17

LICENCE AND WPC CHARGES

Licence Fees 7,435.76 4,150.85

WPC and Spectrum Charges 3,803.56 2,700.18

11,239.32 6,851.03

SCHEDULE 18

ROAMING & ACCESS CHARGES

Roaming Charges 813.53 1,017.89

Access Charges 17,628.56 10,316.52

18,442.09 11,334.41


65


(Rupees in Million)


March 31, 2009 March 31, 2008

SCHEDULE 19

SUBSCRIBER ACQUISITION & SERVICING EXPENDITURE

Cost of Sim and Other Cards 993.37 532.97

Commission and Discount to dealers & recharge expenses 4,268.10 4,516.29

Customer Verification Expenses 375.97 192.86

Collection & Telecalling Expenses 2,551.93 1,121.32

Customer Retention & Customer loyalty Expenses 81.32 60.79

8,270.69 6,424.23

SCHEDULE 20

ADMINISTRATION & OTHER EXPENSES

Repairs and Maintenance – Building 20.65 17.22

– Others 1,267.41 961.80

Other Insurance 37.10 21.02

Non Network Rent 512.43 339.68

Rates and Taxes 69.92 93.60

Electricity 191.84 110.50

Printing and Stationery 94.11 62.98

Communication Expenses 159.33 124.34

Traveling and Conveyance 521.60 414.25

Provision for bad and doubtful debts / advances 357.50 244.94

Bank Charges 125.50 97.35

Directors Sitting Fees 1.23 0.91

Legal and Professional Charges 323.08 176.98

Audit Fees 29.31 22.33

Loss on Sale of Fixed Assets/Asset disposed off 15.12 8.89

Miscellaneous expenses 457.13 216.79

4,183.26 2,913.58

SCHEDULE 21

FINANCE AND TREASURY CHARGES (NET)

Interest (Net of Rs. 243.83 Mn. capitalised, previous year Rs. 147.47 Mn.)

– On Fixed Period Loan 8,592.00 4,348.77

– Others 221.89 32.58

Financing Charges 398.03 211.02

9,211.92 4,592.37

Less:

Interest Received (Gross of Tax) 2,251.50 849.62

Profit on Sale of Current Investments 2,680.89 432.01

Gain / (Loss) on foreign exchange fluctuation (Refer note B 16 to schedule 22) (665.69) 534.54

4,945.22 2,776.20


66

SCHEDULE 22

A. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Preparation of Financial Statements:

The Consolidated Financial Statements of Idea Cellular

Limited (“the Company”), its subsidiary companies and Joint

Ventures (together referred to as the “Group”) have been

prepared in accordance with Accounting Standard 21 on

“Consolidated Financial Statements” and Accounting

Standard 27 on “Financial Reporting of Interests in Joint

Ventures” issued by the Institute of Chartered Accountants

of India (“ICAI”). The Consolidated Financial Statements

are prepared under historical cost convention on accrual

basis. The mandatory applicable accounting standards have

been followed in preparation of these financial statements.

2. Principles of Consolidation:

The basis of preparation of the Consolidated Financial

Statements is as follows:

The Financial Statements (The Balance Sheet and the Profit

and Loss Account) of the Company, its subsidiaries and

joint venture have been combined on a line-by-line basis

by adding together the book values of like items of assets,

liabilities, income and expenses, after eliminating intra-

group balances, transactions and the resulting unrealised

profit or losses.

The Financial Statements of the subsidiaries used in the

consolidation are drawn upto March 31, 2009, the same

reporting date as that of the Company

The differential with respect to the cost of investments in

the subsidiaries over the Company’s portion of equity is

recognised as Goodwill or Capital Reserve, as the case may

be.

The Consolidated Financial Statements are prepared using

uniform accounting policies for like transactions and other

events in similar circumstances except where stated

otherwise.

The list of subsidiaries, which are included in this

Consolidated Financial Statements along with Company’s

holding therein, is as under:

Voting Power % as at

No. Name of the Company

March 31, March 31,

2009 2008

1 Swinder Singh Satara and

Co. Limited 100.00 100.00

2 Aditya Birla Telecom Limited 100.00 100.00

3 Idea Cellular Services Limited 100.00 100.00

4 Idea Cellular Infrastructure

Services Limited 100.00 100.00

5 Idea Cellular Towers

Infrastructure Limited 100.00* 100.00

All the above subsidiaries are incorporated in India.


The Joint Venture, which is included in this Consolidated

Financial Statements along with Company’s holding therein,

is as under:

Voting Power % as at

No. Name of the CompanyMarch 31, March 31,

2009 2008

1 Indus Towers Limited 16.00* 16.00

2 Spice Communications Limited 41.09 –

* entire shareholding is held by Aditya Birla Telecom Limited

3. Fixed Assets:

Fixed assets are stated at cost of acquisition and installation

less accumulated depreciation. Cost is inclusive of freight,

duties, levies and any directly attributable cost of bringing

the assets to their working condition for intended use.

Asset retirement obligations are capitalised based on a

constructive obligation as a result of past events, when it

is probable that an outflow of resources will be required to

settle the obligation and a reliable estimate of the amount

can be made. Such costs are depreciated over the

remaining useful life of the asset.

4. Expenditure during pre-operative period of licence:

Expenses incurred on project and other charges during

construction period are included under pre-operative

expenditure (grouped under capital work in progress) and

are allocated to the cost of fixed assets on the

commencement of commercial operations.

5. Depreciation and amortisation:

Depreciation on fixed assets is provided on straight line

method (except stated otherwise) on the prorata basis of

estimated useful economic lives as given below:-

Tangible Assets Years

Buildings 9 to 30

Network Equipments 10 to 20

Optical Fibre 15

Other Plant and Machineries 3 to 5

Office Equipment 3 to 9

Computers 3 to 5

Furniture and Fixtures 3 to 10

Motor Vehicles Upto 5

Leasehold improvements Period of lease

Intangible Assets:

i) Cost of Rights and Licences including the fees paid on

fixed basis prior to revenue share regime is amortised

on commencement of operations over the period of

license.

ii) Software, which is not an integral part of hardware, is

treated as intangible asset and is amortised over their

useful economic lives as estimated by the management

between 3 to 5 years.


67

iii) Bandwidth / Fibre taken on Indefeasible Right of Use

(IRU) is amortised over the agreement period.

Assets costing upto Rs. 5,000/- are depreciated fully

in the month of purchase.

6. Inventories:

Inventories are valued at cost or net realisable value,

whichever is lower. Cost is determined on weighted average

basis.

7. Foreign currency transactions:

Transactions in foreign currency are recorded at the

exchange rates prevailing at the dates of the transactions.

