Standalone financial statements with AuditorsAuditors’ Report
To
The Members of Bharti Airtel Limited,
1. We have audited the attached Balance Sheet of Bharti Airtel Limited (‘BhartiAirtel’ or ‘the Company’) as at March 31, 2011 and also the Profit andLoss account and the Cash Flow statement for the year ended on that date annexed thereto.These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted inIndia. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issuedby the Central Government of India in terms of sub-section (4A) of Section 227 of theCompanies Act, 1956, we enclose in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we report that:
i. We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purposes of our audit;
ii. In our opinion, proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;
iii. The balance sheet, profit and loss account and cash flow statement dealt with bythis report are in agreement with the books of account;
iv. In our opinion, the balance sheet, profit and loss account and cash flow statementdealt with by this report comply with the accounting standards referred to in sub-section(3C) of Section 211 of the Companies Act, 1956.
v. On the basis of the written representations received from the directors, as on March31, 2011, and taken on record by the Board of Directors, we report that none of thedirectors is disqualified as on March 31, 2011 from being appointed as a director in termsof clause (g) of subsection (1) of Section 274 of the Companies Act, 1956.
vi. In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts give the information required by the Companies Act, 1956,in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India;
a) in the case of the balance sheet, of the state of affairs of the Company as at March31, 2011;
b) in the case of the profit and loss account, of the profit for the year ended on thatdate; and
c) in the case of cash flow statement, of the cash flows for the year ended on thatdate.
For S.R. BATLIBOI & ASSOCIATES
Firm Registration No. 101049W
Chartered Accountants
per Prashant Singhal
Partner
Membership No. 93283
Place: New Delhi
Date: May 5, 2011
Annexure referred to in paragraph 4 of our report of even date
Re: BHARTI AIRTEL LIMITED (‘the Company’)
(i) (a) The Company has maintained proper records showing full particulars with respectto most of its fixed assets, however, is in the process of updating quantitativeand situation details with respect to certain fixed assets in the records maintained bythe Company.
(b) The capitalised fixed assets are physically verified by the management according toa regular programme designed to cover all the items over a period of three years. Pursuantto the programme, a portion of fixed assets and capital work in progress has beenphysically verified by the management during the year, which in our opinion is reasonablehaving regard to the size of the Company and nature of its assets. The Company is in theprocess of reconciling the quantitative and situation details of the physical verificationresults with the records maintained by the Company.
(c) There was no substantial disposal of fixed assets during the year.
(ii) (a) The inventory (other than inventory with third parties) has been physicallyverified by the management during the year. In our opinion, the frequency of verificationis reasonable.
(b) The procedures of physical verification of inventory followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
(c) The Company is maintaining proper records of inventory and no materialdiscrepancies were noticed on physical verification.
(iii) The Company has neither granted nor taken any loans, secured or unsecured, tocompanies, firms or other parties covered in the register maintained under Section 301 ofthe Companies Act, 1956. Accordingly, clause 4(iii) of the Companies (Auditor’sReport) Order, 2003 (as amended) is not applicable to the Company for the current year.
(iv) In our opinion and according to the information and explanations given to us,having regard to the explanation that certain items purchased are of special nature forwhich suitable alternative sources do not exist for obtaining comparative quotations,there is an adequate internal control system commensurate with the size of the Company andthe nature of its business for the purchase of inventory, fixed assets and for the sale ofgoods and services. Further, on the basis of our examination of the books and records ofthe Company, and according to the information and explanations given to us, we haveneither come across nor have been informed of any continuing failure to correct majorweaknesses in the aforesaid internal control system.
(v) (a) According to the information and explanations provided by the management, weare of the opinion that the particulars of contracts or arrangements referred to inSection 301 of the Act that need to be entered into the register maintained under Section301 have been so entered.
(b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of such contracts or arrangements exceeding value of Rupeesfive lakhs have been entered into during the financial year at prices which are reasonablehaving regard to the prevailing market prices at the relevant time.
