Notes to financial statements for the year ended March 31, 2016 1. Corporate Information Bharti Infratel Limited ('the Company' or 'BIL') incorporated on November 30, 2006 with the object of, inter-alia, setting up, operating and maintaining wireless communication towers. The Company received the certificate of commencement of business on April 10, 2007 from the Registrar of Companies. The Registered office of the Company is situated at Bharti Crescent, 1, Nelson Mandela Road, Vasant Kunj, Phase - II, New Delhi - 110070. The Company has entered into a joint venture agreement with Vodafone India Limited and Aditya Birla Telecom Limited to provide passive infrastructure services in 15 telecom circles of India and formed Indus Towers Limited ('Indus') for such purpose. The Company and Vodafone India Limited are holding approximately 42% each in Indus and the balance 16% is held by Aditya Birla Telecom Limited. The Company's shares are publically traded on National Stock Exchange and BSE India. The wholly owned subsidiary, Bharti Infratel Services Limited, has been incorporated on June 4, 2013 with the object of providing operation and management services of all kinds in the field of telecom infrastructure (both active and passive), telecom equipments, wireless communication towers, either on its own or in alliance with any other Person/Body/Bodies Corporate incorporated in India or abroad. The company was evaluating various business opportunities, but due to various reasons remained inoperative since incorporation. In view of this, Board of Directors at their meeting held on March 29, 2016 have agreed to initiate the process of striking off the name of the Company from the Register of Registrar of Companies under Fast Track Exit Mode. A wholly owned subsidiary, Smartx Services Limited, has been incorporated on September 21, 2015 with the object of transmission through Optic Fibre Cables and setting up Wi-Fi hotspots for providing services to telecom operators and others on sharing basis. 2. Basis of Preparation The financial statements of the Company have been brpared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has brpared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013 (the 'Act'), read together with paragraph 7 of the Companies (Accounts) Rules, 2014. The financial statements have been brpared under the historical cost convention on an accrual basis except in case of assets for which fair valuation is carried out. The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year except as mentioned in para 2.1 (r) below. 2.1 Summary of Significant Accounting Policies a. Use of Estimates The brparation of financial statements is in conformity with Indian GAAP and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. b. Tangible Fixed Assets Fixed assets are stated at cost of acquisition, except for assets acquired under Scheme of Arrangement (refer note 41), which are stated at fair values at the date of acquisition as per Schemes net of accumulated debrciation and accumulated impairment losses, if any. The cost comprises cost of acquisition, including taxes and duties (net of CENVAT credit), freight and other incidental expenses related to acquisition and installation. Site restoration cost obligations arising from site acquisition are capitalised 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. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its brviously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure are charged to the statement of profit and loss for the year during which such expenses are incurred. Gains or losses arising from de-recognition of fixed assets are measured 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 when the asset is derecognised. c. Debrciation on Tangible Fixed Assets Debrciation on tangible assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management. The Company has used the following lives to provide debrciation on its tangible assets: Useful lives Plant and machinery 3 to 20 years Furniture and fixtures 5 years Vehicles 5 years Office equipments 2 years/ 5 years Computers 3 years Leasehold improvements Period of lease or useful life, whichever is less The existing useful lives of tangible assets are different from the useful lives as brscribed under Part C of Schedule II to the Act, and the Company believes that this is the best estimate on the basis of technical evaluation and actual usage period. The existing realisable values of certain tangible assets are different from 5% as brscribed under Part C of Schedule II to the Act, and the Company believes that this is the best estimate on the basis of actual realisation. The site restoration cost obligation capitalised as part of plant and machinery is debrciated over the useful life of the related asset. Also, refer note 44 below. d. Intangible Assets and Amortisation Expense Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Software is capitalized at the amounts paid to acquire the respective license for use and is amortized over the period of licence, generally not exceeding three years. Amortisation is recognized in statement of profit and loss on a straight-line basis over the estimated useful economic lives of intangible assets from the date they are available for use. The amortisation period and the amortisation method are reviewed at each balance sheet date. If the expected