Notes forming part of the Financial

1. CORPORATE INFORMATION

Idea Cellular Limited ('the Company'), an Aditya Birla Group company, is currently the third largest pan India telecom service provider in India. The Company is engaged in the business of Mobility and Long Distance services.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Preparation of Financial Statements:

The Financial Statements have been brpared on accrual basis under the historical cost convention in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013.

All assets and liabilities have been classified as current or non-current as per the operating cycle criteria set out in the Schedule III to the Companies Act, 2013.

b) Fixed Assets:

Fixed assets are stated at cost of acquisition and installation less accumulated debrciation / amortisation and accumulated impairment losses, if any. Cost is inclusive of freight, duties, levies, any directly attributable cost incurred for bringing the assets to their working condition for intended use and borrowing cost attributable to fixed assets which take substantial period of time to get ready for intended use.

Asset retirement obligations are capitalised based on a constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Such costs are debrciated over the remaining useful life of the asset. Gains and Losses arising from retirement or disposal of fixed assets are determined as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss on the date of retirement or disposal.

c) Expenditure during br-operative period of license:

Expenses incurred on project and other charges during construction period are included under br-operative expenditure (grouped under capital work-in-progress) and are allocated to the cost of Fixed Assets on the commencement of commercial operations.

d) Debrciation and Amortisation:

Debrciation on tangible fixed assets is provided using straight line method on pro rata basis over their estimated useful economic lives as given below. The useful life is taken as brscribed in Schedule II to the Companies Act, 2013 except where the estimated useful economic life has been assessed to be lower based on technical obsolescence, nature of assets, estimated usage of the assets, operating conditions of the asset, and manufacturers warranties, maintenance and support period, etc.    

 Tangible Assets Years 

 Buildings 9 to 30 

 Network Equipments 7 to 13 

 Optical Fibre 15 

 Other Plant and Machineries 5 

 Office Equipments 3 to 5 

 Computers 3 

 Furniture and Fixtures 3 to 10 

 Motor Vehicles upto 5 

 Leasehold improvements Period of Lease 

 Leasehold Land Period of Lease 

Intangible Assets are amortised on straight line method as under:-

i) Cost of Rights, Licenses amounts (including amounts paid on fixed basis prior to revenue share regime) and amount paid for Spectrum is amortised on straight line method on commencement of operations over the validity period.

ii) Software, which is not an integral part of hardware, is treated as an intangible asset and is amortised over its useful economic life as estimated by the management between 3 to 5 years.

iii) Bandwidth / Fibre taken on Indefeasible Right of Use (IRU) is amortised over the agreement period.

Assets costing upto Rs. 5,000/- are debrciated fully in the month of purchase.

e) Inventories:

Inventories are valued at cost or net realisable value, whichever is lower. Cost is determined on weighted average basis.

f) Foreign currency transactions, forward contracts & other Derivatives:

i) Foreign currency transactions:

Transactions in foreign currency are recorded at the exchange rates brvailing at the date of the transactions. As per the transitional provisions given in the notification issued by Ministry of Corporate Affairs dated March 31, 2009, the company has opted for the option of adjusting the exchange difference on long term foreign currency monetary items to the cost of the assets acquired out of these foreign currency monetary items. The company has aligned its accounting policy based on this notification and its further amendment. Exchange difference arising out of fluctuation in exchange rates on settlement / period end is accounted based on the nature of transaction as under:

- Short term foreign currency monetary assets and liabilities: recognised in the Statement of Profit and Loss. 

- Long term foreign currency monetary liabilities used for acquisition of fixed assets: adjusted to the cost of the fixed assets and amortised over the remaining useful life of the asset.

- Other Long term foreign currency monetary liabilities: recognised in "Foreign Currency Monetary Item Translation Difference Account" and amortised over the period of liability not exceeding March 31, 2020.

ii) Forward contracts & other Derivatives:

Premium / discount amount on forward contract is amortised on period basis related to the contract it pertains to, profit or loss arising on cancellation of forward exchange contract is recognised in the period in which the contract is cancelled.

Derivative contracts not covered under Accounting Standard 11 "The Effects of Changes in Foreign Exchange Rates", entered for hedging foreign currency fluctuations and interest rate risk are marked to market at each reporting date. Loss, if any, on such valuation is recognised in the Statement of Profit and Loss in that period and gain, if any, is not recognised as per the principle of prudence enunciated in Accounting Standard 1, "Disclosure of Accounting Policies".

g) Taxation:

i) Current Tax: Provision for current income tax is made on the taxable income using the applicable tax rates and tax laws. Advance Income Tax and Provision for Current Tax is disclosed in the balance sheet at net as these are settled on net basis.

ii) Deferred Tax: Deferred tax arising on account of timing differences and which are capable of reversal in one or more subsequent periods is recognised using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax assets are not recognised unless there is virtual certainty with respect to the reversal of the same in future years.

iii) Minimum Alternate Tax (MAT) credit: MAT is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the Guidance Note issued by the ICAI, the said asset is created by way of a credit to the Statement of Profit and Loss and is shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period. h) Retirement Benefits:

Contributions to Provident and Pension funds are funded with the appropriate authorities and charged to the Statement of Profit and Loss. Contributions to Superannuation are funded with the Life Insurance Corporation of India and charged to the Statement of Profit and Loss.