As per the transitional provisions given in the notification

issued by Ministry of Corporate Affairs dated 31st

March

2009, the company has opted for the option of adjusting

the exchange difference on long term foreign currency

monetary items to the cost of the assets acquired out of

these foreign currency monetary items. The company has

aligned its accounting policy based on this notification.

Exchange difference arising out of fluctuation in exchange

rates on settlement / period end is accounted based on

the nature of transaction as under:

1) Short term foreign currency monetary assets and

liabilities: recognised in the Profit and Loss account.

2) Long term foreign currency monetary liabilities used

for acquisition of fixed assets: adjusted to the cost of

the fixed assets and amortised over the remaining

useful life of the asset.

3) Other Long term foreign currency monetary liabilities:

recognised in “Foreign Currency Monetary Item

Translation Difference Account” and amortised over

the period of liability not exceeding 31st

March 2011.

8. Taxation:

a) Current Tax: Provision for current income tax is made

on the taxable income using the applicable tax rates

and tax laws.

b) Deferred Tax: Deferred tax arising on account of

timing differences and which are capable of reversal

in one or more subsequent periods is recognised using

the tax rates and tax laws that have been enacted or

substantively enacted. Deferred tax assets are not

recognised unless there is virtual certainty with respect

to the reversal of the same in future years.

c) Minimum Alternative Tax (MAT) credit: is recognised

as an asset only when and to the extent there is

convincing evidence that the Company will pay normal

income tax during the specified period. In the year in

which the MAT credit becomes eligible to be

recognized as an asset in accordance with the

recommendations contained in Guidance Note issued

by the ICAI, the said asset is created by way of a credit

to the Profit and Loss account and shown as MAT Credit

Entitlement. The Company reviews the same at each

balance sheet date and writes down the carrying

amount of MAT Credit Entitlement to the extent there

is no longer convincing evidence to the effect that

Company will pay normal Income Tax during the

specified period.

9. Retirement Benefits:

Contributions to Provident and pension funds are funded

with the appropriate authorities and charged to the profit

and loss account.

Contributions to superannuation are funded with the Life

Insurance Corporation of India and charged to the profit

and loss account.

Liability for gratuity as at the period end is provided on

the basis of actuarial valuation and funded with Life

Insurance Corporation of India.

Provision in accounts for leave benefits to employees is

based on actuarial valuation done by projected accrued

benefit method at the period end.

10. Revenue Recognition and Receivables:

Revenue on account of mobile telephony services and sale

of handsets and related accessories is recognised net of

rebates, discount, service tax, etc. on rendering of services

and supply of goods respectively. Recharge fees on

recharge vouchers is recognised as revenue as and when

the recharge voucher is activated by the subscriber.

Unbilled receivables, represent revenues recognised from

the bill cycle date to the end of each month. These are

billed in subsequent periods as per the terms of the billing

plans.

Debts (net of security deposits outstanding there against)

due from subscribers, which remain unpaid for more than

90 days from the date of bill and/or other debts which are

otherwise considered doubtful, are provided for.

Provision for doubtful debts on account of Interconnect

Usage Charges (IUC), Roaming Charges and passive

infrastructure sharing from other telecom operators is made

for dues outstanding more than 180 days from the date of

billing other than cases when an amount is payable to

that operator or in specific case when management is of

the view that the amount is recoverable.

11. Investments:

Current Investments are stated at lower of cost or fair value

in respect of each separate investment.

Long-term investments are stated at cost less provision for

diminution in value other than temporary, if any.

12. Borrowing Cost:

Interest and other costs incurred in connection with the

borrowing of the funds are charged to revenue on accrual

basis except those borrowing costs which are directly

attributable to the acquisition or construction of those fixed

assets, which necessarily take a substantial period of time


68

to get ready for their intended use. Such costs are

capitalized with the fixed assets.

13. Licence Fees – Revenue Share:

With effect from 1st August, 1999 the variable Licence fee

computed at prescribed rates of revenue share is being

charged to the profit and loss account in the Period in

which the related revenue arises. Revenue for this purpose

comprises adjusted gross revenue as per the license

agreement of the license area to which the license pertains.

14. Use of Estimate:

The preparation of financial statements in conformity with

generally accepted accounting principles requires estimates

and assumptions to be made that affect the reported

amounts of assets and liabilities and disclosure of

contingent liabilities on the date of the financial statements

and the reported amounts of revenues and expenses during

the reporting year. Differences between actual results and

estimates are recognised in the periods in which the results

are known / materialise.

15. Leases:

a) Operating: Lease of assets under which significant

risks and rewards of ownership are effectively retained

by the lessor are classified as operating leases. Lease

payments under an operating lease are recognised as

expense in the profit and loss account, on a straight-

line or other systematic basis over the lease term.

b) Finance: Leased assets acquired on which significant

risk and reward of ownership effectively transferred

to the Company are capitalised at lower of fair value

or the amounts paid under such lease arrangements.

Such assets are amortised over the period of lease or

estimated life of such assets whichever is less.

16. Earnings Per Share:

The earnings considered in ascertaining the Group’s EPS

comprises the net profit after tax, after reducing dividend

on Cumulative Preference Shares for the Period (irrespective

of whether declared, paid or not), as per Accounting

Standard 20 on “Earning Per Share” issued by the Institute

of Chartered Accountants of India. The number of shares

used in computing basic EPS is the weighted average

number of shares outstanding during the Period. The

diluted EPS is calculated on the same basis as basic EPS,

after adjusting for the effects of potential dilutive equity

shares unless the effect of the potential dilutive equity

shares is anti-dilutive.

17. Impairment of Assets:

Assets are reviewed for impairment whenever events or

changes in circumstances indicate that the carrying amount

may not be recoverable. An impairment loss is recognized

in accordance for AS-28 “Impairment of Assets”, for the

amount by which the asset’s carrying amount exceeds its

recoverable amount as on the carrying date. The

recoverable amount is higher of the asset’s fair value less

costs to sell vis-à-vis value in use. For the purpose of

impairment, assets are grouped at the lowest levels for

which there are separately identifiable cash flows.

18. Contingent Liability:

Provisions are recognized when the Company has a present

obligation as a result of past events; it is more likely than

not that an outflow of resources will be required to settle

the obligation; and the amount has been reliably estimated.

Disclosures for contingent liabilities are considered to the

extent of notices / demands received by the Company.

19. Issue Expenditure:

Expenses incurred in connection with issue of equity shares

are adjusted against share premium.

