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Bharti Airtel Ltd(Industry :   Telecommunications - Service Provider)
 
BSE Code:532454NSE Symbol: BHARTIARTLP/E  (TTM): 105.93
ISIN Demat:INE397D01024Div Yield %:0.19EPS   (TTM) :4.88
Book Value (Rs):254.129184Market Cap (RsCr):206645.59Face Value (Rs) :5
  Change Company 

(All amounts are in millions of Indian Rupees - '?'; unless stated otherwise)

1. Corporate information

Bharti Airtel Limited (‘the Company') is domiciled and incorporated in India as a limited liability company with its shares being listed on the National Stock Exchange and the Bombay Stock Exchange. The registered office of the Company is situated at Bharti Crescent, 1, Nelson Mandela Road, Vasant Kunj, Phase - II, New Delhi - 110070.

The Company is principally engaged in provision of telecommunication services in India. The details as to the services provided by the Company are further provided in Note 31. For details as to the group entities, refer Note 32.

2. Summary of significant accounting policies

2.1 Basis of preparation

These standalone financial statements (‘financial statements') have been prepared to comply in all material respects with the Indian Accounting Standard (‘Ind AS') notified under section 133 of the Companies Act, 2013, read together with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 issued by the Ministry of Corporate Affairs (‘MCA').

The said financial statements for the year ended March 31, 2017 are the first Ind AS financial statements of the Company. The transition to Ind AS has been carried out from accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (‘IGAAP'), which is considered as the Previous GAAP, for purposes of Ind AS 101. For details, refer Note 2.3.

The financial statements are authorized for issue by the Company's Board of Directors on May 09, 2017.

The accounting policies, as set out in the following paragraphs of this note, have been consistently applied, by the Company, to all the periods presented in the said financial statements.

The preparation of the said financial statements requires the use of certain critical accounting estimates and judgements. It also requires the management to exercise judgement in the process of applying the Company's accounting policies. The areas where estimates are significant to the financial statements, or areas involving a higher degree ofjudgement or complexity, are disclosed in Note 3.

The financial statements are based on the classification provisions contained in Ind AS 1, ‘Presentation of Financial Statements' and division II of schedule III of the Companies Act 2013. Further, for the purpose of clarity, various items are aggregated in the statement of profit and loss and balance sheet. Nonetheless, these items are dis-aggregated separately in the notes to the financial statements, where applicable or required.

All the amounts included in the financial statements are reported in millions of Indian Rupees (‘Rupees' or T) and are rounded to the nearest million, except per share data and unless stated otherwise.

2.2 Basis of measurement

The financial statements have been prepared on the accrual and going concern basis, and the historical cost convention except where the Ind AS requires a different accounting treatment. The principal variations from the historical cost convention relate to financial instruments classified as fair value through profit or loss and liability for cash-settled awards (refer Note 2.16) - which are measured at fair value.

Fair value measurement

Fair value is the price at the measurement date, at which an asset can be sold or paid to transfer a liability, in an orderly transaction between market participants. The Company's accounting policies require, measurement of certain financial / non-financial assets and liabilities at fair values (either on a recurring or non-recurring basis). Also, the fair values of financial instruments measured at amortised cost are required to be disclosed in the said financial statements.

The Company is required to classify the fair valuation method of the financial / non-financial assets and liabilities, either measured or disclosed at fair value in the financial statements, using a three level fair-value-hierarchy (which reflects the significance of inputs used in the measurement). Accordingly, the Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

The three levels of the fair-value-hierarchy are described below:

Level 1: Quoted (unadjusted) prices for identical assets or liabilities in active markets

Level 2: Significant inputs to the fair value measurement are directly or indirectly observable

Level 3: Significant inputs to the fair value measurement are unobservable.

2.3 Basis of transition to Ind AS

The adoption of Ind AS is carried out in accordance with Ind AS 101 on April 1, 2015 being the transition date. Ind AS 101 requires that all Ind AS standards that are issued and effective for the year ending March 31, 2017, be applied retrospectively and consistently for all the periods presented. However, in preparing these financial statements, the Company has availed of certain exemptions and exceptions in accordance with Ind AS 101, as explained below. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at the transition date under Ind AS and previous GAAP have been recognised directly in equity at the transition date.

In these financial statements, the Company has presented three balance sheets - as of March 31, 2017, March 31, 2016 and April 1, 2015. The Company has also presented two statements of profit and loss, two statements of changes in equity and two statements of cash flows for the year ended March 31, 2017 and 2016 along with the necessary and related notes.

Ind AS 101 allows first-time adopters certain optional exemptions and mandatory exceptions from the retrospective application of certain requirements under Ind AS.

Exemptions / exceptions from full retrospective application

(i) The Company has elected to apply the following optional exemption from full retrospective application of Ind AS:

The Company has elected the option of fair valuing the investments in certain subsidiaries to derive the carrying value of these investments (‘deemed cost').

(ii) The following mandatory exceptions from retrospective application of Ind AS have applied by the Company :

a) Estimates exception - On an assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS (except for adjustments to reflect any difference in accounting policies), as there is no objective evidence that those estimates were in error However, estimates that were required under Ind AS but not required under Previous GAAP, are made by the Company for the relevant reporting dates, reflecting conditions existing as at that date without using any hindsight.

b) De-recognition of financial assets and liabilities exception - Financial assets and liabilities de-recognised before transition date are not re-recognised under Ind AS.

Reconciliations and explanations of the significant effect of the transition from Previous GAAP to Ind AS on the Company's equity, statement of profit and loss and statement of cash flows are provided in Note 38.

2.4 Foreign currency transactions

The financial statements are presented in Indian Rupees which is the functional and presentation currency of the Company.

Transactions in foreign currencies are initially recorded in the relevant functional currency at the rates prevailing at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the closing exchange rate prevailing as at the reporting date with the resulting foreign exchange differences, on subsequent re-statement / settlement, recognised in the statement of profit and loss within finance costs / finance income. Non-monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the exchange rate prevalent, at the date of initial recognition (in case they are measured at historical cost) or at the date when the fair value is determined (in case they are measured at fair value) - the resulting foreign exchange difference, on subsequent re-statement / settlement, recognised in the statement of profit and loss, except to the extent that it relates to items recognised in the other comprehensive income or directly in equity.

The equity items denominated in foreign currencies are translated at historical cost.

2.5 Current versus non-current classification

The Company presents assets and liabilities in the balance sheet based on current / non-current classification.

Deferred tax assets and liabilities, and all assets and liabilities which are not current (as discussed in the below paragraphs) are classified as non-current assets and liabilities.

An asset is classified as current when it is expected to be realised or intended to be sold or consumed in normal operating cycle, held primarily for the purpose of trading, expected to be realised within twelve months after the reporting period, or cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current when it is expected to be settled in normal operating cycle, it is held primarily for the purpose of trading, it is due to be settled within twelve months after the reporting period, or there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

Separated embedded derivatives are classified basis the host contract.

2.6 Property, plant and equipment (‘PPE')

An item is recognised as an asset, if and only if, it is probable that the future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. PPE are initially recognised at cost. The initial cost of PPE comprises its purchase price (including non-refundable duties and taxes but excluding any trade discounts and rebates), and any directly attributable cost of bringing the asset to its working condition and location for its intended use. In case of multiple element contracts whereby the vendor supplies PPE as well as other components, PPE is recorded on the basis of relative fair values.

Subsequent to initial recognition, PPE are stated at cost less accumulated depreciation and any impairment losses. When significant parts of property, plant and equipment are required to be replaced in regular intervals, the Company recognises such parts as separate component of assets. When an item of PPE is replaced, then its carrying amount is de-recognised from the balance sheet and cost of the new item of PPE is recognised. Further, in case the replaced part was not being depreciated separately, the cost of the replacement is used as an indication to determine the cost of the replaced part at the time it was acquired.

The expenditures that are incurred after the item of PPE has been put to use, such as repairs and maintenance, are normally charged to the statement of profit and loss in the period in which such costs are incurred. However, in situations where the said expenditure can be measured reliably, and is probable that future economic benefits associated with it will flow to the Company, it is included in the asset's carrying value or as a separate asset, as appropriate.

Depreciation on PPE is computed using the straightline method over the estimated useful lives. Freehold land is not depreciated as it has an unlimited useful life. The Company has established the estimated range of useful lives of different categories of PPE as follows:

Particulars Years
Leasehold Land Period of lease
Building 20
Building on Leased Land 20
Leasehold Improvements Period of lease or 10
years, whichever is less
Plant & Equipment 3 - 20
Computer 3
Office Equipment 2 - 5
Furniture and Fixtures 5
Vehicles 5

The useful lives, residual values and depreciation method of PPE are reviewed, and adjusted appropriately, at-least as at each reporting date so as to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from these assets. The effect of any change in the estimated useful lives, residual values and / or depreciation method are accounted prospectively, and accordingly the depreciation is calculated over the PPE's remaining revised useful life. The cost and the accumulated depreciation for PPE sold, scrapped, retired or otherwise disposed off are derecognised from the balance sheet and the resulting gains / (losses) are included in the statement of profit and loss within other expenses / other income.

The management basis its past experience and technical assessment has estimated the useful life, which is at variance with the life prescribed in Part C of Schedule II of the Companies Act, 2013 and has accordingly, depreciated the assets over such useful life.

The cost of capital work-in-progress is presented separately in the balance sheet.

2.7 Intangible assets

Identifiable intangible assets are recognised when the Company controls the asset, it is probable that future economic benefits attributed to the asset will flow to the Company and the cost of the asset can be measured reliably.

The intangible assets are initially recognised at cost. These assets having finite useful life are carried at cost less accumulated amortisation and any impairment losses. Amortisation is computed using the straightline method over the expected useful life of intangible assets.

The Company has established the estimated useful lives of different categories of intangible assets as follows:

a. Softwares

Softwares are amortised over the period of license, generally not exceeding three years.

b. Bandwidth

Bandwidth is amortised on straight-line basis over the period of the agreement.

c. Licenses (including spectrum)

Acquired licenses and spectrum are amortised commencing from the date when the related network is available for intended use in the relevant jurisdiction. The useful lives range from two to twenty years.

The revenue-share based fee on licenses / spectrum is charged to the statement of profit and loss in the period such cost is incurred.

d. Other acquired intangible assets

Other acquired intangible assets include the following:

Rights acquired for unlimited license access: Over the period of the agreement which ranges upto five years.

Customer base: Over the estimated life of such relationships.

Non-compete fee: Over the period of the agreement which ranges upto five years.

The useful lives and amortisation method are reviewed, and adjusted appropriately, at least at each financial year end so as to ensure that the method and period of amortisation are consistent with the expected pattern of economic benefits from these assets. The effect of any change in the estimated useful lives and / or amortisation method is accounted prospectively, and accordingly the amortisation is calculated over the remaining revised useful life.

Further, the cost of Intangible Assets under Development (‘IUD') includes the amount of spectrum allotted to the Company and related costs (including borrowing costs that are directly attributable to the acquisition or construction of qualifying assets (refer note 7)), if any, for which services are yet to be roll out and are presented separately in the balance sheet.

2.8 Impairment of non-financial assets

Property, plant and equipment and Intangible assets

PPE and intangible assets with definite lives, are reviewed for impairment, whenever events or changes in circumstances i ndicate that their carrying values may not be recoverable. For the purpose of impairment testing, the recoverable amount (that is, higher of the fair value less costs to sell and the value-in-use) is determined on an individual asset basis, unless the asset does not generate cash flows that are largely independent ofthose from other assets, in which case the recoverable amount is determined at the cash-generating-unit (‘CGU') level to which the said asset belongs. If such individual assets or CGU are considered to be impaired, the impairment to be recognised in the statement of profit and loss is measured by the amount by which the carrying value of the asset / CGU exceeds their estimated recoverable amount and allocated on pro rata basis.

Impairment losses, if any, are recognised in statement of profit and loss.

Reversal of impairment losses

Impairment losses are reversed and the carrying value is increased to its revised recoverable amount provided that this amount does not exceed the carrying value that would have been determined had no impairment loss been recognised for the said asset in previous years.

2.9 Financial instruments

a. Recognition, classification and presentation

The financial instruments are recognised in the balance sheet when the Company becomes a party to the contractual provisions of the financial instrument.

The Company determines the classification of its financial instruments at initial recognition.

The Company recognises its investment in subsidiaries, joint ventures and associates at cost less any impairment losses (basis the recoverable amount being higher of the fair value less costs to sell and the value-in-use). The Company classifies its financial assets in the following categories: a) those to be measured subsequently at fair value through profit or loss, and b) those to be measured

at amortised cost. The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.

The Company has classified all the non-derivative financial liabilities measured at amortised cost.

The entire hybrid contract, financial assets with embedded derivatives, are considered in their entirety for determining the contractual terms of the cash flow and accordingly the embedded derivatives are not separated. However, derivatives embedded in non-financial instrument / other financial liabilities host contracts are classified as separate derivatives if their economic characteristics and risks are not closely related to those of the host contracts.

Financial assets and liabilities arising from different transactions are off-set against each other and the resultant net amount is presented in the balance sheet, if and only when, the Company currently has a legally enforceable right to set-off the related recognised amounts and intends either to settle on a net basis or to realise the assets and settle the liabilities simultaneously.

b. Measurement - Non-derivative financial instruments

I. Initial measurement

At initial recognition, the Company measures the non-derivative financial instruments (except financial guarantee) at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Otherwise transaction costs are expensed in the statement of profit and loss. Financial guarantees, issued in relation to obligations of subsidiaries, are initially recognized at fair value (as part of the cost of the investment in the subsidiary).

II. Subsequent measurement - financial assets The subsequent measurement of the non-derivative financial assets depends on their classification as follows:

i. Financial assets measured at amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost using the effective- interest rate (‘EIR') method (if the impact of discounting / any transaction costs is significant). Interest income from these financial assets is included in finance income.

ii. Financial assets at fair value through profit or loss (‘FVTPL')

All financial assets that do not meet the criteria for amortised cost are measured at fair value through profit or loss. Interest (basis EIR method) income from financial assets at fair value through profit or loss is recognised in the statement of profit and loss within finance income/ finance costs separately from the other gains/ losses arising from changes in the fair value.

Impairment

The company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk since initial recognition. If credit risk has not increased significantly, twelve month ECL is used to provide for impairment loss, otherwise lifetime ECL is used.

However, only in case of trade receivables, the Company applies the simplified approach which requires expected lifetime losses to be recognised from initial recognition of the receivables.

iii. Subsequent measurement - financial liabilities

The financial guarantees are amortised over the life of the guarantee and are measured at each reporting date at the higher of (i) the remaining unamortised balance of the amount at initial recognition and (ii) the best estimate of expenditure required to settle the obligation at the end of the reporting period. Other financial liabilities are subsequently measured at amortised cost using the EIR method (if the impact of discounting / any transaction costs is significant).

c. Measurement - derivative financial instruments

Derivative financial instruments, including separated embedded derivatives are classified as financial instruments at fair value through profit or loss - Held for trading. Such derivative financial instruments are initially recognised at fair value. They are subsequently re-measured at their fair value, with changes in fair value being recognised in the statement of profit and loss within finance income / finance costs.

d. Derecognition

The financial liabilities are de-recognised from the balance sheet when the under-lying obligations are extinguished, discharged, lapsed, cancelled, expires or legally released. The financial assets are derecognised from the balance sheet when the rights to receive cash flows from the financial assets have expired, or have been transferred and the Company has transferred substantially all risks and rewards of ownership. The difference in the carrying amount is recognised in the statement of profit and loss.

2.10 Leases

The determination of whether an arrangement is a lease is based on whether fulfillment of the arrangement is dependent on the use of a specific asset and the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.

Leases where the lessor transfers substantially all the risks and rewards of ownership of the leased asset are classified as finance lease and other leases are classified as operating lease.

Operating lease receipts / payments are recognised as an income / expense on a straight-line basis over the

lease term unless the lease payments increase in line with expected general inflation.

a. Company as a lessee

Assets acquired under finance leases are capitalised at the lease inception at lower of the fair value of the leased asset and the present value of the minimum lease payments. Lease payments are apportioned between finance charges (recognised in the statement of profit and loss) and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability for each period.

b. Company as a lessor

Assets leased to others under finance lease are recognised as receivables at an amount equal to the net investment in the leased assets. Finance lease income is recognised based on the periodic rate of return on the net investment outstanding in respect of the finance lease.

Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised in statement of profit and loss on a stratght-line basis over the lease term.

The Company enters into ‘Indefeasible right to use' arrangement wherein the assets are given on lease over the substantial part of the asset life. However, the title to the assets and significant risk associated with the operation and maintenance of these assets remains with the Company. Hence, such arrangements are recognised as operating lease. The contracted price is recognised as revenue during the tenure of the agreement. Unearned IRU revenue received in advance is presented as deferred revenue within liabilities in the balance sheet.