useful life of the asset is significantly different from brvious estimates, the amortisation period is changed accordingly. Gains or losses arising from de-recognition of intangible assets are measured 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 when the asset is derecognised. e. Leases Where the Company is lessee Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased asset, are capitalised at the inception of the lease term at the lower of the fair value of the leased asset and brsent value of minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised as finance costs in the statement of profit and loss. A leased asset is debrciated on a straight-line basis over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, the capitalised asset is debrciated on a straight-line basis over the shorter of the estimated useful life of the asset and the lease term. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the non-cancellable lease term. Where the Company is lessor Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on an operating lease is recognised in the statement of profit and loss on a straight-line basis over the non-cancellable lease term. Costs, including debrciation, are recognised as an expense in the statement of profit and loss. f. Borrowing Costs Borrowing costs include interest, amortisation of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. g. Impairment of Tangible and Intangible Assets The carrying amounts of assets are reviewed at each balance sheet date for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets’ carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the assets’ fair value less costs to sell and value in use. Impairment losses are recognised in the statement of profit and loss under the caption debrciation and amortisation expense. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). h. Investments Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as non-current investments. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Non-current investments are carried at cost, except for investment in Indus, which is stated at fair value as per the Scheme of Arrangement (refer note 43). However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss. i. Revenue Recognition and Receivables Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenues Revenues include revenue from the use of sites and energy charges received from customers. Revenue is recognised as and when services are rendered. If the payment terms in the service agreements include fixed escalations, the effect of such increases is recognised on a straight-line basis over the fixed, non-cancellable term of the agreement, as applicable. Unbilled receivables rebrsent revenues recognised from the last invoice raised to customer to the year end. These are billed in subsequent periods based on the terms of agreement with the customers. The Company collects service tax on behalf of the Government of India and therefore, it is not an economic benefit flowing to the Company. Hence it is excluded from revenue. Interest Interest income is recognised on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "other income" in the statement of profit and loss. Dividend Dividend income is recognised when the Company’s right to receive dividend is established by the reporting date. Provision for doubtful debts As per the policy, the Company provides for amount outstanding for more than 105 days from the invoice date in case of site sharing operators other than from Bharti Airtel Limited (Parent Company) or in specific cases where management is of the view that the amounts for certain customers are not recoverable. j. Foreign Currency Transactions and Balances Initial recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Conversion Foreign currency monetary items are retranslated using the exchange rate brvailing at the reporting date. Non- monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined. Exchange differences Exchange differences arising on settlement of monetary items or on restatement of the Company’s monetary items at rates different from those at which they were initially recorded during the year, or reported in brvious financial statements, are taken to the statement of profit and loss. k. Retirement and Other Employee Benefits Short term employee benefits are recognised in the year during which the services have been rendered. All employees of the Company are entitled to receive benefits under the provident fund, which is a defined contribution plan. Contribution to provident fund is recognised as and when the services are rendered. Both the employee and the employer make monthly contributions to the plan at a brdetermined rate of the employees’ basic salary. These contributions are made to the fund administered and managed by the Government of India. In addition, some employees of the Company are covered under the employees’state insurance schemes, which are also defined contribution schemes recognised and administered by the Government of India. The Company’s contributions to both these schemes are expensed in the statement of profit and loss. The Company has no further obligations under these plans beyond its monthly contributions. The Company provides for Gratuity obligations through a defined benefit retirement plan covering all employees. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each reporting period end. Actuarial valuation is carried out using the projected unit credit method. Actuarial gains and losses are recognised in full in the year in which they occur in the statement of profit and loss. The Company provides other benefits in the form of compensated absences and long term service awards. The employees of the Company are entitled to compensated absences based on the unavailed leave balance. The Company records liability based on actuarial valuation computed under projected unit credit method. Actuarial gains / losses are immediately taken to the statement of profit and loss and are not deferred. The Company brsents the entire leave encashment liability as a current liability in the balance sheet, since the Company does not have an unconditional right to defer its settlement for more than 12 months after the reporting date. Under the long term service award plan, a lump sum payment is made to an employee on completion of specified years of service. The Company records the liability based on actuarial valuation computed under projected unit credit method. Actuarial gains / losses are immediately taken to the statement of profit and loss and are not deferred. l. Income Taxes Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws brvailing in the respective tax jurisdiction where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted at the reporting date. Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit and loss. Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit and loss. Deferred tax liabilities are recognised for all taxable timing differences. Deferred tax assets are recognised for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed debrciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write down is reversed to the extent thatit becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxable entity and the same taxation authority. m. Employee Stock/Cash Option Plan Employees of the Company receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for options to buy equity instruments (equity-settled transactions). In accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, and the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the Black-Scholes / Lattice Valuation option pricing model and the fair value is recognised as an expense over the period in which the options vest, on a straight line basis, together with a corresponding increase in the "Stock options outstanding account" in reserves. The cumulative expense recognised for equitysettled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company’s best estimate of the number of options to buy equity instruments that will ultimately vest. The expense or credit recognised in the statement of profit and loss for a year rebrsents the movement in cumulative expense recognised as at the beginning and end of that year and is recognised in employee benefits expense. Where the terms of an equity-settled transaction award are modified, the minimum expense recognised is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification. For cash-settled share-based payments, a liability is recognised for the services acquired, measured initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in the statement of profit and loss for the year with a corresponding change in liabilities. n. Earnings Per Share Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. o. Provisions A provision is recognised when the Company has a brsent obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. p. Contingent Liabilities A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrenceof one or more uncertain future events beyond the control of the Company or a brsent obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements. q. Cash and Cash Equivalents Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and on hand and short-term investments with an original maturity of three months or less. r. Corporate Social Responsibility Expenditure Pursuant to the requirements of section 135 of the Act and rules thereon and guidance note on "Accounting for expenditure on Corporate Social Responsibility activities" issued by ICAI, with effect from April 1, 2015, CSR expenditure is recognised as an expense in the Statement of Profit and Loss in the period in which it is incurred. During brvious year, CSR expenditure was accounted for as an appropriation to the Statement of Profit and Loss, pursuant to FAQs on accounting of CSR, as issued by ICAI earlier. The impact of change in accounting policy is not material in relation to these financial statements and therefore, the same has not been disclosed. 3. Since the Company’s business activity falls within a single business and geographical segment of providing passive infrastructure, there are no additional disclosure to be provided under Accounting Standard - 17 ‘Segment reporting’ other than those already provided in the financial statements. 