20. Employee Stock Option:

In respect of stock option granted pursuant to the

company’s Employee Stock Option Scheme, the intrinsic

value of the option is treated as discount and accounted

as employee compensation cost over the vesting period.


69


SCHEDULE 22

B. NOTES TO ACCOUNTS

1 Equity Share Capital

a) Increase in Authorised Equity Share Capital: At the Annual General Meeting held on 29th

September, 2008, members of

the company passed a resolution to increase Authorised Equity Share Capital by Rs. 25,000.00 Mn. to Rs. 67,750.00 Mn.

b) Preferential Allotment

At the Extra-ordinary General Meeting (EGM) held on 30th

July 2008, members passed a resolution to issue on a preferential

basis to TMI Mauritius Limited, 464,734,670 Equity Shares of face value of Rs. 10/- each for cash at a premium of Rs.

146.96 per Equity Share, aggregating to Rs. 72,945 Mn. Accordingly, 413,094,098 and 51,640,572 shares were allotted

on 12th

August 2008 and 13th

August 2008 respectively. The objects of the issue was towards augmentation of the long

term resources of the Company in meeting the fund requirements for growth plans, to supplement working capital

resources and for general corporate purposes.

During the year ended 31st

March 2009, Rs. 62,230 Mn. has been utilised towards the specified objects of the issue.

The unutilized balance of Rs. 10,715 Mn. as on 31st

March 2009 is lying in deposits with banks and mutual funds.

2 The status of utilisation of IPO proceeds and Green Shoe amount up to 31st

March 2009 is as under:

(Rs. Mn.)

Activity To be financed Utilisation up to Utilisation from

through the 31st March 2008 April 2008 to

issue proceeds March 2009

Building strengthening and expanding network and related

services in the New Circles 9,708.00 8,121.98 979.57#

Capital expenditure for NLD operations 808.00 – 7.62#

Roll out for services in Mumbai Circle 6,470.00 828.12 1,415.12#

Redemption of Preference Shares 7,563.26 7,563.26 –

Issue Expenses 620.04 620.04 –

General Corporate purpose ** 3,018.20 3,018.20 5,633.59#

Total 28,187.50 20,151.60 8,035.90

# At the EGM held on 30th July 2008, members approved balance unutilized proceeds of IPO for mergers, acquisitions and

other general corporate purposes, in addition to the objects of IPO, therefore the balance unutilised amounts of the said

objects has been utilised for general corporate purposes.

** Including repayment of short term loans

3 Investment in Spice Communications Limited

During the year, the company has acquired from MCorp Global Communications Private Limited (MCPL) their entire 40.8%

stake in Spice Communications Limited (Spice) (having operations in Punjab and Karnataka Telecom circles). The company

along with TMI India Limited, TMI Mauritius Limited, Axiata Group Berhad (formerly known as TM International Berhad) and

Green Acre Agro Services Private Limited, collectively referred to as “The acquirers” had made a public offer to acquire upto

20% equity stake in Spice from other public shareholders. The said offer was opened on 17th

September 2008 and closed on

6th

October 2008. The acquirers have since made the payment on 15th

October 2008 to all eligible shareholders of Spice who

had validly tendered their shares under the said offer. Consequently, the stake of the Company in Spice stands at 41.09% as

of date. A scheme of amalgamation of Spice with the Company has been filed with Hon’ble High Court of Gujarat at

Ahmedabad on 11th

May, 2009. The scheme shall be effective on and from last of the dates on which all required approvals

are obtained and the sanctioned scheme is filed with the Registrar of Companies at Ahmedabad and Delhi respectively.


70

Accordingly, Spice has been consolidated with effect from 16th

October 2008. The goodwill on acquisition is calculated as under:-

(Rs. Mn.)

Investment value for 41.09% stake in Spice 22,041.87

Less: Proportionate share in Networth of Spice

- Equity Capital 2,834.90

- Share Premium 2,030.91

- P&L account * (5,220.11) (354.30)

Goodwill on acquisition of Spice 22,396.17

* after adjusting an amount of Rs. 64.61 Mn. (net of depreciation) pertaining to foreign currency exchange difference

capitalised by Spice as per the Notification dated 31st March 2009 issued by Ministry of Company affairs on transitional

provisions of AS-11

4 Demerger of Licenses

The Company, inter alia, has been granted UAS Licenses by the Department of Telecommunications (DoT) for Punjab and

Karnataka Service Areas which overlap with operational UAS Licenses of Spice in respect of same Service Areas. Since the

Company has decided to merge Spice into itself, it has filed a scheme of arrangement on 11th

May, 2009 with an appointed

date of 1st

December, 2008 in the Hon’ble High Court of Gujarat at Ahmedabad to de-merge its own UAS Licenses for Punjab

and Karnataka service areas to an eligible entity. Upon the scheme becoming effective, the difference between the carrying

values and the consideration for de-merger of these UAS Licenses is proposed to be adjusted against the balance in the

Securities / Share Premium Account through the Profit & Loss account. The Company has, in the meanwhile sought a

deferment of the proceedings from Hon’ble High Court of Gujarat at Ahmedabad due to regulatory clarity on the subject.

Upon clarity in the matter and Company deciding to go ahead with the Scheme, the aforesaid appointed date may undergo a

change.

Further, the Scheme of Amalgamation of Spice with the Company, as mentioned in Note 3 above, provides for the adjustment

of the amount of loss arising out of impairment or sale, disposal or any other arrangement in connection with these licenses

against the balance in the Securities / Share Premium Account in the event the Scheme of De-merger for the above mentioned

overlapping licenses not being pursued or not becoming effective for any reason whatsoever. In such an event, the net-worth

of the Company may diminish to that extent, which is currently not ascertainable. These UAS Licenses have therefore been

carried at cost (Rs. 3,585.80 Mn.) as on 31st

March, 2009.

5 The Company has paid Non-Compete Fee of Rs. 5,439.75 Mn. to MCPL in July 2008 pursuant to the Non-Compete Agreement

entered into as a part of the acquisition of 40.8% equity in Spice as mentioned in Note 3 above. A Scheme of Arrangement

was filed by the Company with the Hon’ble High Court of Gujarat at Ahmedabad with an appointed date of 1st

July, 2008, to

adjust the Non-Compete fee paid to MCPL against the balance in Securities/ Share Premium Account through the Profit & Loss

account. The said scheme was approved by the Hon’ble High Court on 31st

August 2009 and became effective on 21st

September 2009, pursuant to filing of the High Court order with Registrar of Companies, Gujarat. The scheme has been given

effect to in these financial statements by debiting Non-Compete Fee to Profit & Loss Account and setting off from an equal

amount withdrawn from the Securities Premium account. Had the scheme not mandated the above accounting treatment,

the Non-Compete Fee would have been capitalised as intangible asset and amortised over the non-compete period. In such

an event, Intangible Assets and Securities Premium would have been higher by Rs. 4,071.05 Mn. and Rs. 5,439.75 Mn.

respectively and Profit after Tax for the year would have been lower by Rs. 1,368.70 Mn. on account of amortisation.