2.11 Taxes

The income tax expense comprises of current and deferred income tax. Income tax is recognised in the statement of profit and loss, except to the extent that it relates to items recognised in the other comprehensive income or directly in equity, in which case the related income tax is also recognised accordingly.

a. Current tax

The current tax is calculated on the basis of the tax rates, laws and regulations, which have been enacted or substantively enacted as at the reporting date. The payment made in excess / (shortfall) of the Company's income tax obligation for the period are recognised in the balance sheet as current income tax assets / liabilities.

Any interest, related to accrued liabilities for potential tax assessments are not included in Income tax charge or (credit), but are rather recognised within finance costs.

b. Deferred tax

Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying values in the financial statements. However, deferred tax are not recognised if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

The unrecognised deferred tax assets / carrying amount of deferred tax assets are reviewed at each reporting date for recoverability and adjusted appropriately.

Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Income tax assets and liabilities are off-set against each other and the resultant net amount is presented in the balance sheet, if and only when, (a) the Company currently has a legally enforceable right to set-off the current income tax assets and liabilities, and (b) when it relate to income tax levied by the same taxation authority and where there is an intention to settle the current income tax balances on net basis.

2.12 Inventories

Inventories are stated at the lower of cost (determined using the first-in-first-out method) and net realisable value. The costs comprise its purchase price and any directly attributable cost of bringing to its present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated variable costs necessary to make the sale.

2.13 Cash and cash equivalents

Cash and cash equivalents include cash in hand, bank balances and any deposits with original maturities of three months or less (that are readily convertible to known amounts of cash and cash equivalents and subject to an insignificant risk of changes in value). However, for the purpose of the statement of cash flows, in addition to above items, any bank overdrafts / cash credits that are integral part of the Company's cash management, are also included as a component of cash and cash equivalents.

2.14 Non-current assets held for sale

Non-current assets are classified as assets-held-for- sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. The sale is considered highly probable only when the asset is available for immediate sale in its present condition, it is unlikely that the sale will be withdrawn and sale is expected within one year from the date of the classification. Assets classified as held for sale are stated at the lower of carrying amount and fair value less costs to sell.

Assets classified as held for sale are presented separately in the balance sheet.

Loss is recognised for any initial or subsequent writedown of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative loss previously recognised.

2.15 Share capital / Share premium

Ordinary shares are classified as Equity when the Company has an un-conditional right to avoid delivery of cash or another financial asset, that is, when the dividend and repayment of capital are at the sole and absolute discretion of the Company and there is no contractual obligation whatsoever to that effect.

2.16 Employee benefits

The Company's employee benefits mainly include wages, salaries, bonuses, defined contribution to plans, defined benefit plans, compensated absences, deferred compensation and share-based payments. The employee benefits are recognised in the year in which the associated services are rendered by the Company employees.

a. Defined contribution plans

The contributions to defined contribution plans are recognised in profit or loss as and when the services are rendered by employees. The Company has no further obligations under these plans beyond its periodic contributions.

b. Defined benefit plans

In accordance with the local laws and regulations, all the employees in India are entitled for the Gratuity plan. The said plan requires a lump-sum payment to eligible employees (meeting the required vesting service condition) at retirement or termination of employment, based on a pre-defined formula.

The Company provides for the liability towards the said plans on the basis of actuarial valuation carried out quarterly as at the reporting date, by an independent qualified actuary using the projected- unit-credit method.

The obligation towards the said benefits is recognised in the balance sheet, at the present value of the defined benefit obligations less the fair value of plan assets (being the funded portion). The present value of the said obligation is determined by discounting the estimated future cash outflows, using interest rates of government bonds.

The interest income / (expense) are calculated by applying the above mentioned discount rate to the plan assets and defined benefit obligations liability. The net interest income / (expense) on the net defined benefit liability is recognised in the statement of profit and loss. However, the related re-measurements of the net defined benefit liability are recognised directly in the other comprehensive income in the period in which they arise. The said re-measurements comprise of actuarial gains and losses (arising from experience adjustments and changes in actuarial assumptions), the return on plan assets (excluding interest). Re-measurements are not re-classified to the statement of profit and loss in any of the subsequent periods.

c. Other long-term employee benefits

The employees of the Company are entitled to compensated absences as well as other long- term benefits. Compensated absences benefit comprises of encashment and availment of leave balances that were earned by the employees over the period of past employment.

The Company provides for the liability towards the said benefit on the basis of actuarial valuation carried out quarterly as at the reporting date, by an independent qualified actuary using the projected- unit-credit method. The related re-measurements are recognised in the statement of profit and loss in the period in which they arise.

d. Share-based payments

The Company operates equity-settled and cash- settled, employee share-based compensation plans, under which the Company receives services from employees as consideration for stock options either towards shares of the Company / cash settled units.

In case of equity-settled awards, the fair value is recognised as an expense in the statement of profit and loss within employee benefits as employee share-based payment expenses, with a corresponding increase in share-based payment reserve (a component of equity).

However, in case of cash-settled awards, the credit is recognised as a liability within other nonfinancial liabilities. Subsequently, at each reporting period, until the liability is settled, and at the date of settlement, liability is re-measured at fair value through statement of profit and loss.

The total amount so expensed is determined by reference to the grant date fair value of the stock options granted, which includes the impact of any market performance conditions and non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions. However, the non-market performance vesting and service conditions are considered in the assumption as to the number of options that are expected to vest. The forfeitures are estimated at the time of grant and reduce the said expense rateably over the vesting period.

The expense so determined is recognised over the requisite vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. As at each reporting date, the Company revises its estimates of the number of options that are expected to vest, if required.

It recognises the impact of any revision to original estimates in the period of change. Accordingly, no expense is recognised for awards that do not ultimately vest, except for which vesting is conditional upon a market performance / non-vesting condition. These are treated as vesting irrespective of whether or not the market / non-vesting condition is satisfied, provided that service conditions and all other nonmarket performance are satisfied.

Where the terms of an award are modified, in addition to the expense pertaining to the original award, an incremental expense is recognised for any modification that results in additional fair value, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled (including due to non-vesting conditions not being met), it is treated as if it is vested thereon, and any un-recognised expense for the award is recognised immediately. This includes any award where nonvesting conditions within the control of either the entity or the employee are not met. However, if a new replacement award is substituted for the cancelled award, the arrangement is treated as a modification and accounted accordingly.

2.17 Provisions

a. General

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources will be required to settle the said obligation, and the amounts of the said obligation can be reliably estimated.

Provisions are measured at the present value of the expenditures expected to be required to settle the relevant obligation, using a pre-tax rate that reflects current market assessments of the time value of money (if the impact of discounting is significant) and the risks specific to the obligation. The increase in the provision due to un-winding of discount over passage of time is recognised within finance costs.

b. Asset Retirement Obligation (‘ARO')

ARO are recognised for those operating lease arrangements where the Company has an obligation at the end of the lease period to restore the leased premises in a condition similar to inception of lease. ARO are provided at the present value of expected costs to settle the obligation and are recognised as part of the cost of that particular asset. The estimated future costs of decommissioning are reviewed annually and any changes in the estimated future costs or in the discount rate applied are adjusted from the cost of the asset.

2.18 Contingencies

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

2.19 Revenue recognition

Revenue is recognised when it is probable that the entity will receive the economic benefits associated with the transaction and the related revenue can be measured reliably. Revenue is recognised at the fair value of the consideration received or receivable, which is generally the transaction price, net of any taxes / duties, discounts and process waivers.

In order to determine if it is acting as a principal or as an agent, the Company assesses whether it has exposure to the significant risks and rewards associated with the sale of goods or the rendering of services.

a. Service revenues

Service revenues mainly pertain to usage subscription and activation charges for voice, data, messaging and value added services. It also includes revenue towards interconnection charges for usage of the Company's network by other operators for voice, data, messaging and signalling services.

Usage charges are recognised based on actual usage. Subscription charges are recognised over the estimated customer relationship period or subscription pack validity period, whichever is lower. Activation revenue and related activation costs are amortised over the estimated customer relationship period. However, any excess of activation costs over activation revenue are expensed as incurred.

The billing/ collection in excess of revenue recognised is presented as deferred revenue in the balance sheet whereas unbilled revenue is recognised within other current financial assets.

Revenues from long distance operations comprise of voice services and bandwidth services (including installation), which are recognised on provision of services and over the period of arrangement respectively.

b. Multiple element arrangements

The Company has entered into certain multiple- element revenue arrangements which involve the delivery or performance of multiple products, services or rights to use assets. At the inception of the arrangement, all the deliverables therein are evaluated to determine whether they represent separately identifiable component basis it is perceived from the customer perspective to have value on standalone basis.

Total consideration related to the multiple element arrangements is allocated among the different components based on their relative fair values (i.e., ratio of the fair value of each element to the aggregated fair value of the bundled deliverables).

c. Equipment sales

Equipment sales mainly pertain to sale of telecommunication equipment and related accessories. Such transactions are recognised when the significant risks and rewards of ownership are transferred to the customer. However, in case of equipment sale forming part of multiple-element revenue arrangements which is not separately identifiable component, revenue is recognised over the customer relationship period.

d. Capacity Swaps

The exchange of network capacity is recognised at fair value unless the transaction lacks commercial substance or the fair value of neither the capacity received nor the capacity given is reliably measurable.

e. Interest income

The interest income is recognised using the EIR method. For further details, refer Note 2.9.

f. Dividend income

Dividend income is recognised when the Company's right to receive the payment is established.

2.20 Borrowing costs

Borrowing costs consist of interest and other ancillary costs that the Company incurs in connection with the borrowing of funds. The borrowing costs directly attributable to the acquisition or construction of any asset that takes a substantial period of time to get ready for its intended use or sale are capitalised. All the other borrowing costs are recognised in the statement of profit and loss within finance costs of the period in which they are incurred.

2.21 Exceptional items

Exceptional items refer to items of income or expense within the statement of profit and loss from ordinary activities which are non-recurring and are of such size, nature or incidence that their separate disclosure is considered necessary to explain the performance of the Company.

2.22 Dividends Paid

Dividend to shareholders is recognised as a liability and deducted from equity, in the year in which the dividends are approved by the shareholders. However, interim dividends declared by the Board of directors, which does not need shareholder's approval, are recognised as a liability and deducted from retained earnings, in the year in which the dividends are so declared.

2.23 Earnings per share (‘EPS')

The Company presents the Basic and Diluted EPS data.

Basic EPS is computed by dividing the profit for the period attributable to the shareholders of the Company by the weighted average number of shares outstanding during the period.

Diluted EPS is computed by adjusting, the profit for the year attributable to the shareholders and the weighted average number of shares considered for deriving Basic EPS, for the effects of all the shares that could have been issued upon conversion of all dilutive potential shares. The dilutive potential shares are adjusted for the proceeds receivable had the shares been actually issued at fair value. Further, the dilutive potential shares are deemed converted as at beginning of the period, unless issued at a later date during the period.

3. Critical accounting estimates, assumptions andjudgements

The estimates and judgements used in the preparation of the said financial statements are continuously evaluated by the Company, and are based on historical experience and various other assumptions and factors (including expectations of future events), that the Company believes to be reasonable under the existing circumstances. The said estimates and judgements are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.

Although the Company regularly assesses these estimates, actual results could differ materially from these estimates - even if the assumptions under-lying such estimates were reasonable when made, if these results differ from historical experience or other assumptions do not turn out to be substantially accurate. The changes in estimates are recognised in the financial statements in the period in which they become known.

3.1 Critical accounting estimates and assumptions

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year are discussed below.

a. Property, plant and equipment

Refer Note 2.6 and 6 for the estimated useful life and carrying value of property, plant and equipment respectively.

During the year ended March 31, 2017, the Company has reassessed useful life of certain categories of network assets due to technological developments and accordingly has revised the estimate of its useful life in respect of those assets. Out of these assets, the additional depreciation charge of ' 2,920 on assets for which the revised useful life has expired by March 31, 2016 has been recognised and disclosed as ‘exceptional items' and additional depreciation charge of ' 6,276 for other assets has been recognised within ‘Depreciation and amortisation'. The impact of above change on the depreciation charge for the future years is as follows:

Year ended

Future
Particulars March 31, 2018 March 31, 2019 March 31, 2020 Period till end of life
Impact on future depreciation charge (2,764) (2,646) (1,109) 15,715

b. Allowance for impairment of trade receivables The expected credit loss is mainly based on the ageing of the receivable balances and historical experience. The receivables are assessed on an individual basis or grouped into homogeneous groups and assessed for impairment collectively, depending on their significance. Moreover, trade receivables are written off on a case-to-case basis if deemed not to be collectible on the assessment of the underlying facts and circumstances

c. Contingencies

Refer Note 22 for details of contingent liabilities.

3.2 Critical judgements in applying the Company's accounting policies

The critical judgements, which the management has made in the process of applying the Company's accounting policies and has the most significant impact on the amounts recognised in the said financial statements, is discussed below:

Multiple element contracts with vendors The Company has entered into multiple element contracts for supply of goods and rendering of services. In certain cases, the consideration paid is determined independent of the value of supplies received and services availed. Accordingly, the supplies and services are accounted for based on their relative fair values to the overall consideration. The supplies with finite life under the contracts have been accounted under Property, Plant and Equipment and / or as Intangible assets, since the Company has economic ownership in these assets and represents the substance of the arrangement.

Arrangement containing lease

The Company assesses the contracts entered with telecom operators / passive infrastructure services providers to share tower infrastructure services so as to determine whether these contracts that do not take the legal form of a lease convey a right to use an asset or not. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, that such contracts are in the nature of leases. Most of these leases are classified as operating unless the term of the agreement is for the major part of the estimated economic life of the leased asset, which is accounted for as finance lease.

4. Standards issued but not effective until the date of authorisation for issuance of the said financial statements

The new Standards, amendments to Standards that are issued but not yet effective until the date of authorisation for issuance of the said financial statements are discussed below. The Company has not early adopted these amendments and intends to adopt when they become effective.

Ind AS 102, ‘Share based payments'

In March 2017, MCA issued amendments to Ind AS 102 pertaining to measurement of cash-settled share based payments, classification of share- based payments settled net of tax withholdings and accounting for modification of a share based payment from cash-settled to equity-settled method.

The amendments are applicable to annual periods beginning on or after April 1, 2017 with early adoption permitted. The Company does not expect that the adoption of the amendments will not have any significant impact on the said financial statements.

Ind AS 7, ‘Statement of cash flows'

In March 2017, MCA issued amendments to Ind AS 7, which requires certain additional disclosures to be made for changes in liabilities / assets arising from financial activities on account of non-cash transaction such as effect of changes in foreign exchange rates, fair values and others.

The amendments are applicable to annual periods beginning on or after April 1, 2017 with early adoption permitted. The Company will be providing the requisite disclosure in its statement of cash flows.

5. Significant transactions / new developments

(i) During the year ended March 31, 2017, the Company has been allotted 155.60 MHz spectrum across 1800/2100/2300 MHz. Consequently, the Company has paid amount of ' 67,764 upfront and opted the deferred payment option for ' 66,764.

(ii) The Scheme of Arrangement (‘Scheme') under Sections 391 to 394 of the Companies Act, 1956 with respect to the amalgamation of Airtel Broadband Services Private Limited (‘ABSPL) with the Company, was approved by the Hon'ble High Court of Bombay in 2014. Department of Telecommunications (‘DoT') had given its approval for taking on record the merger of ABSPL with the Company, subject to certain conditions as stipulated in the letter. One of the conditions of merger requires payment of ' 4,361, equal to the difference between the entry fee for Unified Access Service License and Internet Service Provider License. The Hon'ble Telecom Disputes Settlement and Appellate Tribunal (‘TDSAT') vide its interim order in 2015 has allowed the Company to operationalise the spectrum subject to the company paying a sum of ' 4,361 along with interest as may be determined by the Tribunal, in case the petition fails.

Further, during the year ended March 31, 2016, the Company had entered into a definitive agreement for acquisition of Augere Wireless Broadband Private Limited (‘AWBPL). On June 7, 2016, on fulfillment of the relevant closing conditions the transaction has been consummated. The Scheme of Arrangement (‘Scheme') under Sections 391 to 394 of the Companies Act, 1956 with respect to the amalgamation of AWBPL with the Company, was approved by the Hon'ble High Court of Delhi.