Liability for Gratuity as at the year end is provided on the basis of actuarial valuation and funded with the Life Insurance Corporation of India. Provision in accounts for leave benefits to employees is based on actuarial valuation done by projected accrued benefit method at the period end.

i) Revenue Recognition and Receivables:

Revenue on account of telephony services (mobile & long distance) is recognised net of rebates, discount, service tax, etc. on rendering of services and supply of goods respectively. Recharge fees on recharge vouchers is recognised as revenue as and when the recharge voucher is activated by the subscriber. Revenue from passive infrastructure is recognised on accrual basis (net of reimbursements) as per the contractual terms on straight line method over the contract period.

Unbilled receivables, rebrsent revenues recognised from the bill cycle date to the end of each month. These are billed in subsequent periods as per the agreed terms.

Debts (net of security deposits outstanding there against) due from subscribers, which remain unpaid for more than 90 days from the date of bill and/or other debts which are otherwise considered doubtful, are provided for.

Provision for doubtful debts on account of interconnect usage charges (IUC), roaming charges and passive infrastructure sharing from other telecom operators is made for dues outstanding more than 180 days from the date of billing other than cases when an amount is payable to that operator or in specific case when management is of the view that the amount is recoverable.

j) Interest and Dividend Income:

Interest income is recognised on accrual basis on the outstanding amount and applicable interest rate. Dividend income is accounted for when the right to receive it is established.

k) Investments:

Current Investments are stated at lower of cost or fair value in respect of each separate investment. Gain on sale of current investment is accounted on actual sale of investment and loss, if any, is accounted for as soon as it is ascertained.

Long-term Investments are stated at cost less provision for diminution in value other than temporary, if any. 

l) Borrowing Cost:

Interest and other costs incurred in connection with the borrowing of funds are charged to revenue on accrual basis except those borrowing costs which are directly attributable to the acquisition or construction of those fixed assets, which necessarily take a substantial period of time to get ready for their intended use. Such costs are capitalised with the fixed assets.

m) License Fees - Revenue Share:

With effect from August 1, 1999 the variable license fee computed at brscribed rates of revenue share is being charged to the Statement of Profit and Loss in the period in which the related revenue arises. Revenue for this purpose comprises adjusted gross revenue as per the license agreement of the license area to which the license pertains.

n) Use of Estimate:

The brparation of financial statements in conformity with generally accepted accounting principles require estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Differences between actual results and estimates are recognised in the periods in which the results are known / materialised.

o) Leases:

i) Operating Lease: Lease of assets under which significant risks and rewards of ownership are effectively retained by the lessor is classified as operating lease. Lease payment / income for / from an operating lease is recognised as expense / income in the Statement of Profit and Loss, on a straight line or other systematic basis over the lease term respectively.

ii) Finance Lease: Leased assets acquired on which significant risks and rewards of ownership effectively transferred to the Company are capitalised at lower of fair value or the amounts paid under such lease arrangements. Such assets are amortised over the period of lease or estimated life of such assets whichever is less.

p) Earnings Per Share:

The earnings considered in ascertaining the Company's Earnings Per Share (EPS) comprise of the net profit after tax, after reducing dividend on Cumulative Preference Shares for the period (irrespective of whether declared, paid or not), as per Accounting Standard 20 on "Earnings Per Share". The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the period. The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless the effect of the potential dilutive equity shares is anti-dilutive.

q) Impairment of Assets:

Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in accordance with Accounting Standard 28 on "Impairment of Assets", for the amount by which the asset's carrying amount exceeds its recoverable amount as on the carrying date. The recoverable amount is higher of the asset's fair value less costs to sell vis-a-vis value in use. For the purpose of impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.

r) Provisions and Contingent Liability:

Provisions are recognised when the Company has a brsent obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. A contingent liability is disclosed where there is a possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources.

s) Issue Expenditure:

Expenses incurred in connection with issue of equity shares are adjusted against Securities Premium Account.

t) Employee Stock Option:

In respect of stock options granted pursuant to the Company's Employee Stock Option Scheme, the intrinsic value of the option is treated as discount and accounted as employee compensation cost over the vesting period.

In respect of re-pricing of existing stock option, the incremental intrinsic value of the option is accounted for as employee cost over the remaining vesting period. 