6 De-merger of Passive Infrastructure

A Scheme of Arrangement was filed with the Hon’ble High Court of Gujarat at Ahmedabad to de-merge Passive Infrastructure

(PI) assets in the telecom service areas of Andhra Pradesh, Delhi, Gujarat, Uttar Pradesh (both East & West including Uttaranchal),

Haryana, Kerala, Rajasthan and Mumbai at nil consideration to Idea Cellular Towers Infrastructure Limited (ICTIL), a 100%

subsidiary, with an appointed date of 1st

January 2009. The Hon’ble High Court of Delhi at New Delhi and the Hon’ble High

Court of Gujarat at Ahmedabad approved the scheme on 3rd

August 2009 and 31st

August 2009 respectively. The scheme

became effective on 29th

September 2009.

Post demerger ICTIL has revised the estimated useful life of the assets in line with the other major Passive Infrastructure

companies catering to telecom sector. This has resulted in higher profit for the year by Rs. 13.06 Mn.

7 During the year, Aditya Birla Telecom Limited, a subsidiary of the Company has issued 1,925,000 Compulsory Convertible

Preference Shares of the face value Rs. 10/- each for a total consideration of Rs. 20,982.50 Mn. to P5 Asia Holding Investments

(Mauritius) Limited.

8 On 20th

August 2008 and 1st

October 2008 the Company has commenced its commercial operations in Mumbai and Bihar

service area respectively.


71

9 Interest from Department of Telecommunications

The Company had recognised an income of Rs. 802.27 Mn. during the year ended 31st

March, 2003 being refund of excess

interest charged by DoT on the licence fee payable by the Company pursuant to the judgement dated 9th

April, 2002 of

Telecom Disputes Settlement and Appellate Tribunal (TDSAT). During the previous years, DoT arbitrarily acknowledged an

amount of Rs. 758.76 Mn. against Company’s claim of Rs. 802.27 Mn. The Company has represented this matter with DoT.

The Company has not provided for the difference of Rs. 43.51 Mn., as in the opinion of the management, the amount is

recoverable from DoT.

The Company is also entitled to interest on the amount of the refund so accrued in terms of the Supreme Court Judgment; the

recognition of revenue on account of the same has been postponed pending acceptance in this respect by DoT. As of 31st

March, 2009, this case is pending before the H’ble Supreme Court.

10 Contingent Liabilities

a) During the financial year 2006-07, the WPC Wing of the DoT had raised demands towards monthly compounded interest

on WPC charges for the period upto the financial year 2002-03 in respect of the telecom service areas of the erstwhile

Idea Mobile Communication Limited (IMCL) and BTA Cellcom Ltd amounting to Rs. 405.02 Mn., which were deposited

under protest in November 2006. The details of the same are given below.

Telecom operators had paid WPC Royalty and license fees towards GSM frequency, access and back-bone frequency

charges on circle area basis as provided in the license terms from inception till financial year 2002-03 while the DoT

demands were on city basis. The above matter was disputed by the operators and contested in TDSAT. DoT proposed a

change in the basis of levy of spectrum charges based on revenue share vide their letter dated 18th

April, 2002 on the

condition of its acceptance in entirety and withdrawal of all legal proceedings by the operators. Vide their letter dated

26th

March, 2002, DoT had also given time to the operators to deposit the earlier principal demands by 15th

April,

2002.The operators accepted the offer of change to revenue share basis on 23rd

August, 2002. The interest demand now

raised by WPC wing of DoT for the period before 15th

April, 2002 is contrary to the DoT proposal in 2002. During the year,

the Company along with other telecom operators have approached TDSAT vide petition no. 123 of 2008 challenging this

demand. Following submission of reply by DoT, the matter is expected to be heard in November 2009.

The Company has also taken up with the erstwhile promoter of IMCL for Rs. 348.79 Mn. (refer note 13 below)

Spice Communications Limited, a Joint Venture of the Company has also got notices from WPC wing of the DoT on the similar

ground. Company’s share (net of Provision) in the amount of Principal and interest demanded by WPC is Rs. 153.29 Mn.

b) Under Export Promotion Credit Guarantee Scheme, Company had saved aggregated differential duty amounting to Rs.

37.72 Mn. against which company had export obligation amounting to Rs. 301.06 Mn. The company has fulfilled its

export obligation and is awaiting formal acknowledgement from Director General of Foreign Trade for the same.

c) Other Matters not provided for

(Rs. Mn.)


March 31, 2009 March 31, 2008

Income Tax Matters not acknowledged as debts 107.29 18.75

Sales Tax & Service Tax Matters not acknowledged as debts 1,521.45 1,254.06

License Fee & Spectrum charge matters not acknowledged as debts 335.41 –

Other claims not acknowledged as debts 1,441.63 1,117.18

d) Estimated amount of contracts (net of advance) remaining to be executed on capital account and not provided for.

(Rs. Mn.)


March 31, 2009 March 31, 2008

Estimated amount of contracts (net of advance) 17,499.76 20,390.42

11 Details of guarantees given

(Rs. Mn.)


March 31, 2009 March 31, 2008

Bank guarantees given 10,695.58 9,963.55


72

12 In accordance with an assignment agreement entered between the original promoters of the amalgamated subsidiary Idea

Mobile Communications Limited (IMCL) i.e. Escorts Ltd. and First Pacific Company Ltd., IMCL had issued interest free unsecured

Bond of Rs. 1,757.36 Mn. to Escorts Limited vide a Loan agreement dated 15th

January, 2004. This bond was in lieu of the

loans from the original promoters and included accrued interest of Rs. 857.36 Mn. on 10th

June, 2004. This Bond is repayable

on 15th

January, 2014 and carries a put option for Escorts Limited for a period of thirty days commencing on 15th

January,

2010 to redeem the entire amount or part thereof at a price which would have been payable by the Company had the

Company opted for an early redemption in accordance with the terms of the said agreement. The Company is entitled to pre

payment and set off against certain contingent liabilities that may crystallise after 10th

June, 2004. On the request of Escorts

Ltd, the Company on 21st

July, 2006 has consented to release the redemption proceeds of the above loan to Axis Bank on the

same terms and conditions, as mentioned in the above Loan agreement.