The Company has filed the Scheme with Registrar of Companies (‘ROC') on April 9, 2015 and February 15, 2017 which are the effective date and appointed date of merger for ABSPL and AWBPL respectively. Accordingly, these entities have ceased to exist and have merged with the Company. Accordingly, entire assets (' 64,837 and ' 1,536 - mainly pertains to PPE & CwIp of ' 4,843 and IUD of ' 55,689), liabilities (' 8,890 and ' 323 - mainly pertains to borrowings of ' 5,396 and capex payable of ' 2,582) and the differential value of equity in the respective entity books have been recognised by the Company as the date of the transaction at same carrying values as in the books of ABSPL and AWbPl respectively. The difference of ' 8,599 and ' 445 between the share capital and the carrying values of investment in ABSPL and AWBPL in the books of the Company has been adjusted with business restructuring reserve and general reserve respectively.

(iii) During the year ended March 31, 2017, Bharti Infratel Limited (‘BIL), a subsidiary of the Company has bought back its 47,058,823 shares against a consideration of ' 425 per share. Out of which the Company has tendered 29,101,272 shares and received the consideration of ' 12,368 and accordingly, the excess of proceeds (net of associated costs, taxes and levies) over the cost of investment amounting to ' 1,687 has been recognised as gain and disclosed as other income.

(iv) During the year ended March 31, 2017, the Company has sold 400,000,000 shares in BIL, against a consideration aggregating to ' 130,000 and accordingly the excess of cost of investment over the proceeds (net of associated costs, taxes and regulatory levies) amounting to ' 25,375 has been recognised as loss under exceptional items. Subsequent to the transaction, the shareholding of the Company in BIL has reduced to 50.3%.

(v) During the year ended March 31, 2017, the Company has entered into an agreement to sell the investment in subsidiaries Bharti Airtel International (Netherlands) B.V. (‘BAIN'), Bharti International (Singapore) Pte Ltd (‘BISPL) and Bharti Airtel International (Mauritius) Limited (‘BAIML) to its wholly owned subsidiary Network i2i Limited. However, sale of investment in BISPL is subject to certain customary closing conditions, hence has not been consummated. The same has been classified as assets-held-for-sale. Accordingly, the excess of cost of investment over sales consideration, amounting to ' 118,582 and ' 14,906 pertaining to BAIN / BAIML and BISPL respectively has been recognised as loss under exceptional items.

(vi) During the year ended March 31, 2017, the Company has entered into a scheme of amalgamation for the merger of Telenor (India) Communication Private Limited with the Company and definitive agreement to acquire 100% equity stake in Tikona Digital Networks. The said transactions are subject to requisite regulatory approvals and other closing conditions.

(vii) During the year ended March 31, 2017, Bharti Telemedia Limited, a subsidiary of the Company, has allotted 475 shares to the Company against a consideration of ' 4,750.

(viii) During the year ended March 31, 2017, the Company has entered into a definitive agreement with Aircel Limited and its subsidiaries Dishnet Wireless Limited and Aircel cellular Limited, to acquire rights to use spectrum in the 2300 MHz band for seven circles against a consideration of ' 34,840. The Company has received the requisite approvals for the transfer of right to use the spectrum and accordingly the spectrum has been recorded in the books.

(ix) During the year ended March 31, 2016, the Company had entered into a definitive agreement with Videocon Telecommunications Limited to acquire rights to use spectrum in the 1800 MHz band for six circles against a consideration of ' 46,530. During the year ended March 31, 2017, the Company has received the requisite approvals for the transfer of right to use the spectrum and accordingly the spectrum has been recorded in the books.

6. Property, plant and equipment (‘PPE')

The following table presents the reconciliation of changes in the carrying value of PPE and capital work-in-progress for the year ended March 31, 2017 and 2016:

PPE

Particulars Leasehold Improvement Land and Building Plant and machinery Furniture & Fixture Vehicles Office equipment Computer Total Capital work-in progress
Gross carrying value
Balance as of April 1, 2015 4,416 8,366 607,176 1,597 281 3,661 29,018 654,515 26,898
Additions 119 46 - 127 21 661 1,879 2,853 125,379
Disposals / adjustment (4) (52) (8,778) (14) (9) (72) (8,102) (17,031) -
Capitalisation / reclassification 143 (213) 123,758 4 - - (3) 123,689 (123,689)
Balance as of March 31, 2016 4,674 8,147 722,156 1,714 293 4,250 22,792 764,026 28,588
Additions 221 73 - 98 34 531 3,039 3,996 130,153
Acquisition through Business Combinations - - 489 - - - - 489 123
Disposals / adjustment (8) (57) (15,384) (13) (46) (50) 229 (15,329) -
Capitalisation / reclassification 7 (7) 147,104 - - (2) (56) 147,046 (147,046)
Balance as of March 31, 2017 4,894 8,156 854,365 1,799 281 4,729 26,004 900,228 11,818
Accumulated depreciation
Balance as of April 1, 2015 3,154 2,274 360,217 1,329 219 2,474 26,692 396,359 -
Charge* 397 334 66,415 115 18 485 1,838 69,602 -
Disposals / adjustment 33 (51) (6,437) (14) (3) (64) (8,072) (14,608) -
Reclassification 40 (52) 1 - - 3 8 - -
Balance as of March 31, 2016 3,624 2,505 420,196 1,430 234 2,898 20,466 451,353 -
Charge* 393 312 76,174 116 20 593 1,727 79,335 -
Disposals / adjustment (3) (26) (11,784) (4) (30) (46) 257 (11,636) -
Balance as of March 31, 2017 4,014 2,791 484,586 1,542 224 3,445 22,450 519,052 -
Net carrying value
As of April 1, 2015 1,262 6,092 246,959 268 62 1,187 2,326 258,156 26,898
As of March 31, 2016 1,050 5,642 301,960 284 59 1,352 2,326 312,673 28,588
As of March 31, 2017 880 5,365 369,779 257 57 1,284 3,554 381,176 11,818

@ Refer Note 5 (ii)

* Includes exceptional item of ' 1,672 and ' 2,925 for the year ended March 31, 2017 and 2016 with respect to plant and machinery (refer Note 29 (i) a, b, c & (ii) b) Refer note 22(ii)(a) for assets given on operating lease.

Capital work in progress mainly includes ' 10,928, ' 27,950 and ' 26,260 towards plant and machinery as of March 31, 2017, March 31, 2016 and April 1, 2015 respectively.

The following table summarises the detail of lease hold land taken on finance lease which represents the significant part of assets taken on finance lease:

Particulars Grossing Carrying value Accumulated depreciation Net carrying value
As of March 31, 2017 411 46 365
As of March 31, 2016 411 44 367
As of April 1, 2015 411 40 371

7. Intangible assets

The following table presents the reconciliation of changes in the carrying value of intangible assets and intangible assets under development for the year ended March 31, 2017 and 2016:

Intangible assets

Intangible
Particulars Software Bandwidth Licenses (including spectrum) Other acquired intangible assets Total assets under development
Gross carrying value
Balance as of April 1, 2015 14,964 24,167 307,231 2,172 348,534 64,108
Additions 3,086 1,644 - - 4,730 298,643
Disposals / adjustment @ (4,236) - (9,403) - (13,639) -
Capitalisation / reclassification - - 353,036 - 353,036 (353,036)
Balance as of March 31, 2016 13,814 25,811 650,864 2,172 692,661 9,715
Additions 2,657 2,687 - 5,366 10,710 234,815
Acquisition through Business - - 899 - 899 -
Combinations*
Disposals / adjustment (138) (85) (8) - (231) -
Capitalisation / reclassification - - 160,346 - 160,346 (160,346)
Balance as of March 31, 2017 16,333 28,413 812,101 7,538 864,385 84,184
Accumulated amortisation
Balance as of April 1, 2015 11,972 9,015 49,222 433 70,642 -
Charge 2,396 1,652 24,594 434 29,076 -
Disposals / adjustment @ (4,236) - (9,403) - (13,639) -
Balance as of March 31, 2016 10,132 10,667 64,413 867 86,079 -
Charge 2,502 1,863 38,249 1,757 44,371 -
Disposals / adjustment (138) 28 (7) - (117) -
Balance as of March 31, 2017 12,496 12,558 102,655 2,624 130,333 -
Net Carrying Amount
As of April 1, 2015 2,992 15,152 258,009 1,739 277,892 64,108
As of March 31, 2016 3,682 15,144 586,451 1,305 606,582 9,715
As of March 31, 2017 3,837 15,855 709,446 4,914 734,052 84,184

@ Mainly pertains to gross block and accumulated amortisation of license (including spectrum) and software whose useful life has expired.

Weighted average remaining amortisation period of license as of March 31, 2017, March 31, 2016 and April 1, 2015 is 16.85, 17.53 and 17.37 years, respectively.

During the year ended March 31, 2017 and 2016 the Company has capitalised borrowing cost of ' 2,748 and ' 1,937 respectively. Addition in intangible assets under development mainly pertains to Spectrum.

8. Investments

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Non- current
Investments - FVTPL 52 52 52
Investment in subsidiaries 459,494 698,869 652,321
Investment in joint ventures and associates 44 44 157
459,590 698,965 652,530
Current
Investments - FVTPL - 8 47,567
- 8 47,567

Non-current investments

No of shares
As of March 31, 2017 As of March 31, 2016 As of April 1, 2015 As of March 31, 2016 As of April 1, 2015
Investment in Subsidiaries
Bharti Hexacom Limited: Equity Shares of? 10 each 5,718 5,718 5,718 175,000,000 175,000,000 175,000,000
Bharti Airtel Services Limited: Equity Shares of? 10 each * 1 126 1 100,000 100,000 100,000
Bharti Airtel (USA) Limited: Equity Shares of USD .0001 each * 1,997 1,997 1,997 300 300 300
Bharti Airtel (UK) Limited: Equity Shares of GBP 1 each * 1,777 1,777 1,777 123,663 123,663 123,663
Bharti Airtel (Hongkong) Limited: Equity Shares of HKD 1 each * 454 454 454 4,959,480 4,959,480 4,959,480
Bharti Airtel (Canada) Limited: Equity Shares of CAD 1 each (dissolved on December 31, 2015) - 3 - - 75,100
Network i2i Limited: Equity Shares of USD 1 each 58,750 7,925 7,925 817,427,896 52,227,896 52,227,896
Bharti Infratel Limited: Equity Shares of? 10 each (refer note 5) * 341,111 498,347 498,347 930,898,728 1,360,000,000 1,360,000,000
Bharti Telemedia Limited: Equity Shares of? 10 each (refer note 5) * 41,320 39,259 39,259 484,689,995 9,690,000 9,690,000
Bharti Airtel Lanka (Private) Limited : Equity Shares of SLR 10 each (net of provision) # - 471 - 27,146,471,771 27,146,471,771 26,126,080,053
Bharti Airtel Holdings (Singapore) Pte Limited: Equity Shares ofSGD 1 each (merqed with BISPL w.e.f. July 15, 2016) - 15,475 15,475 - 1 1
Bharti Airtel Holdings (Singapore) Pte. Limited: Equity Shares of USD 1 each (merged with BISPL w.e.f. July 15, 2016) (refer note 5) - 338,642,771 338,642,771
Bharti Airtel International (Mauritius) Limited: Equity Shares of USD 1 each # (refer note 5) - 118,027 7,872 - 3,384,970,000 1,699,970,000
Airtel Payments Bank Limited (formarly known as Airtel M Commerce Services Limited): Equity Shares of? 10 each 7,965 3,960 2,900 796,499,995 396,000,000 290,000,000
Bharti International (Singapore) Pte. Limited: Equity Shares of USD 1 each (refer note 5) # - 3,782 3,782 - 593,739,000 593,739,000
Bharti Airtel International (Netherlands) B.V.: Equity Shares of EURO 1 each (refer note 5) # 0 - - 1 908,443,919 908,443,919
Telesonic Networks Limited : Equity Shares of? 10 each 91 91 91 89,230,796 89,230,796 89,230,796
Nxtra Data Limited: Equity Shares of? 10 each * 309 1,452 1,452 5,050,000 5,050,000 5,050,000
Airtel Broadband Services Private Limited: Equity Shares of? 10 each (merged with the Company) (refer note 5) - 65,270 - -
Indo Teleports Limited (formerly known as Bharti Teleports Limited) 285 285 - 21,850,000 21,850,000 -
Equity Shares of? 10 each
Wynk Limited: Equity Shares of? 10 each * 1 8 1 50,000 50,000 50,000
Nettle Infrastructure Investments Limited: Equity Shares of ?10 each 0 - - 45,000 - -

 

No of shares
As of March 31, 2017 As of March 31, 2016 As of April 1, 2015 As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Investment in joint ventures and associates
Bridge Mobile PTE Limited : Equity shares of USD 1 each 34 34 34 800,000 800,000 800,000
Firefly Networks Limited : Equity Shares of? 10 each 10 10 10 1,000,000 1,000,000 1,000,000
Indo Teleport Limited (formerly known as Bharti Teleport Limited) Equity shares of? 10 each - - 113 - - 11,270,000
Other Investments (FVTPL)
IFFCO Kissan Sanchar Limited : Equity Shares of? 10 each 50 50 50 100,000 100,000 100,000
Investment in mutual funds - - 47,550
Investment in deposits and Bonds 2 10 19
459,875 699,258 700,100
Less: Provision for diminution in value of investments 285 285 3
459,590 698,973 700,097
Aggregate book value of unquoted investments 118,764 200,911 154,203
Aggregate book value of quoted investments 341,111 498,347 545,897
Aggregate market value of quoted investments 302,961 519,452 571,150
Aggregate provision for diminution in value of investments 285 285 3

Investment value has been increased by ? 453,244 and ? 453,244 / ? 14,864 and ? 14,730 for deemed cost / fair valuation adjustment on Ind-As transition as of March 31, 2016 and April 1, 2015, respectively (refer note 38 III (4)/(5)).

# Investment value has been reduced by ? 199,401 for fair valuation adjustments on Ind-AS transition (refer note 38 III (4)).

All the above investments are unquoted except Bharti Infratel Limited and mutual funds.

Detail of significant investments in subsidiaries are as below:

As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Name of the Subsidiaries Place of incorporation Principal activities % of shareholding
1 Bharti Hexacom Limited India Telecommunication services 70.00 70.00 70.00
2 Bharti Infratel Limited (refer note 5) India Infrastructure sharing services 50.30 71.76 71.88
3 Bharti Telemedia Limited India Direct To Home services 95.00 95.00 95.00
4 Airtel Payments Bank Limited (formerly known as Airtel M Commerce Services Limited) India Mobile commerce services 80.10 80.10 100.00
5 Airtel Broadband Services Private Limited (refer note 5) India Telecommunication services - - 100.00
6 Network i2i Limited Mauritius Submarine Cable System 100.00 100.00 100.00
7 Bharti Airtel Holdings (Singapore) Pte Ltd (refer note 5) Singapore Investment Company - 100.00 100.00
8 Bharti Airtel International (Mauritius) Limited (refer note 5) Mauritius Investment Company - 100.00 100.00
9 Bharti International (Singapore) Pte. Ltd (refer note 5) Singapore Telecommunication services 100.00 100.00 100.00

9. Derivative financial Instruments

The Company uses foreign exchange option contracts, swap contracts, forward contracts and interest rate swaps to manage some of its transaction exposures.

The details of derivative financial instruments are as follows:-

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Assets
Currency swaps, forward and option contracts 187 549 215
Interest swaps 106 - -
Embedded derivatives 554 309 107
847 858 322
Liabilities
Currency swaps, forward and option contracts 1,848 596 111
Embedded derivatives - 108 233
1,848 704 344
Non-current derivative financial assets 213 396 154
Current derivative financial assets 634 462 168
Non-current derivative financial liabilities (186) (8) (121)
Current derivative financial liabilities (1,662) (696) (223)
(1,001) 154 (22)

Embedded derivative

The Company entered into agreements denominated / determined in foreign currencies. The value of these contracts changes in response to the changes in specified foreign currencies. Some of these contracts have embedded foreign currency derivatives having economic characteristics and risks that are not closely related to those of the host contracts. These embedded foreign currency derivatives have been separated and carried at fair value through profit or loss.

10. Loans and security deposits

Unsecured, considered good As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Non - current
Loans to related parties (refer note 32) 623 18,546 33,240
Security deposits * 9,766 10,315 9,652
10,389 28,861 42,892
Current
Loans to related parties (refer note 32) 72,081 43,376 40,552
72,081 43,376 40,552

*Security deposits primarily include deposits given towards rented premises, cell sites, interconnect ports and other miscellaneous deposits.

11. Financial Assets - Others Non-Current

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Rent equalisation 49 38 23
Restricted cash * 22 10 6
Others 485 550 458
556 598 487

Current

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Restricted cash * 647 636 558
Unbilled revenue 7,501 11,148 7,492
Claims recoverable 450 617 397
Interest accrued on investments 24 1,431 1,182
Others 150 127 36
8,772 13,959 9,665

* Restricted cash represents amount given as collateral for legal cases and / or bank guarantees for disputed matter and earmarked balances for dividend payouts.