3. The Department of Telecommunications (DoT) conducted auctions for frequency blocks in the 800, 900, 1800 and 2100 Mhz spectrum bands in March 2015. The frequency blocks that were put to auction in the 900 and 1800 Mhz band in 17 service areas included the blocks that are currently held by existing licensees whose licenses for the respective service areas are due to expire during financial years (FY) 2015-16 and 2016-17. The Company successfully bid for its requirements in the nine service areas of Maharashtra, Madhya Pradesh, Kerala, Gujarat, Andhra Pradesh, Haryana, Punjab, Karnataka and Uttar Pradesh (West) where its licenses are due to expire during FY 2015 - 16 / 2016-17 and also additional spectrum at a total cost of Rs. 301,375.25 Mn as under:

• 54 Mhz of 900 Mhz spectrum in the 9 service areas of Maharashtra, Madhya Pradesh, Kerala, Gujarat, Andhra Pradesh, Haryana, Punjab, Karnataka and Uttar Pradesh (West)

• 20.4 Mhz of 1800 Mhz spectrum in the 6 service areas of Karnataka, Uttar Pradesh (West), Orissa, Tamilnadu, Himachal Pradesh and North East

• 5 Mhz of 2100 Mhz spectrum in Kolkata service area.

The validity of the above spectrum will be for a fresh 20 year period starting from the effective date as mentioned in the Letter of Intent (LOI) when issued, which, in case of spectrum blocks currently held by the existing licensees, should be the date of expiry of existing licenses. As per the payment options available, the Company has chosen the deferred payment option. The upfront payment amount under the deferred payment option due on or before April 9, 2015 was Rs. 77,341.99 Mn. of which Rs. 19,350.00 Mn. was paid on March 31, 2015 and the balance amount of Rs. 57,991.99 Mn. was paid on April 9, 2015. Pending completion of subsequent formalities as per the Notice Inviting Applications (NIA) for the auction and any orders that may be passed by the Hon'ble Subrme Court in related and connected matters currently before it, the amount paid as on March 31, 2015 has been disclosed as Capital Advances and the balance amount of Rs. 282,025.25 Mn. has been disclosed under capital commitments.

4. During the year, the Company has issued and allotted 223,880,597 Equity Shares of face value of Rs. 10/- each to eligible Qualified Institutional Buyers at a price of Rs. 134/- per Equity Share, including a brmium of Rs. 124/- per Equity Share, aggregating Rs. 30,000 Mn. The Company also issued and allotted 51,838,540 Equity Shares of face value of Rs. 10/- each to Axiata Investments 2 (India) Limited on a brferential basis at a price of Rs. 144.68 per Equity Share, including a brmium of Rs. 134.68 per Equity Share, aggregating Rs. 7,500 Mn.

5 . Details of Guarantees given:

Bank Guarantees given Rs. 86,472.12 Mn. (Previous year Rs. 42,004.11 Mn.)

6. Capital and other Commitments:

Estimated amount of commitments as on March 31, 2015 towards:

• Spectrum won in auctions Rs. 282,025.25 Mn (Previous year Rs. Nil)

• Contracts remaining to be executed for capital expenditure (net of advances) and not provided for are Rs. 27,661.71 Mn. (Previous year Rs. 16,874.82 Mn.)

• Long term contracts remaining to be executed including early termination commitments (if any) are Rs. 17,866.22 Mn. (Previous year Rs. 18,376.07 Mn.)

7. The Company is one of the members of Aditya Birla Management Corporation Private Limited, a Company limited by guarantee, which has been formed to provide common pool of facilities and resources to its members with a view to optimise the benefits of specialisation and minimize cost to each member. The Company's share of expenses incurred under the common pool has been accounted for at actuals in the respective heads in the Statement of Profit & Loss.

8. The Company has a composite IT outsourcing agreement where in fixed assets and services related to IT has been supplied by the vendor. Such fixed assets received have been accounted for as a finance lease. Correspondingly, such assets are recorded at fair value at the time of receipt and debrciated on the stated useful life applicable to similar IT assets of the Company. 

9. The Board of Directors has recommended a dividend at the rate of Rs. 0.60 per share (Previous Year Rs. 0.40) of face value of Rs. 10/-aggregating Rs.2,598.17 Mn. including Rs. 439.46 Mn. Dividend Distribution Tax (Previous Year Rs. 1,553.52 Mn., including Rs. 225.67 Mn. Dividend Distribution Tax) for the year ended March 31, 2015. The payment of dividend is subject to the approval of the shareholders at the ensuing annual general meeting of the Company.

10 . Previous year's figures have been regrouped/rearranged wherever necessary to conform to the current year grouping. 

For and on behalf of the Board 

Arun Thiagarajan Director

Gian Prakash Gupta Director

Himanshu Kapania Managing Director 

Akshaya Moondra Chief Financial Officer

Pankaj Kapdeo Company Secretary 

Place : Mumbai

Date : April 28, 2015