Escorts Limited have approached the Company for a pre-payment settlement after adjusting agreed contingent liabilities and

demands in September 2009.

13 As on 31st March, 2009 the closing balance in units are as follows:

As on March 31, 2009 As on March 31, 2008

Particulars Qty in ‘000 Rs in Mn. Qty in ‘000 Rs in Mn.

Closing Units Closing Value Closing Units Closing Value

Birla Sunlife Cash Plus - I P – Growth – – 14,129 310

Birla Sunlife Interval Income Fund - Monthly Plan - Series I – – 48,574 500

Birla Sunlife Liquid Plus - IP – Growth – – 65,692 1,000

Birla Sunlife Monthly Interval Fund - Series 2 – – 122,373 1,250

Birla Sunlife Quarterly Interval Fund - Series 8 – – 50,000 500

Birla Sun Life Cash Plus – Institutional Premium Plan – Growth 314,995 4,430 77,499 1,000

Birla Sun Life Cash Manager - IP – Growth 954,040 14,019 – –

ICICI Prudential Flexible Income Plan - Growth – – 16,765 250

ICICI Prudential Liquid - Super IP - Growth 38,500 500 – –

Kotak QIP Series 21,993 253 – –

LIC MF Liquid Fund - IP - Growth 15,554 250 – –

Prudential ICICI Monthly Interval Fund - Series 1 – – 47,126 500

Reliance Liquid Plus Fund – IP – Growth – – 22,905 250

UTI Fixed Income Interval Fund-MIP Series-IP Growth 88,048 1,000 – –

Total 1,433,130 20,452 465,063 5,560

14 During the previous year, Spice invested in a new 100% subsidiary, Carlos Towers Limited. However the said subsidiary has

been excluded in consolidation by Spice as its control is intended to be temporary. Company’s share in Spice’s investment in

Carlos Towers Limited, amounting to Rs. 0.21 Mn. has been disclosed under investment schedule.

15 Under ESOS 2006, 6,131,250 options have been granted as ‘Tranche II’ to the eligible employees as on 24th

July 2008. Each

option when exercised would be converted into one equity share of Rs. 10/- each, fully paid up, of the Company. The options will

vest in 4 equal annual installments after one year of the grant. The maximum period of exercise is 5 years from the date of vesting.

The compensation costs of stock options granted to employees have been accounted by the Company using the intrinsic

value method.

Summary of Stock Option

No. of Stock Options



Options Outstanding as on April 1, 2008 19,667,000 – –

Options Granted during the year – 6,131,250 19,931,000

Option forfeited/lapsed during the year 2,391,000 454,750 264,000

Options exercised during the year – – –

Options Outstanding as on March 31, 2009 17,276,000 5,676,500 19,667,000

Personnel cost includes Rs. 144.74 Mn. (Previous Year Rs. 37.59 Mn.) being the amortisation of intrinsic value for the period

ending 31st

March, 2009.


73

Had the compensation cost for the Company’s stock based compensation plan been determined as per fair value approach

(calculated using Black & Scholes Option Pricing Model), the Company’s net income would be lower by Rs. 423.72 Mn.

(Previous Year: Rs. 100.93 Mn) and earnings per share as reported would be lower as indicated below:

(Rs. Mn.)


March 31, 2009 March 31, 2008

Net profit after tax but before exceptional items 8,815.79 10,423.10

Add: Total stock-based employee compensation expense determined under

intrinsic value base method 144.74 37.59

Less: Total stock-based employee compensation expense determined under

fair value base method 568.46 138.52

Adjusted net profit 8,392.07 10,322.17

Basic Earnings Per Share (in Rs.)



Diluted Earnings Per Share (in Rs.)



The fair value of each option is estimated on the date of grant based on the following assumptions:


March 31, 2009 March 31, 2008


Dividend yield (%) Nil Nil Nil

Expected life 6 yrs 6 months 6 yrs 6 months 6 yrs 6 months

Risk free interest rate (%) 7.78% 7.50% 7.78%

Volatility (%) 40.00 45.80 40.00

16 As per the transitional provisions given in the notification issued by Ministry of Corporate Affairs dated 31st March 2009, the

company has opted for the option of adjusting the exchange difference on long term foreign currency monetary items to the

cost of the assets acquired out of these foreign currency monetary items. During the year, the Group has capitalised exchange

difference amounting to Rs. 374.37 Mn. (including Rs. 185.27 Mn. pertaining to subsidiaries and company’s share in joint

ventures) on restatement of long term loans used for acquiring fixed assets. Due to this, profit for the year is higher by Rs.

316.49 Mn.

17 Details of foreign currency exposures:

a) Hedged by a derivative instrument:

(Amount in Mn.)


March 31, 2009 March 31, 2008

Foreign Currency Loan*

in USD 30.00 30.00

in JPY 17,727.73 12,630.73

Equivalent INR 7,655.32 5,658.20

*Fully hedged for interest and principal repayments


74

b) Not hedged by a derivative instrument or otherwise:

(Amount in Mn.)


March 31, 2009 March 31, 2008


in USD 167.88 –

Interest accrued on above in USD 0.66 –

Equivalent INR 8,587.05 –

Sundry Creditors:

in USD 80.99 48.78

in EURO 0.31 0.42

Equivalent INR 4,139.56 1976.23

Sundry Debtors:

in USD 5.09 4.56

in EURO 0.02 0.03

Equivalent INR 258.43 184.16

Bank Deposits:

in USD – 6.79

Equivalent INR – 271.48

Advance Paid to Supplier:

in USD 1.13 –

Equivalent INR 56.87 –

18 Employee Benefits:

a) Defined Benefit Plan: The Group provides for its liability towards gratuity as per the actuarial valuation carried by the

Life Insurance Corporation of India (LIC). The present value of the accrued gratuity minus fund value is provided in the

books of accounts.

i) Changes in benefit obligation for the Company and its Subsidiaries

(Rs. Mn.)

Sr. For the year ended For the year ended

No Particulars March 31, 2009 March 31, 2008

Funded Unfunded

1 Assumptions

Discount Rate 8.00% 7.00% 8.00%

Salary Escalation 6%-7% 6.00% 5%-7%

2 Table showing changes in present value of obligations

Present value of obligations as at beginning of year 84.92 – 81.97

Interest cost 6.79 0.07 6.18

Current Service Cost 25.25 0.91 16.93

Benefits Paid 11.85 – 8.65

Actuarial (Gain)/ Loss on obligations 27.58 0.46 (11.48)

Present value of obligations as at end of year 132.69 1.44 84.92

3 Table showing changes in the fair value of plan assets

Fair value of plan assets at beginning of year 80.33 – 61.80

Expected return on plan assets 8.04 – 6.07

Contributions 48.03 – 21.12

Benefits paid 11.85 – 8.65

Actuarial Gain/ (Loss) on Plan assets NIL NIL NIL

Fair value of plan assets at the end of year 124.55 – 80.33


75

(Rs. Mn.)