12. Income taxes

The major components of Income Tax Expense are:

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Current income tax
- For the year 95 20,014
- Adjustments for prior periods (140) 544
(45) 20,558
Deferred tax*
- Origination and reversal of temporary differences 17,455 5,269
- Adjustments for prior periods (3,249) (1,086)
14,206 4,183
Income tax expense 14,161 24,741

* Includes minimum alternate tax (MAT) credit of ' 1,218 and ' 17,631 for the year ended March 31, 2017 and March 31, 2016 respectively.

The reconciliation between the amount computed by applying the statutory income tax rate to the (loss) / profit before tax and tax (income) / expenses charge is summarised below:

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
(Loss) / profit before tax (85,095) 102,544
Tax (income) / expense @ company's domestic tax rate of 34.608% (29,450) 35,488
Effect of:
Tax holiday (144) (8,214)
Adjustments in respect to previous years (3,389) (542)
Tax for which no credit is allowed 469 583
(Income) / expense (net) not (taxable) / deductible 46,380 (2,745)
Others 295 171
Income tax expense 14,161 24,741

The analysis of deferred tax assets and liabilities is as follows:

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Deferred tax assets
Provision for impairment of debtors / advances 10,520 7,978 7,178
Carry forward losses 1,575 - -
Employee benefits 1,044 840 820
Minimum tax credit 57,498 56,280 38,649
Lease rent equalization 6,478 6,189 5,676
Fair valuation of financial instruments and exchange differences 5,791 4,865 4,133
Depreciation / amortisation on property, plant and equipment / intangible assets (76,574) (54,076) (30,396)
Rates and taxes 1,527 - -
Others 1,016 994 1,181
Net deferred tax assets 8,875 23,070 27,241

 

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Deferred tax expense
Provision for impairment of debtors / advances 2,542 800
Carry forward losses 1,575 -
Employee benefits 204 20
Minimum tax credit 1,218 17,631
Lease rent equalization 289 513
Fair valuation of financial instruments and exchange differences 926 732
Depreciation / amortisation on property, plant and equipment / intangible assets (22,498) (23,680)
Rates and taxes 1,527 -
Others 11 (199)
Net deferred tax expense (14,206) (4,183)

The movement in deferred tax assets and liabilities during the year is as follows:

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Opening balance 23,070 27,241
Tax expense recognised in statement of profit and loss (14,206) (4,183)
Tax income recognised in OCI 11 12
Closing balance 8,875 23,070

13. Other non-financial assets Non-Current

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Capital advances * 1,033 3,989 77
Other advances 23,007 22,632 16,959
Taxes recoverable 14,139 - -
Others 1,675 1 5
39,854 26,622 17,041

Current

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Prepaid expenses 1,960 2,522 2,561
Advances to suppliers 9,579 11,073 2,690
Taxes recoverable 20,404 8,846 6,193
Others 1,009 901 1,501
32,952 23,342 12,945

* Includes advance payment of ' 3,657 towards spectrum during the year ended March 31, 2016.

Other advances represent payments made to various Government authorities under protest and are disclosed net of provision (refer Note 19).

Taxes recoverable primarily include customs duty, excise duty, service tax and sales tax. Non-current tax recoverable represents service tax recoverable on spectrum beyond one year period.

Advance to Suppliers are disclosed net of provision of '1,092, ' 2,056 and ' 3,003 as of March 31, 2017, 2016 and April 1, 2015, respectively.

Others primarily include employee receivables which principally consist of advances given for business purpose.

14. Trade Receivables

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Unsecured
Considered good * 32,118 31,724 33,047
Considered doubtful 25,530 18,181 16,229
Less: Provision for doubtful receivables (25,530) (18,181) (16,229)
32,118 31,724 33,047

includes amount due from related parties (refer Note 32).

The movement in allowances for doubtful debts is as follows:

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Opening balance 18,181 16,229
Additions 7,678 6,327
Write off (net of recovery) 329 4,375
Closing balance 25,530 18,181

15. Cash and cash equivalents (‘C&CE')

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Balances with banks
- On current accounts 1,030 240 878
- Bank deposits with original maturity of three months or less - - 2,700
Cheques on hand 6 166 222
Cash on hand 51 60 52
1,087 466 3,852

For the purpose of statement of cash flows, C&CE comprise of following:-

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
C&CE as per balance sheet 1,087 466 3,852
Bank overdraft (refer Note 17) (265) (3,024) -
822 (2,558) 3,852

The details of Specified Bank Notes held and transacted during the period November 8, 2016 to December 30, 2016 are provided below:-

Particulars Specified Bank Notes Other Denomination Notes Total
Closing cash on hand as at November 8, 2016 41 1 42
(+) Permitted receipts 39 674 713
(-) Permitted payments - - -
(-) Amount deposited in Banks 80 639 719
Closing cash on hand as at December 30, 2016 - 36 36

16. Share Capital

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Authorised shares
5,500,000,000 (March 31, 2016 and April 1, 20155,000,000,000) equity shares of ' 5 each 27,500 25,000 25,000
Issued, Subscribed and fully paid-up shares
3,997,400,102 equity shares of ' 5 each 19,987 19,987 19,987
19,987 19,987 19,987

a. Terms/rights attached to equity shares

The Company has only one class of equity shares having par value of ' 5 per share. Each holder of equity shares is entitled to cast one vote per share.

b. Details of shareholders (as per the register of shareholders) holding more than 5% shares in the Company

As of March 31, 2017

As of March 31, 2016

As of April 1, 2015

Particulars No. of shares '000 % holding No. of shares '000 % holding No. of shares '000 % holding
Equity shares of ' 5 each fully paid up
Bharti Telecom Limited 1,817,987 45.48% 1,802,318 45.09% 1,747,545 43.72%
Pastel Limited 591,319 14.79% 591,319 14.79% 591,319 14.79%
Indian Continent Investment Limited 265,861 6.65% 265,861 6.65% 265,861 6.65%
LIC of India Child Fortune Plus Balanced Fund 211,832 5.30% 203,879 5.10% - -
Three Pillar Pte Limited 199,870 5.00% 199,870 5.00% 199,870 5.00%

c. Shares held by Bharti Airtel Welfare Trust against employee share-based payment plans (face value of ' 5/- each)

As of March 31, 2017

As of March 31, 2016

Particulars Shares '000 Amount Shares '000 Amount
Opening balance 1,882 524 1,411 114
Purchased during the year - - 1,500 514
Exercised during the year (537) (157) (1,029) (104)
1,345 367 1,882 524

d. Dividend paid and proposed

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
A Declared and paid during the year:
Final dividend for 2015-16 : ' 1.36 per share (including dividend distribution tax @ 20.358% of ' 1,107 Mn) 6543 -
Final dividend for 2014-15 : ' 2.22 per share (including dividend distribution tax @ 20.358% of ' 1,807 Mn) - 10,681
6,543 10,681
B Proposed dividend
Final dividend for 2016-17: ' 1.00 per share (2015-16 : ' 1.36 per share) 3,997 5,436
Dividend distribution tax @ 20.358% 814 1,107
4,811 6,543

The proposed dividend is subject to approval at annual general meeting and hence has not been recognised as liability.

During the year ended March 31, 2017 and 2016, the Company has availed tax credit of ' 1,087 and ' 1,807 respectively, on account of dividend distribution tax on dividend received from subsidiary companies.

17. Borrowings Non-current

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Secured
Term loans - - -
Others* 31 20 19
31 20 19
Less: Current portion (A) (15) (10) (9)
16 10 10
Unsecured
Term loans 31,457 39,207 64,050
Non convertible bonds @ 64,082 65,402 -
Deferred payment liabilities ** 439,205 341,424 143,167
Finance lease obligations 2,097 1,951 144
536,841 447,984 207,361
Less: Current portion (B) (33,436) (33,424) (13,162)
503,405 414,560 194,199
503,421 414,570 194,209
Current maturities of long-term borrowings (A+B) 33,451 33,434 13,171

*Others include vehicle loans taken from banks which were secured by hypothecation of the vehicles.

@ During the year ended March 31, 2016, the Company had issued 4.375% USD 1,000 Mn (' 63,973) senior unsecured notes (‘Bonds') at issue price of 99.304% which are listed on Singapore stock exchange and due for repayment in the year 2025.

Current

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Unsecured
Term loans 65,213 3,975 6,259
Bank overdraft 265 3,024 -
65,478 6,999 6,259

** During the year ended March 31, 2017, 2015 and 2014, the Company had won the auction for spectrum aggregating to 350.6 Mhz. The Company had opted for deferred payment in certain circles for a specified portion of the auction price. The deferred payment liability recognised in the financial statements is payable in 10 equal annual installments (including the related interest) after a moratorium of two years.

17.1 Analysis of borrowings

The details given below are gross of debt origination cost.

17.1.1 Repayment terms of borrowings

The table below summarises the maturity profile of the Company's borrowings based on contractual undiscounted payments.

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Within one year 99,332 40,433 19,430
Between one and two years 41,830 27,023 25,119
Between two and five years 91,535 71,101 42,368
Over five years 371,242 318,447 128,779
603,939 457,004 215,696

The borrowings of ' 265, ' 3,024 and ' Nil outstanding as of March 31, 2017, March 31, 2016 and April 1, 2015, comprising bank overdraft facilities from banks which are repayable on demand. The borrowings of ' 601,577, ' 452,029 and ' 215,552 outstanding as of March 31, 2017, March 31, 2016 and April 1, 2015, comprising various loans, are repayable in total 368, Nil and Nil monthly installments, 586, 732 and 842 half yearly installments, 36, 20 and 15 yearly installments, 11, 1 and Nil bullet installments, and finance lease obligation of ' 2,097, ' 1,951 and ' 144 in total 85, 84 and 15 yearly, quarterly and monthly installments.

17.1.2 Interest rate and currency of borrowings

The below details do not necessarily represents foreign currency or interest rate exposure to the statement of profit and loss, since the Company has taken derivatives for offsetting the foreign currency & interest rate exposure. For foreign currency and interest rate sensitivity, refer Note 33.

Particulars Weighted Average Rate of Interest Total borrowings Floating rate borrowings Fixed rate borrowings
INR 9.60% 502,918 46,765 456,153
USD 3.58% 101,021 36,555 64,466
March 31, 2017 603,939 83,320 520,619
INR 9.99% 346,430 3,036 343,394
USD 3.22% 110,574 44,762 65,812
March 31, 2016 457,004 47,798 409,206
INR 10.08% 163,483 20,153 143,330
USD 1.16% 52,213 52,213 -
April 1, 2015 215,696 72,366 143,330

17.2 Unused lines of credit *

The below table provides the details of un-drawn credit facilities that are available to the Company.

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Unsecured 172,646 126,561 151,118

* Excluding non-fund based facilities.

18 Financial Liabilities - Others Non-Current

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Equipment supply payable - - 452
Lease rent equalisation 19,541 19,913 18,439
Others 2,340 823 822
21,881 20,736 19,713

Current

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Equipment supply payables 44,304 65,874 53,790
Employees payables 2,290 2,944 2,262
Interest accrued but not due 1,409 1,164 237
Security deposit * 2,538 2,602 2,722
Others 5,130 6,188 6,239
55,671 78,772 65,250

* It pertains to deposits received from subscriber / channel partners which are repayable on disconnection, net of outstanding, if any.

‘Others' include payable to Qualcomm Asia Pacific Pte. Limited of ' 4,104 towards purchase of balance equity shares upon satisfaction of certain conditions as per the share purchase agreement for acquisition of erstwhile Airtel Broadband Services Private Limited (formerly known as Wireless Business Services private Limited)

19 Provisions

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Asset retirement obligation 921 921 703
Gratuity 1,827 1,668 1,587
Compensated absence 789 730 720
Other employee benefit plans 84 93 90
3,621 3,412 3,100
Non-current - provisions 2330 2223 1926
Current - provisions 1291 1189 1174
3621 3412 3100

The movement of provision toward Asset retirement obligations is as below:

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Opening Balance 921 703
Additions 22 243
Interest cost (22) (25)
921 921

Due to large number of lease arrangements of the Company, the range of expected period of outflows of provision for asset retirement obligation is significantly wide.

Refer Note 24 for movement of provision towards employee benefits.

The movement of provision towards subjudice matters is as below:

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Opening Balance 75,196 55,205
Net additions 10,758 19,991
85,954 75,196

The said provision has been disclosed under:

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Other non-financial assets - non-current (refer note 13) 40,985 34,586 27,362
Other non-financial liabilities - current (refer note 20) 674 603 530
Trade payables (refer note 21) 44,295 40,007 27,313
85,954 75,196 55,205

20 Other non-financial liabilities Current

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Taxes payable 11,501 7,844 4,629
Others 141 343 343
11,642 8,187 4,972

Taxes payable include service tax, sales tax and other taxes payable and also include provision towards sub judice matters (refer Note 19).

21 Trade Payables

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Trade payables* 149,698 119,706 105,769

* It includes amount due to related parties (refer Note 32) and provision towards sub judice matters (refer Note 19).

22 Contingent liabilities and commitments

(i) Contingent liabilities

Claims against the company not acknowledged as debt:

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
(i) Taxes, Duties and Other demands (under adjudication / appeal / dispute)
-Sales Tax and Service Tax 11,245 11,259 11,120
-Income Tax 12,527 16,282 16,335
-Customs Duty 4,317 4,254 4,254
-Entry Tax 5,509 5,061 4,221
-Stamp Duty 404 404 411
-Municipal Taxes 121 122 122
-Department of Telecom ('DoT') demands 36,540 4,809 4,766
-Other miscellaneous demands 962 818 59
(ii) Claims under legal cases including arbitration matters
-Access Charges / Port Charges 8,733 8,196 6,952
-Others 599 610 562
80,957 51,815 48,802

Further, refer Note f(iv), f(v) and f(vi) below for other DoT matter.

The category wise detail of the contingent liability has been given below:-

a) Sales and Service Tax

The claims for sales tax comprised of cases relating to the appropriateness of declarations made by the Company under relevant sales tax legislations which were primarily procedural in nature and the applicable sales tax on disposals of certain property and equipment items. Pending final decisions, the Company has deposited amounts under protest with statutory authorities for certain cases.

The service tax demands relate to cenvat claimed on tower and related material, levy of service tax on SIM cards and employee talk time, cenvat credit disallowed for procedural lapses and usage in excess of 20% limit.

b) Income Tax demand

Income tax demands mainly include the appeals filed by the Company before various appellate authorities against the disallowance by income tax authorities of certain expenses being claimed, non-deduction of tax at source with respect to dealers / distributor's margin and payments to international operators for access charges.

c) Access charges (Interconnect Usage Charges) / Port charges

(i) Despite the interconnect usage charges (‘IUC') rates being governed by the Regulations issued by Telecom Regulatory Authority of India (‘TRAI'); BSNL had raised a demand for IUC at the rates contrary to the regulations issued by TRAI in 2009. Accordingly, the Company filed a petition against the demand with the TDSAT which allowed payments by the Company based on the existing regulations. The matter was then challenged by BSNL and is currently pending with the Hon'ble Supreme Court.

(ii) The Hon'ble TDSAT allowed BSNL to recover distance based carriage charges. The private telecom operators have jointly filed an appeal against the said order and the matter is currently pending before the Hon'ble Supreme Court.

(iii) BSNL challenged before TDSAT the port charges reduction contemplated by the regulations issued by TRAI in 2007 which passed its judgment in favour of BSNL. The said judgment has been challenged by the private operators in Hon'ble Supreme Court. Pending disposal of the said appeal, in the interim, private operators were allowed to continue paying BSNL as per the revised rates i.e. TRAI regulation issued in 2007, subject to the bank guarantee being provided for the disputed amount. The rates were further reduced by TRAI in 2012 which was challenged by BSNL before the Hon'ble Delhi High Court. The Hon'ble Delhi High Court, in the interim, without staying the rate revision, directed the private operators to secure the difference between TRAI regulation of 2007 and 2012 rates by way of bank guarantee pending final disposal of appeal.

d) Customs Duty

The custom authorities, in some states, demanded custom duty for the imports of special software. The view of the Company is that such imports should not be subject to any custom duty as it is operating software exempt from any custom duty. In response to the application filed by the Company, the Hon'ble Central Excise and Service Tax Appellate Tribunal (‘CESTAT') has passed an order in favour of the custom authorities. The Company has filed an appeal with Hon'ble Supreme Court against the CESTAT order.

e) Entry Tax

In certain states, an entry tax is levied on receipt of material from outside the state. This position has been challenged by the Company in the respective states, on the grounds that the specific entry tax is ultra vires the Constitution. Classification issues have also been raised, whereby, in view of the Company, the material proposed to be taxed is not covered under the specific category.