4. During the year ended March 31, 2008, pursuant to the Scheme of Arrangement with Bharti Airtel Limited (‘the Scheme’) under sections 391 to 394 of the Companies Act, 1956, the telecom infrastructure undertaking of Bharti Airtel Limited was transferred to the Company. Pursuant to the Scheme, the debrciation charged by the Company on the excess of the fair values over the original book values of the assets transferred by Bharti Airtel Limited is being off-set against General Reserve. Had the Company followed generally accepted accounting principles in India, General Reserve as at March 31, 2016 and March 31, 2015 would have been higher by Rs. 8,302 Mn and Rs. 7,724 Mn, respectively. Debrciation for the year ended March 31, 2016 would have been higher by Rs. 571 Mn (March 31, 2015 - Rs. 606 Mn), other expenses for the year ended March 31, 2016 would have been higher by Rs. 8 Mn (March 31, 2015 - Rs. 55 Mn) and profit for the year ended March 31, 2016 would have been lower by Rs. 579 Mn (March 31, 2015 - Rs. 661 Mn), respectively. 5. The Scheme of Arrangement (‘Indus Scheme’) under Section 391 to 394 of the Companies Act, 1956 for transfer of all assets and liabilities, as defined in Indus scheme, from Bharti Infratel Ventures Limited (BIVL), erstwhile wholly owned subsidiary company, to Indus Towers Limited (Indus), was approved by the Hon’ble High Court of Delhi vide order dated April 18, 2013 and filed with the Registrar of Companies on June 11, 2013 with appointed date April 1, 2009 i.e. effective date of Indus Scheme and accordingly, effective June 11, 2013, the erstwhile subsidiary company has ceased to exist and has become part of Indus. The Company was carrying investment in BIVL at Rs. 59,921 Mn. Pursuant to Indus Scheme, the Company has additionally got 504 shares in Indus in lieu of transfer of its investment in BIVL to Indus and recorded these additional shares at their fair value of Rs. 60,419 Mn in accordance with the requirements of Accounting Standard – 13. The resultant gain of Rs. 385 Mn (net of taxes Rs. 116 Mn) has been disclosed as adjustment to carry forward balance of Statement of Profit and Loss as at April 1, 2009. This being non cash transaction, has not been considered for disclosure in cash flow statement for the year ended March 31, 2014. 6. The Company has classified its investments in mutual funds as current and non-current at the time of initial recognition, based on its plan of future utilisation of funds within 12 months and after 12 months, respectively. These investments are reclassified and disclosed as at year end based on balance utilisation period. 7. During the year 2014-15, the Company has re-assessed the useful life and residual value of all its assets, accordingly, effective April 1, 2014, it has revised the useful life of certain class of shelters from 15 years to 10 years and revised the residual value of certain plant and machineries (batteries and DG sets) from Nil and 5% to 25% and 10%, respectively. The net impact thereof is not material and hence, not disclosed in these financial statements. 8. On April 27, 2015, the Board of Directors had proposed a dividend of Rs. 6.50 per equity share to all the existing shareholders for the year ended March 31, 2015. The dividend proposed by the Board of Directors had approved by the shareholders in the annual general meeting held on August 11, 2015 and paid during the financial year ended March 31, 2016. 9. The Company has received interim dividend of Rs. 19,000 per equity share, Rs. 5,380 per equity share and Rs. 8,400 per equity share from Joint Venture Company totalling to Rs. 9,510 Mn, Rs. 2,693 Mn and Rs. 4,204 Mn during quarter ended June 30, 2014, quarter ended September 30, 2014 and quarter ended March 31, 2015 respectively, which has been disclosed under Other Income. 10. Charity and donation includes Nil (FY 2014-15 – Rs. 60 Mn) paid to Satya Electoral Trust for political purposes. 11. The Company has recognised write back of over aged liabilities and provisions amounting to Rs. 162 Mn (FY 2014-15 – Rs. 367 Mn), related to fixed assets transferred to Joint Venture Company, equally over the period starting from October 1, 2014 to June 30, 2015 and disclosed under “Miscellaneous Income”. 12. The Company was required to spend Rs. 255 Mn towards CSR expenditure in current year as per the requirement of the Act. During the year, Rs. 269 Mn were committed towards 5 long-term CSR projects basis approval from the Board. The disbursement of committed funds is based on the individual project work plans and milestones achieved over the project duration. All projects are being monitored on the progress made and impact created during the routine course of the business. The CSR fund disbursement in current year was Rs. 209 Mn. 13. During the year ended March 31, 2016, the Company has re-classified the termination charges w.r.t. cancellation of contracts by operators of Rs. 47 Mn, from ‘Other income’ to ‘Revenue from operations’. Previous year figures have not been reclassified being not material in relation to these financial statements. 14. The Central Government in consultation with National Advisory Committee on Accounting Standards has amended Companies (Accounting Standards) Rules, 2006 (‘principal rules’), vide notification issued by Ministry of Corporate Affairs dated March 30, 2016. The Company believes that as the original notification dated 7 December 2006 for notifying accounting standard states that the accounting standards shall come into effect in respect of accounting periods commencing on or after the publication of these Accounting Standards. Therefore the Company has not applied these amendments during the year. 15. Previous year figures have been regrouped/ reclassified where necessary to conform to the current year’s classifications. |