Sr. For the year ended For the year ended

No Particulars March 31, 2009 March 31, 2008

Funded Unfunded

4 Table showing fair value of plan assets

Fair value of plan assets at beginning of year 80.33 – 61.80

Actual return on plan assets 8.04 – 6.07

Contributions 48.03 – 21.12

Benefits Paid (11.85) – 8.65

Fair value of plan assets at the end of year 124.55 – 80.33

Funded status 8.14 – (4.60)

Excess of Actual over estimated return on plan assets NIL NIL NIL

(Actual rate of return = Estimated rate of return as

ARD falls on March 31)

5 Actuarial Gain/Loss recognized

Actuarial Gain/ (Loss) for the year -Obligation (27.58) – 11.48

Actuarial (Gain)/ Loss for the year - plan assets NIL – NIL

Total (Gain)/ Loss for the year 27.58 – (11.48)

Actuarial (Gain)/ Loss recognized in the year 27.58 – (11.48)

6 The amounts to be recognized in the Balance

Sheet and statements of profit and loss

Present value of obligations as at the end of year 132.69 1.44 84.92

Fair value of plan assets as at the end of the year 124.55 – 80.33

Funded status 8.14 – (4.60)

Net Asset/ (Liability) recognized in Balance Sheet (17.55) (1.44) (23.38)

7 Expenses Recognised in statement of Profit & loss

Current Service cost 25.25 0.91 16.93

Interest Cost 6.79 0.07 6.18

Expected return on plan assets (8.04) – 6.07

Net Actuarial (Gain)/ Loss recognised in the year 27.58 0.46 (11.48)

Expenses recognised in statement of Profit & Loss 51.58 1.44 5.55

ii) Changes in benefit obligation for the Company’s share in Joint Ventures (Rs. Mn.)

Change in defined benefit obligation

Opening defined benefit obligation 11.08

Liability taken over from joint venturers 2.21

Current Service Cost 3.57

Interest Cost 0.50

Benefits paid (3.80)

Actuarial (gain)/ losses 1.03

Closing Defined benefit obligation 14.59

Fair value of Plan assets (2.75)

Unfunded liability recognized in the Balance Sheet 15.39

Expenses Recognised in statement of Profit & Loss

Current Service cost 3.57

Interest Cost 0.50

Expected return on plan assets (0.04)

Net Actuarial (Gain)/ Loss recognised in the year 1.06

Expenses recognised in statement of Profit & Loss 5.08


76

iii) Assumptions

Discount rate 7% - 7.6%

Salary Escalation rate 7% - 10%

b) Defined Contribution Plan: During the year, the Company has recognised the following amounts in the Profit and Loss

account:

(Rs. Mn)


March 31, 2009 March 31, 2008

Employers’ Contribution to Provident Fund 139.98 97.20

Employers’ Contribution to Superannuation Fund 31.53 25.00

19 Segment Reporting

1. Primary Segments:

The Company operates in two business segments:

a) Mobility Services

b) Long Distance (LD)

c) Passive Infrastructure (PI)

2. Secondary Segment:

The Company caters only to the needs of Indian market representing a singular economic environment with similar risks

and rewards and hence there are no reportable geographical segments


(Rs. Mn.)


Mobility LD Others

Revenue

External Revenue 101,084.60 25.64 202.61 – 101,312.85

Inter-segment Revenue 259.97 7,104.15 2,295.13 (9,659.25) –

Total Revenue 101,344.57 7,129.79 2,497.74 (9,659.25) 101,312.85

Segment result 13,439.37 1,182.19 (285.04) – 14,336.52

Interest & financing charges (Net) – – – – 4,945.22

Profit before Tax – – – – 9,391.30

Provision for tax (Net) – – – – 575.51

Profit after tax – – – – 8,815.79

Other information

Segment assets 187,015.55 6,556.42 32,436.96 (20,551.43) 205,457.50

Unallocated corporate assets – – – – 57,809.02

Total assets 187,015.55 6,556.42 32,436.96 (20,551.43) 263,266.52

Segment liabilities 127,139.82 5,389.89 17,498.66 (20,551.43) 129,476.94

Unallocated corporate liabilities – – – – 1,136.46

Total liabilities 127,139.82 5,389.89 17,498.66 (20,551.43) 130,613.40

Capital expenditure 52,317.15 878.26 13,792.60 – 66,988.01

Depreciation & amortisation 13,004.26 17.58 1,006.09 – 14,027.93


77


(Rs. Mn.)


Mobility LD

Revenue

External Revenue 67,199.90 – – 67,199.90

Inter-segment Revenue – 3,536.67 (3,536.67) –

Total Revenue 67,199.90 3,536.67 (3,536.67) 67,199.90

Segment result 13,199.70 724.80 – 13,924.50

Interest & financing charges (Net) – – – 2,776.20

Profit before Tax – – – 11,148.30

Provision for tax (Net) – – – 725.20

Profit after tax – – – 10,423.10

Other information

Segment assets 118,644.46 1,402.16 (1,120.93) 118,945.69

Unallocated corporate assets – – – 9,337.79

Total assets 118,644.46 1,402.16 (1,120.93) 128,283.48

Segment liabilities 92,770.52 520.60 (1,120.93) 92,170.19

Unallocated corporate liabilities – – – 667.28

Total liabilities 92,770.52 520.60 (1,120.93) 92,837.47

Capital expenditure 54,993.54 0.02 – 54,993.56

Depreciation & amortisation 8,766.86 1.25 – 8,768.11

20 Related Party Transactions

As per Accounting Standard-18 on “Related Party Disclosure”, related parties of the Company are disclosed below:

A. List of related Parties :

Promoters

Hindalco Industries Limited

Grasim Industries Limited

Aditya Birla Nuvo Limited

Birla TMT Holdings Pvt. Limited

Key Management Personnel

Mr. Sanjeev Aga, MD

Mr. AJS Jhala, CFO (upto 30th

June 2008)

Mr. Akshaya Moondra, CFO (from 1st

July 2008)

B. Transactions with Related Parties

(Rs. Mn.)