During the year ended March 31, 2017, the Hon'ble Supreme Court of India upheld the constitutional validity of entry tax levied by few States. However, Supreme Court did not conclude certain aspects such as present levies in each State is discriminatory in nature or not, leaving them open to be decided by regular benches of the Courts. Pending disposition by the regular benches, the Company has decided to maintain status-quo on its position and hence continued to disclose it as contingent liability.

f) DoT Demands

(i) DoT demands include Demand for license fees pertaining to computation of Adjusted Gross Revenue (‘AGR') and the interest thereon, due to difference in its interpretation. The definition of AGR is sub-judice and under dispute since 2005 before the TDSAT. However, the Hon'ble High Courts vide interim orders in 2012 had permitted the Company to continue paying license fee on similar basis as the Company has been paying throughout the period of the license. Further, TDSAT had pronounced its judgment in 2015, quashed all demands raised by DoT and directed DoT to rework the demands basis the principles enunciated in its judgment. Subsequently, the Union of India (‘UOI') and the Company along with various other operators have filed appeals / cross appeals before the Hon'ble Supreme Court of India against the TDSAT judgment. In 2016, all the appeals were tagged together and Hon'ble Supreme Court has permitted DoT to raise demands with a direction not to enforce any demand till the final adjudication of the matter by Hon'ble Supreme Court. Accordingly, DoT has raised the demand basis special audit done by DoT and Comptroller and Auditor General of India. The contingent liability includes such demand and interest thereto (excluding certain contentious matters, penalty and interest thereto) for the financial year 2006-07, 2007-08, 2008-09 and 2009-10.

(ii) DoT demands also include the contentious matters in respect of subscriber verification norms and regulations including validity of certain documents allowed as proof of address / identity.

(iii) Penalty for alleged failure to meet certain procedural requirements for EMF radiation self-certification compliance.

The matters stated above are being contested by the Company and based on legal advice, the Company believes that it has complied with all license related regulations and does not expect any financial impact due to these matters.

In addition to the amounts disclosed in the table above, the contingent liability on DoT matters includes the following:

(iv) Post the Hon'ble Supreme Court Judgment in 2011, on components of AGR for computation of license fee, based on the legal advice, the Company believes that the foreign exchange gain should not be included in AGR for computation of license fee thereon. Further as per TDSAT judgement in 2015, foreign exchange fluctuation does not have any bearing on the license fees. Accordingly, the license fee on foreign exchange gain has not been provided in the financial statements. Also, due to ambiguity of interpretation of ‘foreign exchange differences', the license fee impact on such exchange differences is not quantifiable. Further as stated in point (i) above, the interpretation as to the components of AGR (including the above component) is subject to litigation and the Hon'ble High Courts vide interim orders in 2012 had permitted the Company to continue paying license fee on similar basis as the Company has been paying throughout the period of the license. The matter is currently pending adjudication of the matter by Hon'ble Supreme Court.

(v) On January 8, 2013, DoT issued a demand on the Company for ' 51,353 towards levy of one time spectrum charge. The demand includes a retrospective charge of ' 8,940 for holding GSM Spectrum beyond 6.2 MHz for the period from July 1, 2008 to December 31, 2012 and also a prospective charge of ' 42,413 for GSM spectrum held beyond 4.4 MHz for the period from January 1, 2013, till the expiry of the initial terms of the respective licenses.

In the opinion of the Company, inter-alia, the above demand amounts to alteration of financial terms of the licenses issued in the past. Based on a petition filed by the Company, the Hon'ble High Court of Bombay, vide its order dated January 28, 2013, has directed the DoT to respond and not to take any coercive action until the next date of hearing. The DoT has filed its reply and the next date of hearing is awaited. The Company, based on independent legal opinions, till date has not given any effect to the above demand.

(vi) DoT had issued notices to the Company (as well as other telecom service providers) to stop provision of services (under 3G Intra Circle Roaming (‘ICR') arrangements) in the service areas where such service providers had not been allocated 3G Spectrum and levied a financial penalty of ' 3,500 on the Company. The Company contested the notices and upon various rounds of litigations, in response to which TDSAT in 2014 held 3G ICR arrangements to be competent and compliant with the licensing conditions and quashed the notice imposing penalty. The DoT has challenged the order of TDSAT before the Hon'ble Supreme Court which is yet to be listed for hearing.

Guarantees:

Guarantees outstanding as of March 31, 2017, March 31, 2016 and April 1, 2015 amounting to ' 123,614, ' 99,911 and ' 101,379, respectively have been issued by banks and financial institutions on behalf of the Company. These guarantees include certain financial bank guarantees which have been given for subjudice matters and in compliance with licensing conditions, the amount with respect to these have been disclosed under capital commitments, contingencies and liabilities, as applicable, in compliance with the applicable accounting standards.

(ii) Commitments

Capital commitments

Estimated amount of contracts to be executed on capital account and not provided for (net of advances) ' 69,623, ' 45,115 and ' 274,832 (including ' Nil, ' 10,970 and ' 244,040 towards spectrum) as of March 31, 2017, March 31, 2016 and April 1, 2015, respectively.

Lease Commitments

a) Operating Lease

As per the agreements maximum obligation on longterm non-cancellable operating leases are as follows:

As lessee

The future minimum lease payments obligations are as follows:-

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Not later than one year 72,725 68,645 60,478
Later than one year but not later than five years 277,273 215,297 218,622
Later than five years 90,895 102,969 111,760
440,893 386,911 390,860
Lease Rentals 71,059 63,941
Lease equalisation adjustments (421) 1,473

The escalation clause includes escalation ranging from 0 to 25%, includes option of renewal from 1 to 15 years and there is no restrictions imposed by lease arrangements.

As lessor

(i) The Company has entered into non-cancellable lease arrangements to provide dark fiber on indefeasible right of use (‘IRU') basis. Due to the nature of the transaction, it is not possible to compute gross carrying amount, depreciation for the year and accumulated depreciation of the asset given on operating lease as of March 31, 2017 and accordingly, disclosures required by Ind AS-17 are not provided.

(ii) The future minimum lease payment receivables are as follows: As lessor

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Not later than one year 221 337 328
Later than one year but not later than five years 929 1,344 1,207
Later than five years 430 430 904
1,580 2,111 2,439

b) Finance Lease

As lessee

Finance lease obligation of the Company as of March 31, 2017 is as follows:-

Particulars Future minimum lease payments Interest Present value
Not later than one year 668 111 557
Later than one year but not later than five years 1,387 223 1,164
2,055 334 1,721

Finance lease obligation of the Company as of March 31, 2016 is as follows:

Particulars Future minimum lease payments Interest Present value
Not later than one year 713 92 621
Later than one year but not later than five years 1,519 228 1,291
2,232 320 1,912

Finance lease obligation of the Company as of April 1, 2015 is as follows:

Particulars Future minimum lease payments Interest Present value
Not later than one year 42 12 30
Later than one year but not later than five years 117 16 101
159 28 131

The escalation clause includes escalation ranging from 0% to 7.5%, includes option of renewal in block of 3 years. As lessor

The future minimum lease payments receivable of the Company as of March 31, 2017 is as follows:-

Particulars Future minimum lease payments Interest Present value
Not later than one year 133 25 107
Later than one year but not later than five years 189 17 172
322 42 279

The future minimum lease payments receivable of the Company as of March 31, 2016 is as follows:-

Particulars Future minimum lease payments Interest Present value
Not later than one year 126 33 94
Later than one year but not later than five years 297 37 260
423 70 354

The future minimum lease payments receivable of the Company as of April 1, 2015 is as follows:-

Particulars Future minimum lease payments Interest Present value
Not later than one year 45 13 32
Later than one year but not later than five years 123 17 106
168 30 138

23 Revenue from operations

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Service revenue 622,637 602,617
Sale of products 126 386
622,763 603,003

24 Employee benefits

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Salaries and bonus 14,731 15,742
Contribution to provident and other funds 672 652
Staff welfare expenses 611 682
Defined benefit plan / other long-term benefits 557 531
Share based payment expense
- Equity-settled plans 298 204
- Cash-settled plans 157 360
Others 359 477
17,385 18,648

24.1 Share based payment plans

The following table provides an overview of all existing share option plans of the Company:

Scheme Plan Vesting period (years) Contractual term (years)
Equity settled Plans
Scheme I 2006 Plan 1 - 5 7
Scheme 2005 2008 Plan & Annual Grant Plan (AGP) 1 - 3 7
Scheme 2005 Performance Share Plan (PSP) 2009 Plan 3 - 4 7
Scheme 2005 Special ESOP & Restricted Share Units (RSU) Plan 1 - 5 7
Scheme 2005 Long Term Incentive (LTI) Plan 1 - 3 7
Cash settled Plans
Performance Unit Plan (PUP) Performance Unit Plan (PUP) 2013, 2014 & 2015 1 - 4 3-5

The stock options vesting are subject to service and certain performance conditions mainly pertaining to certain financial parameters.

The movement in the number of stock options and the related weighted average exercise prices are as follows:

For the year ended March 31, 2017

For the year ended March 31, 2016

Particulars Number of share options ('000) Weighted average exercise price o Number of share options ('000) Weighted average exercise price o
2006 Plan
Outstanding at beginning of year 305 5.00 390 5.00
Granted - - - -
Exercised (100) 5.00 (75) 5.00
Forfeited / Expired - - (10) 5.00
Outstanding at end of year 205 5.00 305 5.00
Exercisable at end of year 36 5.00 30 5.00
2008 Plan and AGP
Outstanding at beginning of year 639 402.50 2,534 355.45
Granted - - - -
Exercised - - (686) 334.89
Forfeited / Expired (639) 402.50 (1,209) 342.24
Outstanding at end of year - - 639 402.50
Exercisable at end of year - - 639 402.50
PSP 2009 Plan
Outstanding at beginning of year 53 5.00 83 5.00
Granted - - - -
Exercised (37) 5.00 (22) 5.00
Forfeited / Expired (10) 5.00 (8) 5.00
Outstanding at end of year 6 5.00 53 5.00
Exercisable at end of year 5 5.00 53 5.00
Special ESOP and RSU Plan
Outstanding at beginning of year 126 5.00 189 5.00
Granted - - - -
Exercised (91) 5.00 (44) 5.00
Forfeited / Expired (1) 5.00 (19) 5.00
Outstanding at end of year 34 5.00 126 5.00
Exercisable at end of year 34 5.00 126 5.00
LTI Plans
Outstanding at beginning of year 1,709 5.00 523 5.00
Granted 820 5.00 1,576 5.00
Exercised (308) 5.00 (201) 5.00
Forfeited / Expired (219) 5.00 (189) 5.00
Outstanding at end of year 2,002 5.00 1,709 5.00
Exercisable at end of year 358 5.00 208 5.00
PUP
Number of shares under option:
Outstanding at beginning of year 3,118 - 4,801 -
Granted 9 - 18 -
Exercised (1,257) - (822) -
Forfeited / Expired (469) - (879) -
Outstanding at end of year 1,401 - 3,118 -
Exercisable at end of year - - - -

The following table summarises information about weighted average remaining contractual life, weighted average fair value and weighted average share price forthe options:

Plan

Weighted average remaining contractual life for the options outstanding as of (years)

Weighted Avg Fair Value for the options granted during the year ended (?)

Weighted average share price for the options exercised during the year ended (?)

March 31, 2016 April 1, 2015 March 31, 2016 April 1, 2015 March 31, 2016 April 1, 2015
Equity settled Plans
2006 Plan 4.07 5.00 5.86 - - 361.19 316.50 350.45 371.70
2008 Plan & AGP - 0.25 0.63 - - - - 397.45 383.30
PSP 2009 Plan 0.34 0.69 1.87 - 346.84 367.51 352.26
Special ESOP&RSU Plan 0.10 1.20 2.26 - - 329.91 319.66 350.09
LTI Plan (2011, 2012, 2015 & 2016) 5.65 5.98 4.27 338.50 398.32 291.63 296.90 348.28 368.36
Cash settled Plans
PUP 2013, 2014 & 2015 1.20 1.85 2.58 379.25 361.11 389.29 466.38 420.81 354.24

The carrying value of cash settled plans liability is ? 141, ? 697 and ? 658 as of March 31, 2

The fair value of options is measured using Black-Scholes valuation model. The key inputs t plans and fair value of cash settled plans are given in the table below:

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Risk free interest rates 5.79% to 6.86% 6.86% to 7.83%
Expected life 4 to 60 months 4 to 60 months
Volatility 27.08% to 27.59% 26.63% to 27.45%
Dividend yield 0.39% to 0.63% 0.54% to 0.63%
Wtd average exercise price (?) 0 to 5 0 to 5

The expected life of the stock options is based on the Company's expectations and is not necessarily indicative of exercise patterns that may actually occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the expected life of the options is indicative of future trends, which may not necessarily be the actual outcome. Further, the expected volatility is based on the weighted average volatility of the comparable benchmark companies.

24.2 Defined benefit plan

The details of defined benefit obligations and plan assets are as follows:

Particulars

For the year March 31, 2017

For the year March 31, 2016

Gratuity Compensated absence Gratuity Compensated absence
Obligation:
Balance as at beginning of the year 1,668 730 1587 720
Current service cost 256 150 247 145
Interest cost 133 58 135 61
Benefits paid (273) (113) (340) (145)
Transfers 7 4 (7) 6
Remeasurements 36 (40) 46 (57)
Present value of funded obligation 1,827 789 1,668 730
Current portion 498 789 454 730
Non-current portion 1,329 - 1,214 -

The expected contribution for the year ended March 31, 2017 and 2016 for Gratuity plan is ' 389 and ' 380, respectively.

Amount recognised in other comprehensive income

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Experience losses 15 6
Gains from change in demographic assumptions (20) 4
Losses from change in financial assumptions 41 36
Remeasurements on liability 36 46

Due to its defined benefit plans, the Company is exposed to the following significant risks:

Changes in bond yields - A decrease in bond yields will increase plan liability.

Salary risk - The present value of the defined benefit plans liability is calculated by reference to the future salaries of the plan participants. As such, an increase in the salary of the plan participants will increase the plan's liability.

The financial (per annum rates) and demographic assumptions used to determine defined benefit obligations are as follows:

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Discount rate 7.40% 8.00% 8.50%
Rate of return on plan assets N.A. N.A. N.A.
Rate of salary increase 10.00% 10.00% 10.00%
Rate of attrition 21% to 29% 20% to 23% 19% to 27%
Retirement age 58 58 58

The Company regularly assesses these assumptions with the projected long-term plans and prevalent industry standards.

The impact of sensitivity due to changes in the significant actuarial assumptions on the defined benefit obligations is given in the table below:

Change in assumption

As of March 31, 2017

As of March 31, 2016

Particulars Gratuity Compensated absence Gratuity Compensated absence
Discount Rate + 1% -59 -33 -73 -33
-1% 64 36 80 36
Salary Growth Rate + 1% 62 -33 77 35
-1% -59 36 -72 -33

The above sensitivity analysis is determined based on a method that extrapolates the impact on the net defined benefit obligations, as a result of reasonable possible changes in the significant actuarial assumptions. Further, the above sensitivity analysis is based on a reasonably possible change in a particular under-lying actuarial assumption, while assuming all other assumptions to be constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.

The table below summarises the maturity profile and duration of the gratuity liability:

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Within one year 498 454 450
Within one - three years 569 463 433
Within three - five years 327 287 278
Above five years 433 464 426
Weighted average duration (in years) 3.42 3.75 3.69

25 Network operating expenses / sales and marketing expenses / other expenses a. Network operating expenses

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Internet, bandwidth and leasedline charges 4,834 6,040
Passive infrastructure charges 48,884 45,444
Power and fuel 65,093 57,589
Repair and maintenance 21,240 25,683
Others 5,309 3,133
145,360 137,889
b. Sales and marketing expenses

 

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Advertisement & marketing 7,200 7,485
Sales commission and distribution expenses 21,957 19,087
Business promotion 1,706 4,829
Others 1,457 1,423
32,320 32,824
c. Other expenses

 

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Cost of good sold 58 375
Charity and donation# 1,146 575
Legal and professional fees 7,925 7,981
Bad debts written off 329 4,375
Provision for doubtful debts 7,349 1,952
Content costs 5,934 6,506
Collection and recovery expenses 3,955 3,625
Customer care expenses 3,540 3,611
Travelling and conveyance 1,084 1,261
IT expenses 4,754 4,610
Others 2,450 4,769
38,524 39,640

# As per the requirements of section 135 of the Companies Act, 2013, the Company was required to spend an amount of ' 2,079 and ' 1,890 for the year ended March 31, 2017 and 2016 on corporate social responsibility expenditure. During the year ended March 31, 2017 and 2016, the Company has spent in cash an amount of ' 56 and ' 535 towards education and sanitation respectively. Further, amount paid to Satya Electoral Trust for political purpose amounting to ' 170 and ' Nil during the year ended March 31, 2017 and 2016 respectively.

26 Depreciation and amortisation

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Depreciation * 77,663 66,677
Amortisation 44,371 29,076
122,034 95,753

* includes impact of reassessment of useful life, refer Note 3.1 a.

27 Finance costs and income

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Finance costs
Interest expense 42,902 23,544
Net loss on derivative financial instruments 2,244 -
Net loss on FVTPL investments - 184
Net exchange loss - 4,561
Other finance charges 7,400 7,164
52,546 35,453
Finance income
Interest income 18,242 15,220
Net gain on FVTPL investments 1,725 -
Net exchange gain 3,454 -
Net gain on derivative financial instruments - 488
23,421 15,708

‘Other finance charges' include bank charges, trade finance charges, charges relating to derivative instruments and interest charges towards sub judice matters.

28 Non-operating expense

Non-operating expense comprises regulatory levies applicable to finance income.

29 Exceptional Items

Exceptional items comprise of the following:

(i) For the year ended March 31, 2017:

a. Charge of ' 2,396 towards operating costs (including accelerated depreciation) on network re-farming and up-gradation program.

b. Charge of ' 2,920 resulting from reassessment of the useful life of certain categories of network assets of the Company due to technological advancements. (Refer Note 3.1 (a))

c. Net charge aggregating to ' 7,506 pertaining to regulatory levies related assessment / provisions, settlement of tax related contingent liability and reconciliation of balances.

d. Loss of ' 159,886 pertains to internal restructuring and divestment. (Refer Note 5 (v))

(ii) For the year ended March 31, 2016:

a. Charge for regulatory fee provisions of ' 2,659 arising out of re-assessment of certain positions.

b. Charge of ' 4,140 towards operating costs (including accelerated depreciation) on network refarming and up-gradation program.

Tax expense includes:

(a) Tax benefit of ' 5,864 and ' 2,243 for the year ended March 31, 2017 and 2016, respectively on above exceptional items.

(b) Tax benefit of ' 1,892 during the year ended March 31, 2017 on account of reassessment of tax provisions.

30 Earnings per share (‘EPS')

The followings is a reconciliation of the equity shares used in the computation of basic and diluted earnings per equity share:

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Weighted average shares outstanding for basic / diluted EPS 3,997,400 3,997,400
(Loss) / profit for the year (99,256) 77,803

31 Segment Reporting

The Company's operating segments are organised and managed separately through the respective business managers, according to the nature of products and services provided with each segment representing a strategic business unit. These business units are reviewed by the Chairman of the Company (Chief Operating Decision Maker - ‘CODM').

The amounts reported to CODM are based on the accounting principles used in the preparation of financial statements as per Ind AS. Segment's performance is evaluated based on segment revenue and segment result viz. profit or loss from operating activities before exceptional items and tax. Accordingly, finance costs / income, non - operating expenses and exceptional items are not allocated to individual segment.

Inter-segment pricing and terms are reviewed and changed by the management to reflect changes in market conditions and changes to such terms are reflected in the period in which the changes occur. Intersegment revenues are eliminated upon consolidation of segments and reflected in the ‘Eliminations' column.

Segment assets / liabilities comprise assets / liabilities directly managed by each segment. Segment assets primarily include receivables, property, plant and equipment, capital work-in-progress, intangibles, intangible assets under development, non-current investments, inventories, cash and cash equivalents, inter-segment assets. Segment liabilities primarily include operating liabilities. Segment capital expenditure comprises additions to property, plant and equipment and intangible assets.

Effective April 1, 2016, the Company has realigned the reporting of its corporate data and fixed-line business with Airtel business and accordingly renamed Telemedia Service to Homes Services. The historical periods have been restated for the above mention segmental changes to make them comparable.

The revised reporting segments of the Company are as below:

Mobile Services: These services cover voice and data telecom services provided through wireless technology (2G / 3G / 4G) in India. This includes the captive national long distance networks which primarily provide connectivity to the mobile services business in India. This also includes intra-city fibre networks.

Airtel Business: These services cover end-to-end telecom solutions being provided to large Indian and global corporations by serving as a single point of contact for all telecommunication needs across data and voice (domestic as well as international long distance), network integration and managed services.

Homes Services: These services cover voice and data communications through fixed-line network and broadband technology.

Unallocated: Unallocated items include expenses / results, assets and liabilities (including inter-segment assets and liabilities) of corporate headquarters of the Company, non-current investment, current taxes, deferred taxes and certain financial assets and liabilities, not allocated to the operating segments.

Summary of the segmental information for the year ended and as of March 31, 2017 is as follows:

Particulars Mobile Services India Airtel Business Homes Services Unallocated Eliminations Total
Revenue from external customers 505,670 90,421 26,672 - - 622,763
Inter-segment revenue 21,075 7,979 198 - (29,252) -
Total revenue 526,745 98,400 26,870 - (29,252) 622,763
Segment result 94,680 19,469 6,331 (1,418) - 119,062
Finance costs 52,546
Finance income (23,421)
Non-operating expense 2,324
Exceptional items (refer note 29) 172,708
Profit before tax (85,095)
Other segment items
Capital expenditure 362,700 14,058 19,286 1,633 (20,862) 376,815
Depreciation and amortisation 113,230 9,737 5,951 12 (6,896) 122,034
As of March 31, 2017
Segment assets 1,541,193 233,317 296,014 616,542 (779,650) 1,907,416
Segment liabilities 736,333 151,419 231,935 555,306 (779,650) 895,343

Summary of the segmental information for the year ended, as of March 31, 2016 and as of April 1, 2015 is as follows:

Particulars Mobile Services India Airtel Business Homes Services Unallocated Eliminations Total
Revenue from external customers 500,080 78,624 24,299 - - 603,003
Inter-segment revenue 18,226 8,527 215 - (26,968) -
Total revenues 518,306 87,151 24,514 - (26,968) 603,003
Segment result 112,068 14,031 5,540 (1,532) - 130,107
Finance income (15,708)
Finance costs 35,453
Other expenses 1,019
Exceptional items (refer note 29) 6,799
Profit before tax 102,544
Other segment items
Capital expenditure 425,861 13,759 6,026 932 (11,042) 435,536
Depreciation and amortisation 86,279 10,367 4,749 14 (5,656) 95,753
As of March 31, 2016
Segment assets 1,376,117 167,483 166,534 800,866 (660,720) 1,850,280
Segment liabilities 611,172 103,148 108,295 571,094 (660,720) 732,989
As of April 1, 2015
Segment assets 1,070,350 125,483 105,051 817,726 (603,321) 1,515,289
Segment liabilities 387,377 73,302 50,727 549,822 (603,321) 457,907

 

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Unallocated assets comprise of :
Derivative financial assets 847 858 322
Deferred tax asset 8,875 23,070 27,241
Current tax assets 15,297 820 -
Inter-segment loans / receivables 27,701 3,185 2,284
Other investments 52 60 47,619
Investment in subsidiaries, joint ventures and 459,538 698,913 652,478
associates
Loans to related parties 72,704 61,922 73,792
Others 31,528 12,038 13,990
616,542 800,866 817,726
Unallocated liabilities comprise of :
Borrowings 160,783 108,604 70,328
Derivative financial liabilities 1,848 704 344
Current tax liabilities - - 507
Inter-segment loans / payables 359,597 437,856 470,627
Others 33,078 23,930 8,016
555,306 571,094 549,822

Geographical information:

Information concerning geographical areas by location of the entity is as follows: (a) Revenue from external customers:

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
India 575,319 562,697
Others 47,444 40,306
622,763 603,003

(b) Non-current operating assets:

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
India 1,197,249 942,372 621,865
Others 13,981 15,186 5,189
1,211,230 957,558 627,054

Non-current operating assets for this purpose consist of property, plant and equipment, capital work-in-progress, intangible assets and intangible assets under development.

32 Related Party disclosures Subsidiaries

- Indian

Airtel Broadband Services Private Limited (merged with the Company w.e.f April 9, 2015)

Airtel Payments Bank Limited (formerly known as Airtel M Commerce Services Limited)

Bharti Airtel Services Limited

Bharti Hexacom Limited

Bharti Infratel Limited

Bharti Infratel Services Limited #

Bharti Telemedia Limited

Indo Teleports Limited (formerly known as Bharti Teleports Limited)

Nxtra Data Limited

Smartx Services Limited (subsidiary w.e.f. September 21, 2015)

Telesonic Networks Limited

Wynk Limited

Nettle Infrastructure Investments Limited

(formerly known as Nettle Developers Limited, subsidiary w.e.f. March 14, 2017)

Augere Wireless Broadband India Private Limited

(subsidiary w.e.f. June 7, 2016, subsequently merged with the Company w.e.f. February 15, 2017) A

- Foreign

Africa Towers N.V.

Africa Towers Services Limited ##

Airtel (Seychelles) Limited

Airtel (SL) Limited (sold on July 19, 2016)

Airtel Bangladesh Limited (Merged with Robi Axiata

Limited w.e.f. November 16, 2016)

Airtel Burkina Faso S.A. (sold on June 22, 2016)

Airtel Congo (RDC) S.A.

Airtel Congo S.A.

Airtel DTH Services (SL) Limited #

Airtel DTH Services Congo (RDC) S.p.r.l. ###

Airtel DTH Services Nigeria Limited ##

Airtel Gabon S.A.

Airtel Ghana Limited

Airtel Madagascar S.A.

Airtel Malawi Limited

Airtel Mobile Commerce (Ghana) Limited

Airtel Mobile Commerce (Kenya) Limited

Airtel Mobile Commerce (Seychelles) Limited

Airtel Mobile Commerce (SL) Limited (sold on July 19, 2016)

Airtel Mobile Commerce (Tanzania) Limited

Airtel Mobile Commerce B.V.

Airtel Mobile Commerce Burkina Faso S.A. (sold on June 22, 2016)

Airtel Mobile Commerce Holdings B.V.

Airtel Mobile Commerce Limited, Malawi

Airtel Mobile Commerce Madagascar S.A.

Airtel Mobile Commerce Rwanda Limited

Airtel Mobile Commerce Tchad S.a.r.l.

Airtel Mobile Commerce Uganda Limited

Airtel Mobile Commerce Zambia Limited

Airtel Money (RDC) S.A.

Airtel Money Niger S.A.

Airtel Money S.A. (Gabon)

Airtel Money Transfer Limited

Airtel Money Tanzania Limited (incorporated on June 10, 2016)

Airtel Networks Kenya Limited

Airtel Networks Limited

Airtel Networks Zambia Plc

Airtel Rwanda Limited

Airtel Tanzania Limited

Airtel Tchad S.A.

Airtel Towers (Ghana) Limited #

Airtel Towers (SL) Company Limited #

Airtel Uganda Limited

Bangladesh Infratel Networks Limited ##

Bharti Airtel (Canada) Limited ###

Bharti Airtel (France) SAS

Bharti Airtel (Hong Kong) Limited

Bharti Airtel (Japan) Kabushiki Kaisha

Bharti Airtel (UK) Limited

Bharti Airtel (USA) Limited

Bharti Airtel Africa B.V.

Bharti Airtel Burkina Faso Holdings B.V.

Bharti Airtel Chad Holdings B.V.

Bharti Airtel Congo Holdings B.V.

Bharti Airtel Developers Forum Limited

Bharti Airtel DTH Holdings B.V.

Bharti Airtel Gabon Holdings B.V.

Bharti Airtel Ghana Holdings B.V.

Bharti Airtel Holdings (Singapore) Pte Ltd (merged with

Bharti International (Singapore) Pte Ltd w.e.f. July 15, 2016)

Bharti Airtel International (Mauritius) LimitedA

Bharti Airtel International (Netherlands) B.V.A

Bharti Airtel Kenya B.V.

Bharti Airtel Kenya Holdings B.V.

Bharti Airtel Lanka (Private) Limited

Bharti Infratel Lanka (Private) Limited ##

Bharti Airtel Madagascar Holdings B.V.

Bharti Airtel Malawi Holdings B.V.

Bharti Airtel Mali Holdings B.V.

Bharti Airtel Niger Holdings B.V.

Bharti Airtel Nigeria B.V.

Bharti Airtel Nigeria Holdings B.V. ##

Bharti Airtel Nigeria Holdings II B.V.

Bharti Airtel RDC Holdings B.V.

Bharti Airtel Rwanda Holdings Limited

Bharti Airtel Services B.V.

Bharti Airtel Sierra Leone Holdings B.V. (sold on July 19, 2016)

Bharti Airtel Tanzania B.V.

Bharti Airtel Uganda Holdings B.V.

Bharti Airtel Zambia Holdings B.V.

Bharti International (Singapore) Pte. Ltd

Burkina Faso Towers S.A. ###

Celtel (Mauritius) Holdings Limited

Celtel Niger S.A.

Channel Sea Management Company (Mauritius) Limited

Congo RDC Towers S.A.

Congo Towers S.A. #

Gabon Towers S.A. ##

Indian Ocean Telecom Limited

Kenya Towers Limited ###

Madagascar Towers S.A.

Malawi Towers Limited

Mobile Commerce Congo S.A.

Montana International

MSI-Celtel Nigeria Limited ##

Network i2i Limited

Niger Towers S.A. ###

Partnership Investment Sprl

Societe Malgache de Telephone Cellulaire S.A.

Tanzania Towers Limited

Tchad Towers S.A. #

Towers Support Nigeria Limited ##

Uganda Towers Limited ###

Warid Telecom Uganda Limited (Merged with Airtel

Uganda Limited w.e.f. July 31, 2016)

Zambian Towers Limited ###

Zap Trust Company Nigeria Limited ##

Associates

- Indian

Seynse Technologies Private Limited (Stake acquird on February 21, 2017)

- Foreign

Tanzania Telecommunications Company Ltd (‘TTCL) (Stake sold on June 23, 2016)

Seychelles Cable Systems Company Limited

Robi Axiata Limited (stake acquired w.e.f. November 16,

2016)

Joint Ventures

- Indian

Indus Towers Limited Firefly Networks Limited

Forum I Aviation Limited (Investment sold on January 7, 2016)

- Foreign

Bridge Mobile Pte Limited

Entities having significant influence over the Company

- Indian

Bharti Telecom Limited

- Foreign

Singapore Telecommunications Limited Pastel Limited

Others related parties*

i) Key Management Personnel and their relatives exercise significant influence

- Indian

Bharti Foundation

Bharti Airtel Employees Welfare Trust

Hike Private Limited (formerly known as Hike Limited)

Cedar Support Services Limited

ii) Group Companies

- Indian

Brightstar Telecommunication India Limited (formerly known as Beetel Teletech Limited)

Bharti Axa General Insurance Company Limited

Bharti Axa Life Insurance Company Limited

Bharti Realty Holdings Limited

Bharti Realty Limited

Future Retail Limited (ceased w.e.f. May 01, 2016) Deber Technologies Private Limited (formerly known as Ignite World Private Limited)

Hike Messenger Limited (formerly known as BSB Innovation India Limited)

Centum Learning Limited

Fieldfresh Foods Private Limited

Indian Continent Investment Limited

Jersey Airtel Limited

Nile Tech Limited

Y2CF Digital Media Limited

Bharti Enterprises Limited

Atrium Restaurants India Private Limited

Bharti Land Limited

Centum Work skills India Limited

Oak Infrastructure Developers Limited

Gourmet Investments Private Limited

Key Management Personnel (‘KMP')

Sunil Bharti Mittal Gopal Vittal

* ‘Other related parties' though not ‘Related Parties' as per the definition under IND AS 24, ‘Related party disclosures', have been included by way of a voluntary disclosure, following the best corporate governance practices.

# Dissolved during the year ended March 31, 2017.

## Under liquidation.

### Dissolved during the year ended March 31, 2016.

A Refer note 5.

The summary of transactions with the above mentioned parties is as follows:

For the Year ended

March 31, 2017

March 31, 2016

Particulars Subsidiaries Joint Ventures Associates Entities having significant influence Other related parties Subsidiaries Joint Ventures Associates Entities having significant influence Other related parties
Purchase of fixed assets/bandwidth 4,119 - - - 2,705 3,729 - - - 2,390
Sale of fixed assets/IRU given 799 - - - - 1,026 - - -
Purchase of investments* 85,425 - - - 111,858 - - - -
Sale of Investments 96,809 - - - 3 - - - -
Rendering of Services 22,680 49 3 1,383 285 20,957 36 4 1,266 339
Receiving of services 48,818 40,423 12 211 2,729 46,759 36,815 - 210 2,738
Fund transferred/expenses incurred on behalf of others 2,647 11 - 0 2,554 14 5 - 42
Fund received/expenses incurred on behalf of the Company 169 - - 116 169 25 - - 121
Donation - - - 921 - - - - 524
Security deposit given/advances paid 24 136 - - 37 50 117 - 0 23
Advance received/refund of Security deposit given 3 50 0 - 7 - - - 28
Loans given 98,566 - - - - 14,755 5 14 554
Repayment of loans given* 91,562 - - - 156 26,503 - 14 - 104
Interest charged by others - - - - - 6 - - -
Interest charged by the Company 804 0 - - - 707 0 21 2
Reimbursement of energy expenses 13,742 24,614 - - - 12,456 21,988 - - -
Guarantees and collaterals given # (Including performance guarantees) 709,615 - - - 799,179 - - - -
Dividend Paid - - 3,255 364 - - 5,199 592
Dividend Income 16,512 - - - - 9,470 - - -

* Includes loan converted into equity investments.