Particulars Promoters Key

Hindalco Grasim Aditya Birla Management

Industries Industries Nuvo Limited Personnel

Limited Limited

Remuneration – – – 63.09

(–) (–) (–) (61.48)

Purchase of Fixed Assets – – – –

(–) (0.13) (–) (–)

Purchase of Service/ Goods 0.12 – 0.33 –

(–) (–) (–) (–)

Sale of Service/ Goods 5.39 7.67 0.52 –

(–) (–) (–) (–)

Employee Expenses – – – –

(0.08) (–) (–) (–)

Unsecured Loans/ ICD repaid – – 750.00 –

(–) (–) (–) (–)

Unsecured Loans given/ ICD – – 750.00 –

(–) (–) (–) (–)

Interest on Unsecured Loans given – – 7.97 –

(–) (–) (–) (–)

Expenses incurred on Company’s behalf by 0.13 1.49 – –

(3.93) (2.00) (0.18) (-)

(Figures in bracket are for the year ended March 31, 2008)


78

C. Outstanding as on March 31, 2009

(Rs Mn.)

Particulars Promoters Key Management

Hindalco Personnel

Industries Limited

Unsecured Loan given - -

(-) (8.00)

Accounts Receivable 0.03 -

(-) (-)

Remuneration Payable - 17.44

(-) (24.20)

Accounts Payable - -

(0.08) (-)


21 The Company has entered into non-cancellable operating leases for office and main switching centre locations for periods

ranging from 36 months to 480 months. For the current year, total minimum lease payments amounting to Rs. 3,067.12 Mn.

(Previous year Rs. 264.63 Mn.) is charged to Profit & Loss account.

The future lease payments in respect of the above are as follows.

(Rs. Mn.)

Particulars Not later than Later than one year Later than five

one year but not later years

than five years

Minimum Lease payments 2,652.18 8,169.93 4,627.78

(313.24) (1,120.97) (902.12)


22 During the financial year 2007-08, company had entered into a composite IT outsourcing agreement wherein fixed assets and

services related to IT has been supplied by the vendor. Such fixed assets received have been accounted for as a finance lease.

Correspondingly, such assets are recorded at fair value of these assets at the time of receipt and depreciated on the stated

useful life applicable to similar assets of the company.

As at 31st

March, 2009, an amount of Rs. 939.12 Mn. towards the supply of fixed assets during the year stands outstanding

and will be paid during financial year 2009-10.

23 During the financial year, Spice has taken certain fixed assets on finance lease, the company’s share of minimum lease rentals

outstanding as at 31st

March 2009 are as follows :-

(Rs. Mn.)

Particulars Not later than Later than one year Later than five

one year but not later years

than five years

Minimum Lease payments outstanding 443.36 2,004.25 1,815.78

Future Interest outstanding 380.76 1,284.55 563.41

Present value of lease payments 62.59 719.70 1,252.36

24 Basic & Diluted Earnings Per Share


March 31, 2009 March 31, 2008

Nominal value of Equity Shares (Rs.) 10/- 10/-

Profit after Tax (Rs. Mn.) 8,815.79 10,423.10

Profit attributable to equity shareholders (Rs. Mn.) 8,815.79 10,423.10

Weighted average number of equity shares outstanding during the year 2,930,612,054 2,634,896,058

Basic Earnings Per Share (Rs.) 3.01 3.96

Dilutive effect on weighted average number of equityshares outstanding during the year – 483,044

Weighted average number of diluted equity shares 2,930,612,054 2,635,379,102

Diluted Earnings Per Share (Rs.) 3.01 3.96


79

25 Deferred Tax

As of March 31, 2009, the Company has deferred tax liability of Rs. 4,993.27 Mn. and deferred tax asset of Rs. 3,863.36 Mn. as under:

(Rs. Mn.)


March 31, 2009 March 31, 2008

Deferred Tax Liability:

Depreciation and Amortisation 4,967.95 1,663.38

Others 25.32 –

Total Deferred Tax Liability 4,993.27 1,663.38

Deferred Tax Asset:

Brought forward loss 2,390.81 –

Provision for Doubtful Debts 949.93 837.22

Expenses allowable on payment basis 204.81 64.60

Others 317.81 100.54

Total Deferred Tax Asset 3,863.36 1,002.36

Net Deferred Tax Liability 1,129.91 661.02

26 The Company has the following joint ventures as on 31st

March, 2009 and its percentage holding is given below :

Name of the Joint Venture % holding

As on As on

March 31, 2009 March 31, 2008

Spice Communications Limited 41.09% –

Indus Towers Limited 16.00% 16.00%

The proportionate share of assets, liabilities, income, expenditure, contingent liabilities and capital commitment of the above

joint venture companies included in these consolidated financial statements are given below:

(Rs. Mn.)


March 31, 2009 March 31, 2008

Assets

Net Block (including CWIP) 18,226.60 0.53

Investment 0.21 –

Deferred Tax Assets 143.61 –

Current Assets 5,536.71 1.36

Profit and Loss Account 752.09 7.01

Liabilities

Reserves & Surplus – –

Loans 17,541.23 2.02

Current Liabilities 7,472.10 6.71


March 31, 2009 March 31, 2008

Revenues 4,543.66 –

Operating Costs 3,727.12 6.97

EBIDTA 816.54 (6.97)

Finance Cost 873.65 0.03

Depreciation & Amortisation 827.26 0.01

PBT (884.37) (7.01)

Taxes (139.23) –

PAT (745.14) (7.01)

Contingent Liability 2,114.44 –

Capital Commitment 4,035.59 2.94


80

27 The movement in the Asset Retirement Obligation is set out as follows:

(Rs. Mn.)


March 31, 2009 March 31, 2008

Opening Balance 473.58 253.26

Additional Provision 702.16 220.32

Utilisation (2.69) –

Closing Balance 1,173.05 473.58

28 Previous year’s figures have been regrouped / rearranged wherever necessary to conform to the current year grouping and are

not comparable with the current period due to the consolidation of financials pertaining to additional subsidiaries and joint

ventures.