# mainly pertains to BAIN

The significant related party transactions are summarised below:

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Rendering of Services
Subsidiaries
Bharti Hexacom Limited 9,802 8,244
Bharti Airtel (UK) Limited 9,597 8,787
Receiving of Services
Subsidiaries
Bharti Hexacom Limited 4,526 3,353
Bharti Infratel Limited 20,543 19,426
Bharti Airtel (UK) Limited 9,366 7,763
Telesonic Networks Limited 4,408 4,317
Joint Venture of subsidiary
Indus Towers Limited 40,369 36,765
Reimbursement of energy expenses
Subsidiary
Bharti Infratel Limited 13,742 12,456
Joint Venture of subsidiary
Indus Towers Limited 24,614 21,988
Loans given
Subsidiaries
Bharti Telemedia Limited 23,357 13,592
Nettle Infrastructure Investments Limited 68,140 -
Repayment of Loans given
Subsidiaries
Bharti Telemedia Limited 42,563 26,079
Bharti Airtel International (Netherlands) B.V. 33,788 -
Bharti International (Singapore) Pte Limited * 9,357 -
* loan conversion into equity
Purchase of investments
Subsidiaries
Bharti Airtel International (Mauritius) Limited 14,620 110,155
Network i2i Limited 50,825 -
Sale of investment
Subsidiary
Nettle Infrastructure Investments Limited 68,060 -
Dividend income
Subsidiaries
Bharti Hexacom Limited 1,348 630
Bharti Infratel Limited 15,164 8,840
Dividend paid
Entity having significant influence over the Company
Bharti Telecom Limited 2,451 3,886

The outstanding balances are as follows:

Particulars Subsidiaries Joint ventures Associates Entities having significant influence Other related parties
As of March 31, 2017
Trade Payables (5,342) (10,563) (10) (223) (410)
Trade Receivables 748 1 0 0 69
Loans (including accrued interest) * 72,699 5 0 0 352
Security Deposit 2,602 3,717 0 0 931
As of March 31, 2016
Trade Payables (6,010) (8,115) 0 (120) (403)
Trade Receivables 1,301 0 0 0 212
Loans (including accrued interest) * 62,766 5 0 0 559
Security Deposit 2,580 3,631 0 0 894
As of April 1, 2015
Trade Payables (5,720) (7,740) 0 (32) (420)
Trade Receivables 1,954 0 114 0 157
Loans (including accrued interest) * 74,383 0 466 0 98
Security Deposit 2,537 3,513 0 0 901

Outstanding balances at period end are un-secured and settlement occurs in cash.

KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any director, whether executive or otherwise. Remuneration to key management personnel were as follows:

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
Short-Term employee benefits 250 223
Performance linked Incentive ('PLI')# 118 94
Post-employment benefit 26 24
Share-based payment 62 57
456 398

# Value of PLI considered above represents incentive at 100% performance level. However, same will be paid on the basis of actual performance parameters in next year. Additional provision of ' 28 and ' 29 has been recorded in the books towards PLI for the year ended March 31, 2017 and March 31, 2016, respectively. During the year ended March 31, 2017 and 2016, PLI of ' 116 and ' 143 respectively pertaining to previous year has been paid.

As the liabilities for the gratuity and compensated absences are provided on an actuarial basis, and calculated for the Company as a whole rather than each of the individual employees, the said liabilities pertaining specifically to KMP are not known and hence, not included in the above table.

In addition to above ' 313 thousand and ' 322 thousand have been paid as equity divided to key management personnel during the year ended March 31, 2017 and March 31, 2016 respectively.

The Company has agreed to ensure appropriate financial support only if and to the extent required by its subsidiaries (namely, Bharti Airtel Services Limited, Bharti Telemedia Limited, Airtel Payments Bank Limited, Bharti Teleports Limited, Nxtra Data Limited, Bharti Airtel (Hongkong) Limited, Bharti Airtel Lanka (Private) Limited and Bharti Airtel International (Netherlands) B.V. including its subsidiaries).

33 Financial and Capital risk 1. Financial Risk

The business activities of the Company expose it to a variety of financial risks, namely market risks (that is, foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company's risk management strategies focus on the un-predictability of these elements and seek to minimise the potential adverse effects on its financial performance. Further, the Company uses certain derivative financial instruments to mitigate some of these risk exposures (as discussed below in this note).

The financial risk management for the Company is driven by the Company's senior management (‘GSM'), in close co-ordination with the operating entities and internal / external experts subject to necessary supervision. The Company does not undertake any speculative transactions either through derivatives or otherwise. The GSM are accountable to the Board of Directors and Audit Committee. They ensure that the Company's financial risk-taking activities are governed by appropriate financial risk governance frame work, policies and procedures. The BOD of the respective operating entities periodically reviews the exposures to financial risks, and the measures taken for risk mitigation and the results thereof.

(i) Foreign currency risk

Foreign exchange risk arises on all recognised monetary assets and liabilities, and any highly probable forecasted transactions, which are denominated in a currency other than the functional currency of the Company. The Company has foreign currency trade payables, receivables and borrowings. However, foreign exchange exposure mainly arises from borrowings and trade payables denominated in foreign currencies.

The foreign exchange risk management policy of the Company requires it to manage the foreign exchange risk by transacting as far as possible in the functional currency. Moreover, the Company monitors the movements in currencies in which the borrowings / capex vendors are payable and manage any related foreign exchange risk, which inter-alia include entering into foreign exchange derivative contracts - as considered appropriate and whenever necessary. For further details as to foreign currency borrowings, refer Note 17. Further, for the details as to the fair value of various outstanding derivative financial instruments, refer Note 34.

Foreign currency sensitivity

The impact of foreign exchange sensitivity on profit for the year and other comprehensive income is given in the table below:

Particulars Change in currency exchange rate Effect on profit before tax Effect on equity (OCI)
For the year ended March 31, 2017
US Dollars +5% (5,244) -
-5% 5,244 -
Others +5% (2) -
-5% 2 -
For the year ended March 31, 2016
US Dollars +5% (7,664) -
-5% 7,664 -
Others +5% 8 -
-5% (8) -

The sensitivity disclosed in the above table is mainly attributable to, in case of to foreign exchange gains / (losses) on translation of USD denominated borrowings, derivative financial instruments, trade payables, and trade receivables.

The above sensitivity analysis is based on a reasonably possible change in the under-lying foreign currency against the respective functional currency while assuming all other variables to be constant.

Based on the movements in the foreign exchange rates historically and the prevailing market conditions as at the reporting date, the Company's management has concluded that the above mentioned rates used for sensitivity are reasonable benchmarks.

(ii) Interest rate risk

As the Company does not have exposure to any floating-interest bearing assets, or any significant longterm fixed-interest bearing assets, its interest income and related cash inflows are not affected by changes in market interest rates. Consequently, the Company's interest rate risk arises mainly from borrowings.

Borrowings

Borrowings with floating and fixed interest rates expose the Company to cash flow and fair value interest rate risk respectively. However, the short-term borrowings of the Company do not have a significant fair value or cash flow interest rate risk due to their short tenure. Accordingly, the components of the debt portfolio are determined by the GSM in a manner which enables the Company to achieve an optimum debt-mix basis its overall objectives and future market expectations.

The Company monitors the interest rate movement and manages the interest rate risk based on its risk management policies, which inter-alia include entering into interest swaps contracts - as considered appropriate and whenever necessary.

Interest rate sensitivity of borrowings

The impact of the interest rate sensitivity on profit before tax is given in the table below:

Interest rate sensitivity Increase / decrease in basis points Effect on profit before tax
For the year ended March 31, 2017
INR - borrowings + 100 (468)
-100 468
US Dollar -borrowings + 100 (228)
-100 228
For the year ended March 31, 2016
INR - borrowings + 100 (30)
-100 30
US Dollar -borrowings + 100 (448)
-100 448

The sensitivity disclosed in the above table is attributable to floating-interest rate borrowings and the interest swaps.

The above sensitivity analysis is based on a reasonably possible change in the under-lying interest rate of the Company's borrowings in INR, USD (being the significant currencies in which it has borrowed funds), while assuming all other variables (in particular foreign currency rates) to be constant.

Based on the movements in the interest rates historically and the prevailing market conditions as at the reporting date, the Company's management has concluded that the above mentioned rates used for sensitivity are reasonable benchmarks.

(iii) Price risk

The Company invests its surplus funds in various mutual funds (debt fund, equity fund, liquid schemes and income funds etc.), short term debt funds, government securities and fixed deposits. In order to manage its price risk arising from investments, the Company diversifies its portfolio in accordance with the limits set by the risk management policies.

(iv) Credit risk

Credit risk refers to the risk of default on its obligation by the counter-party, the risk of deterioration of creditworthiness of the counter-party as well as concentration

risks of financial assets, and thereby exposing the Company to potential financial losses.

The Company is exposed to credit risk mainly with respect to trade receivables, and derivative financial instruments.

Trade receivables

The Trade receivables of the Company are typically noninterest bearing un-secured and derived from sales made to a large number of independent customers. As the customer base is widely distributed both economically and geographically, there is no concentration of credit risk.

As there is no i ndependent credit rating of the customers available with the Company, the management reviews the credit-worthiness of its customers based on their financial position, past experience and other factors. The credit risk related to the trade receivables is managed / mitigated by each business unit, basis the Company's established policy and procedures, by setting appropriate payment terms and credit period, and by setting and monitoring internal limits on exposure to individual customers. The credit period provided by the Company to its customers generally ranges from 14-30 days except Airtel business segment wherein it ranges from 7-90 days.

The Company uses a provision matrix to measure the expected credit loss of trade receivables, which comprise a very large numbers of small balances. Refer note 14 for details on the impairment of trade receivables. Based on the industry practices and the business environment in which the entity operates, management considers that the trade receivables are credit impaired if the payments are more than 90 days past due.

The ageing analysis of trade receivables as of the reporting date is as follows:

Past due but not impaired

Particulars Neither past due nor impaired (excluding unbilled) Less Than 30 days 30 to 60 days 60 to 90 days Above 90 days Total
Trade Receivables as of March 31, 2017 15,997 8,624 3,970 3,203 324 32,118
Trade Receivables as of March 31, 2016 16,885 9,189 2,651 2,165 833 31,724
Trade Receivables as of April 1, 2015 21,097 8,702 858 1,910 480 33,047

The Company performs on-going credit evaluations of its customers' financial condition and monitors the credit-worthiness of its customers to which it grants credit in its ordinary course of business. The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amount due. Where the financial asset has been written-off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit and loss.

Financial instruments and cash deposits

The Company's treasury, in accordance with the board approved policy, maintains its cash and cash equivalents, deposits and investment in mutual funds, and enters into derivative financial instruments - with banks, financial and other institutions, having good reputation and past track record, and high credit rating. Similarly, counter-parties of the Company's other receivables carry either no or very minimal credit risk. Further, the Company reviews the credit-worthiness of the counter-parties (on the basis of its ratings, credit spreads and financial strength) of all the above assets on an on-going basis, and if required, takes necessary mitigation measures.

(v) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due.

Accordingly, as a prudent liquidity risk management measure, the Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including bilateral loans, debt, and overdraft from both domestic and international banks at an optimised cost. It also enjoys strong access to domestic and international capital markets across debt and equity.

Moreover, the Company's senior management regularly monitors the rolling forecasts of the entities' liquidity reserve (comprising of the amount of available un-drawn credit facilities and Cash and cash equivalents) and the related requirements, to ensure they have sufficient cash on an on-going basis to meet operational needs while maintaining sufficient headroom at all times on its available un-drawn committed credit facilities, so that there is no breach of borrowing limits or relevant covenants on any of its borrowings. For details as to the Borrowings, refer Note 17.

Based on past performance and current expectations, the Company believes that the Cash and cash equivalents, cash generated from operations and available un-drawn credit facilities, will satisfy its working capital needs, capital expenditure, investment requirements, commitments and other liquidity requirements associated with its existing operations, through at least the next twelve months.

The table below summarises the maturity profile of the Company's financial liabilities based on contractual undiscounted payments:-

As of March 31, 2017

Particulars Carrying amount On Demand Less than 6 months 6 to 12 months 1 to 2 years > 2 years Total
Interest bearing borrowings*# 603,759 265 72,941 31,725 70,808 732,139 907,878
Other financial liabilities# 76,143 2,538 51,724 - - 21,881 76,143
Trade payables 149,698 - 149,698 - - - 149,698
Financial liabilities (excluding derivatives) 829,600 2,803 274,363 31,725 70,808 754,020 1,133,719
Derivative assets 847 - 536 98 44 169 847
Derivative liabilities (1,848) - (1,319) (343) (58) (128) (1,848)
Net derivatives (1,001) - (783) (245) (14) 41 (1,001)

 

As of March 31, 2016

Particulars Carrying amount On Demand Less than 6 months 6 to 12 months 1 to 2 years > 2 years Total
Interest bearing borrowings*# 456,167 3,036 11,338 30,859 69,284 614,419 728,936
Other financial liabilities# 98,344 2,602 75,006 - - 20,736 98,344
Trade payables 119,706 - 119,706 - - - 119,706
Financial liabilities (excluding derivatives) 674,217 5,638 206,050 30,859 69,284 635,155 946,986
Derivative assets 858 - 387 75 243 153 858
Derivative liabilities (704) - (572) (124) (3) (5) (704)
Net derivatives 154 - (185) (49) 240 148 153

 

As of April 1, 2015

Particulars Carrying amount On Demand Less than 6 months 6 to 12 months 1 to 2 years > 2 years Total
Interest bearing borrowings*# 213,876 - 14,171 7,550 38,208 273,711 333,640
Other financial liabilities# 84,726 2,722 62,291 - - 19,713 84,726
Trade payables 105,769 - 105,769 - - - 105,769
Financial liabilities (excluding derivatives) 404,371 2,722 182,231 7,550 38,208 293,424 524,135
Derivative assets 322 - 116 52 86 68 322
Derivative liabilities (344) - (158) (65) (112) (9) (344)
Net derivatives (22) - (42) (13) (26) 59 (22)

* Includes contractual interest payment based on interest rate prevailing at the end of the reporting period after adjustment for the impact of interest swaps, over the tenor of the borrowings.

# Interest accrued but not due of ' 1,409, ' 1,164 and ' 237 as of March 31, 2017, March 31, 2016 and April 1, 2015, respectively, has been included in interest bearing borrowings and excluded from other financial liabilities.

The Company from time to time in its usual course of business guarantees certain indebtedness of its subsidiaries. Accordingly, as of March 31, 2017, March 31, 2016 and April 1, 2015 company has issued corporate guarantee for debt of ' 340,855, ' 393,128 and ' 433,987, respectively. The outflow in respect of these guarantees arises only on any default/non- performance of the subsidiary with respect to the guaranteed debt and substantial amount of such loans are due for payment after two years from the reporting date.

2. Capital Risk

The Company's objective while managing capital is to safeguard its ability to continue as a going concern (so that it is enabled to provide returns and create value for its shareholders, and benefits for other stakeholders), support business stability and growth, ensure adherence to the covenants and restrictions imposed by lenders and / or relevant laws and regulations, and maintain an optimal and efficient capital structure so as to reduce the cost of capital. However, the key objective of the Company's capital management is to, ensure that it maintains a stable capital structure with the focus on total equity, uphold investor; creditor and customer confidence, and ensure future development of its business activities. In order to maintain or adjust the capital structure, the Company may issue new shares, declare dividends, return capital to shareholders, etc.

The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions or its business requirements.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Net debt is calculated as loans and borrowings less cash and cash equivalents.