Tarjani Vakil Biswajit Subramanian

Director Director




81

Consolidated Cash Flow Statement for the year ended March 31, 2009

(Rupees in Million)


March 31, 2009 March 31, 2008

A) Cash Flow from Operating Activities

Net Profit after Tax 8,815.79 10,423.10

Adjustments For

Depreciation 12,472.70 7,569.01

Amortisation of Intangible assets 1,555.23 1,199.10

Interest charge 9,211.92 4,592.37

Profit on sale of current investment (2,680.89) (432.01)

Provision for Bad & Doubtful Debts/Advances 357.50 244.94

Employee Stock Option Cost 144.74 37.59

Provision for Gratuity and Leave Encashment 182.10 54.34

Provision for Current Tax 1,273.29 425.93

MAT Credit entitlement (1,268.99) (425.33)

Provision for Deferred Tax 468.97 650.47

Provision for Fringe Benefit Tax 102.24 74.13

Liability no longer required written back (160.31) (139.73)

Interest Income (2,251.50) (849.62)

(Profit) / Loss on sale of fixed assets/ assets discarded 15.12 8.89

19,422.12 13,010.08

Operating profit before working capital changes 28,237.91 23,433.18

Changes in Current Assets and Current Liabilities

(Increase)/Decrease in Sundry Debtors (1,679.85) (706.10)

(Increase)/Decrease in Inventories (235.41) (97.05)

(Increase)/Decrease in Other Current Assets (543.59) 163.42

(Increase)/Decrease in Loans and Advances (6,732.19) (3,380.55)

Increase /(Decrease) in Current Liabilities 5,058.54 6,241.72

(4,132.50) 2,221.44

Cash generated from operations 24,105.41 25,654.62

Tax paid (including Current Tax, FBT & TDS) (1,463.31) (430.52)

Net cash from operating activities 22,642.10 25,224.10

B) Cash Flow from Investing Activities

Purchase of Fixed assets & Intangible assets (including CWIP) (62,156.83) (55,726.29)

Proceeds from sale of Fixed assets 103.83 150.79

Payment for Non Compete Fee (5,439.75) –

Sale/ (purchase) of Other Investments (Net) (12,210.80) (5,115.67)

Interest and Dividend Received 1,510.54 922.94

Payment for purchase of Shares of

Spice Communications Limited (JV) (22,041.88) –

Net cash from / (used in) investing activities (100,234.89) (59,768.23)


82

Consolidated Cash Flow Statement for the year ended March 31, 2009

(Rupees in Million)

For the Year ended For the year ended

March 31, 2009 March 31, 2008








C) Cash Flow from Financing Activities

Proceeds from issue of Equity Shares 72,944.74 3,187.52

Compulsorily Convertible Preference shares

issued by Subsidiary 20,982.50 –

Share Issue Expenses (240.91) –

Proceeds from Long term borrowings 12,342.23 20,632.01

Repayment of Long Term Borrowings (3,071.58) (1,480.94)

Proceeds from Short Term Loan 42,958.61 22,120.90

Repayment of Short Term Loan (36,255.54) (18,622.98)

Interest Paid (7,632.81) (4,517.27)

Net cash from / (used in) financing activities 102,027.24 21,319.24

Net increase / (decrease) in cash and cash equivalent 24,434.45 (13,224.89)

Cash and cash equivalent at the beginning 4,974.51 18,199.40

Add : Cash and Cash Equivalents acquired on acquisition

of Spice Communications Limited (JV) 1,455.00

Cash and cash equivalent at the end 30,863.96 4,974.51

Notes to Cash flow Statement

1. Cash and cash equivalent includes


Balances with Scheduled & Other Banks

- on Current Accounts 1,671.97 1,181.98

- on Deposit Accounts 28,977.52 3,495.52

30,863.96 4,974.51

2. The above cash flow statement has been prepared under the indirect method as set out in Accounting Standard 3 on Cash

Flow Statement.

3. Previous year’s figures have been rearranged/regrouped wherever necessary.

As per our report of even date attached.


83

Statement pursuant to Section 212 of the Companies Act, 1956, related to Subsidiary Companies

Particulars Aditya Birla Idea Cellular Idea Cellular Idea Cellular Swinder Singh

Telecom Services Infrastructure Towers Satara &

Limited Limited Services Infrastructure Company

Limited Limited Limited

1. Financial year of the Subsidiary ended on March 31, 2009 March 31, 2009 March 31, 2009 March 31, 2009 March 31, 2009

2. Shares of the Subsidiary held by the Company

on the above date :-

(a) Number & face value 10,000,000 50,000 50,000 50,000 50,000

Equity Shares Equity Shares Equity Shares Equity Shares Equity Shares

of Rs.10 each of Rs.10 each of Rs.10 each of Rs.10 each of Rs.10 each

(b) Extent of holding 100% 100% 100% *100% 100%

3. Net aggregate amount of profits / (losses )

of the subsidiary for the above financial year

on the subsidiary so far as they concern

members of the company :-

(a) Dealt within the accounts of the NIL NIL NIL NIL NIL

company for the year ended

March 31, 2009 (Rs. Mn)

(b) Not dealt with the accounts of the (285.65) 0.11 (37.86) (129.57) 1.74


March 31, 2009 (Rs. Mn)

4. Net aggregate amount of profits / (losses)

for previous year of the subsidiary so far as

they concern members of the company :-

(a) Dealt within the accounts of the NIL NIL NIL NIL NIL


March 31, 2008 (Rs. Mn)

(b) Not dealt with the accounts of the (13.02) (1.97) (0.10) (0.64) 1.67


March 31, 2008 (Rs. Mn)

* Shares held through Aditya Birla Telecom Limited


Tarjani Vakil Biswajit Subramanian Sanjeev Aga

Director Director Managing Director



Place: Mumbai


Statement pursuant to exemption received under section 212(8) of the Companies Act, 1956

relating to subsidiary companies for the year ended March 31, 2009

(Rupees in Million)

Sr. Name of the Company Country of Capital Reserves Total Total Investments Turnover Profit/ Provision for Profit/ Proposed

No. Registration Assets Liabilities other than (Loss) Taxation (Loss) Dividend

Investments in before after

subsidiary Taxation Taxation

1 Aditya Birla

Telecom Limited India 119.25 20,575.97 15,319.59 4,197.60 9,572.73 434.60 (431.52) (145.87) (285.65) NIL

2 Idea Cellular

Services Limited India 0.50 (1.86) 25.22 26.58 – 239.17 3.05 2.94 0.11 NIL

3 Idea Cellular Infrastructure

Services Limited India 0.50 (37.96) 3,422.20 3,459.66 – 337.33 (37.29) 0.57 (37.86) NIL

4 Idea Cellular Towers

Infrastructure Limited India 0.50 16,098.13 16,107.44 8.81 – 410.56 (129.57) – (129.57) NIL

5 Swinder Singh Satara

& Co Limited India 0.50 11.84 119.28 106.94 – 79.72 2.31 0.57 1.74 NIL


84

NOTES

Prin

ted

at In

fom

edia

18 Li

mite

d

Corporate Office

Registered Office

:“ ”

ast

:

Gujarat

Windsor , 5th FloorOff CST Road, KalinaSantacruz (E )Mumbai - 400 098

Suman TowerPlot No.18, Sector-11Gandhinagar - 382 011

idea cellular limited annual report 2008-09 · annual report 2008-09 5 sector growth the indian...

Documents