Particulars As of March 31, 2017 As of March 31, 2016 As of April 1, 2015
Borrowings 602,350 455,003 213,639
Less: Cash and Cash Equivalents 1,087 466 3,852
Net Debt 601,263 454,537 209,787
Equity 1,012,073 1,117,291 1,057,382
Total Capital 1,012,073 1,117,291 1,057,382
Capital and Net Debt 1,613,336 1,571,828 1,267,169
Gearing Ratio 37.3% 28.9% 16.6%

34 Fair Value of financial assets and liabilities

The category wise details as to the carrying value and fair value of the Company's financial instruments are as follows:

Level

Carrying Value as of

Fair Value as of

Particulars 2017 March 31, 2016 April 1, 2015 2017 March 31, 2016 April 1, 2015
Financial Assets
FVTPL
Derivatives
- Currency swaps, forward and option contracts Level 2 187 549 215 187 549 215
- Interest rate swaps 106 - - 106 - -
- Embedded derivatives Level 2 554 309 107 554 309 107
Investments Level 1 - - 47,550 - - 47,550
Investments Level 2 52 60 69 52 60 69
Amortised cost
Loans and security deposits Level 2 82,470 72,237 83,444 82,470 72,237 83,444
Trade receivables Level 2 32,118 31,724 33,047 32,118 31,724 33,047
Cash and cash equivalents Level 1 1,087 466 3,852 1,087 466 3,852
Other financial assets Level 2 9,328 14,557 10,152 9,328 14,557 10,152
125,902 119,902 178,436 125,902 119,902 178,436
Financial Liabilities
FVTPL
Derivatives
- Currency swaps, forward and option contracts Level 2 1,848 596 111 1,848 596 111
- Embedded derivatives Level 2 - 108 233 - 108 233
Amortised cost
Borrowings- fixed rate Level 1 64,082 65,402 - 65,008 67,469 -
Borrowings- fixed rate Level 2 456,153 343,395 143,330 490,251 353,949 143,330
Borrowings- floating rate Level 2 82,115 46,206 70,309 82,115 46,206 70,309
Trade payables Level 2 149,698 119,706 105,769 149,698 119,706 105,769
Other financial liabilities Level 2 77,552 99,508 84,963 77,552 99,508 84,963
831,448 674,921 404,715 866,472 687,542 404,715

The following methods / assumptions were used to estimate the fair values:

i. The carrying value of trade receivables, trade payables, short-term borrowings, other current financial assets and liabilities approximate their fair value mainly due to the short-term maturities of these instruments.

ii. Fair value of quoted financial instruments is based on quoted market price at the reporting date.

iii. The fair value of long-term borrowings and noncurrent financial assets / liabilities is estimated by discounting future cash flows using current rates applicable to instruments with similar terms, currency, credit risk and remaining maturities.

iv. The fair values of derivatives are estimated by using pricing models, wherein the inputs to those models are based on readily observable market parameters. The valuation models used by the Company reflect the contractual terms of the derivatives (including the period to maturity), and market-based parameters such as interest rates, foreign exchange rates, volatility etc. These models do not contain a high level of subjectivity as the valuation techniques used do not require significant judgement and inputs thereto are readily observable.

During the year ended March 31, 2017 and 2016, there were no transfers between Level 1 and Level 2 fair value measurements. None of the financial assets and financial liabilities are in Level 3.

Following table describes the valuation techniques used and key inputs thereto for the Level 2 financial assets / liabilities as of March 31, 2017, March 31, 2016 and April 1, 2015:

Financial assets / liabilities Valuation technique Inputs used
- Currency swaps, forward and option contracts Discounted Cash Flow Forward currency exchange rates, Interest rates.
- Interest swaps Discounted Cash Flow Prevailing / forward interest rates in market, Interest rates.
- Embedded derivatives Discounted Cash Flow Forward currency exchange rates, Interest rates.
- Investments Discounted Cash Flow Prevailing / forward interest rates in market, Interest rates.
- Other financial assets Discounted Cash Flow Prevailing / forward interest rates in market, Interest rates.
Financial assets / liabilities Valuation technique Inputs used
- Other borrowings- fixed rate Discounted Cash Flow Prevailing interest rates in market, Future payouts, Interest rates.
- Other financial liabilities Discounted Cash Flow Prevailing interest rates in market, Future payouts, Interest rates.

35 Auditor's remuneration

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
- Audit fee* 76 78
- Reimbursement of expenses* 6 6
- As advisor for taxation matters* 0 -
- Other services* 9 18
91 102

*Excluding service tax

36 Micro, small & medium enterprises development act, 2006 (‘MSMED') disclosure

The dues to micro and small enterprises as required under MSMED Act, 2006, based on the information available with the Company, is given below:

Particulars For the year ended March 31, 2017 For the year ended March 31, 2016
1 The principal amount and the interest due thereon [' Nil (March 31, 2016 - ' Nil)] remaining unpaid to any supplier as at the end of each accounting year 10 32
2 The amount of interest paid by the buyer in terms of section 16 of the MSMED Act, 2006, along with the amounts of the payment made to the supplier beyond the appointed day during each accounting year 96
3 The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under MSMED Act, 2006.
4 The amount of interest accrued and remaining unpaid at the end of each accounting year; 0 -
5 The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under section 23 of the MSMED Act, 2006.

37 Other Matters

(i) In 1996, the Company had obtained the permission from DoT to operate its Punjab license through one of its wholly owned subsidiary. However DoT cancelled the permission to operate in April, 1996 and subsequently reinstated in March, 1998. Accordingly, for the period from April 1996 to March, 1998 (‘blackout period') the license fee was disputed and not paid by the Company.

Subsequently, basis the demand from DoT in 2001, the Company paid the disputed license fee of ' 4,856 for blackout period under protest. Consequently, the license was restored subject to arbitrator's adjudication on the dispute. The arbitrator adjudicated the matter in favour of DoT, which was challenged by the Company before Hon'ble Delhi High Court. In 2012, Hon'ble Delhi High Court passed an order setting aside the arbitrator's award, which was challenged by DoT and is pending before its division bench. Meanwhile, the Company had filed a writ petition for recovery of the disputed license fee and interest thereto. However, the single bench, despite taking the view that the Company is entitled to refund, dismissed the writ petition on the ground that the case is still pending with the larger bench. The

Company therefore has filed appeal against the said order with division bench and is currently pending.

(ii) TRAI vide Telecom Interconnect Usages Charges Regulation (Eleventh Amendment) 2015 has reduced the IUC charges for mobile termination charges to 14 paisa from 20 paisa and abolished the fixed-line termination charges. The company has challenged the said Regulation before the Hon'ble Delhi High Court and the matter is currently pending.

38 Reconciliation from previous GAAP

The following reconciliations provide a quantification of the effect of differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101 whereas the notes explain the significant differences thereto.

I. Balance sheet reconciliations as of April 1, 2015 II a. Balance sheet reconciliations as of March 31, 2016 II b. Reconciliations of statement of profit and loss for the year ended March 31, 2016

III. Notes to the balance sheet and statement of profit and loss reconciliations

IV Explanation of material adjustments to statement of cash flows

I. Balance sheet reconciliation as of April 1, 2015

Particulars Notes Regrouped IGAAP Ind AS Adjustment Ind AS
Assets
Non-current assets
Property, plant and equipment 1 / 2 / 3 256,552 1,604 258,156
Capital work-in-progress 2 26,561 337 26,898
Intangible assets 277,892 - 277,892
Intangible assets under development 64,108 - 64,108
Investment in subsidiaries, joint ventures and associates 4 / 5 383,908 268,570 652,478
Financial Assets
- Investments 7 52 - 52
- Derivative instruments 6 - 154 154
- Loans and security deposits 3 / 5 49,650 (6,758) 42,892
- Others 487 - 487
Deferred tax assets (net) 10 27,935 (694) 27,241
Other non-current assets 3 17,041 - 17,041
1,104,186 263,213 1,367,399
Current assets
Inventories 94 - 94
Financial Assets
- Investments 7 47,211 356 47,567
- Derivative instruments 6 - 168 168
- Trade receivables 33,047 - 33,047
- Cash and cash equivalents 3,852 - 3,852
- Loans 40,552 - 40,552
- Others 9,665 - 9,665
Other current assets 12,864 81 12,945
147,285 605 147,890
Total Assets 1,251,471 263,818 1,515,289
Equity and Liabilities
Equity
Shares capital 19,987 - 19,987
Other Equity 762,743 274,652 1,037,395
782,730 274,652 1,057,382
Non-current liabilities
Financial liabilities
-Borrowings 194,209 - 194,209
-Derivative instruments 6 126 (5) 121
-Others 19,713 - 19,713
Deferred revenue 3 16,012 (125) 15,887
Provisions 1 1,969 (43) 1,926
232,029 (173) 231,856
Current liabilities
Financial liabilities
-Borrowings 6,259 - 6,259
-Current maturities of long term borrowings 13,171 - 13,171
-Derivative instruments 6 126 97 223
-Trade payables 105,890 (121) 105,769
-Others 3 65,328 (78) 65,250
Deferred revenue 3 28,604 122 28,726
Provisions 1,174 - 1,174
Current tax liabilities (net) 507 - 507
Other current liabilities 8 15,653 (10,681) 4,972
236,712 (10,661) 226,051
Total Liabilities 468,741 (10,834) 457,907
Total Equity and Liabilities 1,251,471 263,818 1,515,289

II a. Balance sheet reconciliation as of March 31, 2016

Particulars Notes Regrouped IGAAP Ind AS Adjustment Ind AS
Assets
Non-current assets
Property, plant and equipment 1 / 2 / 3 311,563 1,110 312,673
Capital work-in-progress 2 28,251 337 28,588
Intangible assets 606,582 - 606,582
Intangible assets under development 9,715 - 9,715
Investment in subsidiaries, joint ventures and associates 4 / 5 430,209 268,704 698,913
Financial assets
- Investments 7 52 - 52
- Derivative instruments 6 - 396 396
- Loans and security deposits 3 / 5 33,199 (4,338) 28,861
- Others 598 - 598
Deferred tax assets (net) 10 23,503 (433) 23,070
Other non-current assets 3 26,622 - 26,622
1,470,294 265,776 1,736,070
Current assets
Inventories 53 - 53
Financial assets
- Investments 8 - 8
- Derivative instruments 6 - 462 462
- Trade receivables 31,724 - 31,724
- Cash and cash equivalents 466 - 466
- Loans 43,376 - 43,376
- Others 13,959 - 13,959
Current tax assets (net) 820 - 820
Other current assets 23,483 (141) 23,342
113,889 321 114,210
Total Assets 1,584,183 266,097 1,850,280
Equity and Liabilities
Equity
Shares capital 19,987 - 19,987
Other Equity 824,481 272,823 1,097,304
844,468 272,823 1,117,291
Non-current Liabilities
Financial liabilities
- Borrowings 414,622 (52) 414,570
- Derivative instruments 6 11 (3) 8
- Others 20,736 - 20,736
Deferred revenue 3 17,110 (126) 16,984
Provisions 1 2,262 (39) 2,223
454,741 (220) 454,521
Current liabilities
Financial liabilities
- Borrowings 6,961 38 6,999
- Current maturities of long-term borrowings 33,434

-

33,434
- Derivative instruments 6 108 588 696
- Trade payables 120,280 (574) 119,706
- Others 3 78,907 (135) 78,772
Deferred revenue 3 29,364 121 29,485
Provisions 1,189 - 1,189
Other current liabilities 8 14,731 (6,544) 8,187
284,974 (6,506) 278,468
Total Liabilities 739,715 (6,726) 732,989
Total Equity and Liabilities 1,584,183 266,097 1,850,280

II b. Reconciliation of Statement of profit and loss for the year ended March 31, 2016

Particulars Notes Regrouped IGAAP Ind AS Adjustment Ind AS
Income
Revenue from operations 603,002 1 603,003
Other Income 1,729 - 1,729
Total Income 604,731 1 604,732
Expenses
Network operating expenses 3 137,540 349 137,889
Access charges 80,236 - 80,236
License fee / spectrum charges (revenue share) 69,635 - 69,635
Employee benefits 9 18,693 (45) 18,648
Sales and marketing Expenses 32,824 - 32,824
Other expenses 3 39,610 30 39,640
Total Expenses 378,538 334 378,872
Profit from operating activities before depreciation, amortisation and exceptional items 226,193 (333) 225,860
Depreciation and amortisation expense 1 / 2 / 3 95,431 322 95,753
Finance costs 1 / 3 / 6 / 7 35,002 451 35,453
Finance income 3 / 5 / 6 / 7 (12,458) (3,250) (15,708)
Non operating expense 1,019 - 1,019
Profit before exceptional items and tax 107,199 2,144 109,343
Exceptional items 6,799 - 6,799
Profit before tax 100,400 2,144 102,544
Tax expenses
Current tax 20,558 - 20,558
Deferred tax 10 4,376 (193) 4,183
Profit for the year 75,466 2,337 77,803
Other comprehensive income ('OCI') :
Items not to be reclassified to profit or loss :
Re-measurement losses on defined benefit plans 9 - (46) (46)
Income tax credit 9 - 12 12
Other comprehensive loss for the year - (34) (34)
Total comprehensive income for the year 75,466 2,303 77,769

III. Notes to the balance sheet and statement of profit and loss reconciliations

As the presentation requirements under IGAAP differ from Ind AS, the IGAAP information has been regrouped for ease and facilitation of reconciliation with Ind AS.

1. Asset retirement obligations (‘ARO')

Under previous GAAP, ARO is initially measured at the expected cost to settle the obligation. Under Ind AS, the ARO is initially measured at the present value of expected cost to settle the obligation. The Company accordingly has recognized the adjustment to the cost of fixed assets and the consequent depreciation and finance cost. The corresponding impact on the date of transition has been recognised in equity.

2. Foreign exchange gain / losses

Under previous GAAP, certain foreign exchange gains or losses on foreign currency denominated liabilities were capitalized into the carrying value of fixed assets until March 31st 2008. Under Ind AS, such gains and losses are not allowed to capitalised. The Company accordingly has recognised the adjustment to the cost of fixed assets and the consequent depreciation. The corresponding impact on the date of transition has been considered in equity.

3. Non-current financial assets / liabilities

Under previous GAAP certain non-current financial assets / liabilities which were measured at cost / best estimate of the expenditure required to settle the obligation, at the balance sheet date without considering the effect of discounting whereas these are measured at the present value on the balance sheet date under Ind AS. Accordingly, the Company has recognised the adjustment to the respective carrying amount and the consequent impact on finance cost / finance income due to the unwinding of the discounting impact. The corresponding impact on the date of transition has been recognised in equity.

4. Investment in subsidiaries - deemed cost exemption

Under previous GAAP, investments in subsidiaries were measured at cost. Under Ind AS, the Company has elected the option of fair value the investments in certain subsidiaries basis the requirements of Ind AS 101, First Time Adoption of Indian Accounting Standards for deriving the carrying value of these Investments (‘deemed cost').

5. Fair valuation of loans

Under previous GAAP, interest free loans given by Parent to its subsidiaries are not required to be fair valued on initial recognition and hence these were recognised at the amount of loan given. Under Ind AS, such loans are measured at fair value on initial recognition basis discounting at market interest rates and the difference is accounted as investment in respective subsidiary. The consequent unwinding of discounted fair value is recognised as interest income in the statement of profit and loss with the corresponding increase in loans.

6. Derivatives

Under previous GAAP derivative contracts are measured at fair value at each balance sheet date with the changes over the previous carrying amount being recognised in the statement of profit and loss, but recognition of increase in the fair value is restricted only to the extent it represents any subsequent reversal of previously recognised losses. Under Ind AS, the entire changes the fair values of derivative contracts are recognised in statement of profit and loss in the year of change.

7. Investments

Under previous GAAP, current investments were measured at lower of cost or fair value. Under Ind AS, these financial assets are classified as FVTPL and the changes in fair value are recognised in statement of profit and loss. On the transition date, these financial assets have been measured at their fair value which is higher than its cost as per previous GAAP, resulting in an increase in carrying value of the investments with corresponding increase being recognised in equity.

8. Proposed dividend

Under previous GAAP, dividend on equity shares recommended by the board of directors (‘proposed dividend') was recognised as a liability in the financial statements in the period to which it relates. Under Ind AS, such dividend is recognised as a liability when approved by the shareholders in the general meeting. The Company accordingly, has de-recognised the proposed dividend liability with the corresponding increase being recognised in equity.

9. Remeasurement differences

Under previous GAAP, there was no concept of other comprehensive income and hence, previous GAAP profit is reconciled to total comprehensive income as per Ind AS. Under previous GAAP, the remeasurements of the net defined benefit liability were recognised in the statement of profit and loss. Under Ind AS, the said remeasurement differences net of the related tax impact are recognised in other comprehensive income.

10. Deferred Taxes

Under Ind AS, the Company has recognised the consequential deferred tax implications on the impact on account of adjustments explained above.

IV. Explanation of material adjustments to Statement of Cash Flows

There were no material differences between the statement of cash flows presented under Ind AS and the previous GAAP except due to various re-classification adjustments recorded under Ind AS and difference in the definition of cash and cash equivalents under these two GAAPs.

   

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