(vi) The Company has not accepted any deposits from the public within the meaning ofSections 58A and 58AA of the Act and the rules framed there under.
(vii) In our opinion, the Company has an internal audit system commensurate with thesize and nature of its business.
(viii) We have broadly reviewed the books of accounts maintained by Company pursuant tothe rules made by the Central Government for the maintenance of cost records under Section209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie, theprescribed accounts and records have been made and maintained. We have not, however, madea detailed examination of records with a view to determine whether they are accurate orcomplete.
(ix) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund, investor education and protectionfund, employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax,customs duty and cess and other material statutory dues applicable to it. The provisionsrelating to excise duty is not applicable to the Company.
Further, since the Central Government has till date not prescribed the amount of cesspayable under Section 441A of the Companies Act, 1956, we are not in a position to commentupon the regularity or otherwise of the Company in depositing the same.
(b) According to the information and explanations given to us, no undisputed amountspayable in respect of provident fund, investor education and protection fund,employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax, customsduty, cess and other material undisputed statutory dues were outstanding, at the year end,for a period of more than six months from the date they became payable.
(c) According to the records of the Company, the dues outstanding of income-tax,sales-tax, wealth-tax, service tax, customs duty and cess on account of any dispute, areas follows:
| Name of the Statutes | Nature of the Dues | Amount Disputed (in Rs Mn) | Period to Which it Relates | Forum where the dispute is pending |
| Andhra Pradesh VAT Act | Sales Tax | 4,661.28 | 2000-02; 2005-08; 2009-10 | High Court of Andhra Pradesh |
| Gujarat Sales Tax Act | Sales Tax | 0.93 | 2006-07 | Commissioner (Appeals) |
| West Bengal Sales Tax Act | Sales Tax | 0.40 | 1996-97 | DCCT - Appellate Stage |
| West Bengal Sales Tax Act | Sales Tax | 0.01 | 1997-98 | DC Appeals |
| West Bengal Sales Tax Act | Sales Tax | 0.28 | 1995-96 | The Commercial Tax Officer |
| West Bengal Sales Tax Act | Sales Tax | – | 2004-05 | West Bengal Taxation Tribunal |
| West Bengal Sales Tax Act | Sales Tax | 324.85 | 2005-06 | DCCT Appeal |
| West Bengal Sales Tax Act | Sales Tax | 1,095.80 | 2006-08 | Appellate Authority |
| UP VAT Act | Sales Tax | 2.93 | 2004-05; 2006-08 | Assessing Officer |
| UP VAT Act | Sales Tax | 9.18 | 2002-10 | Reviewing authorities |
| UP VAT Act | Sales Tax | 0.88 | 2009-10 | Additional Commissioner Appeals |
| UP VAT Act | Sales Tax | 0.50 | 2003-04 | Joint Commissioner Appeals |
| UP VAT Act | Sales Tax | 22.71 | 2003-07; 2009-10 | Joint Commissioner Appeals |
| UP VAT Act | Sales Tax | 9.45 | 2006-07; 2010 | High Court of Judicature at Allahabad, Lucknow Bench |
| UP VAT Act | Sales Tax | – | 2008-09 | Assistant Commissioner of Sales tax |
| UP VAT Act | Sales Tax | 4.36 | 2006-07; 2008-09 | Commercial Taxes Tribunal |
| UP VAT Act | Sales Tax | 0.54 | 2005-06 | Appellate Authority |
| Haryana Sales Tax Act | Sales Tax | 2.80 | 2002-2004 | Joint Commissioner |
| Haryana Sales Tax Act | Sales Tax | 1.35 | 2009-10 | Assessing Officer |
| Haryana Sales Tax Act | Sales Tax | 1.80 | 2007-09 | Finance Commissioner (Appeal) |
| Punjab Sales Tax Act | Sales Tax | 0 .61 | 2001-02 | Joint Director (Enforcement) |
| Madhya Pradesh Commercial Sales Tax Act | Sales Tax | 22.08 | 1997-01 & 2003-06 & 2007-08 | Deputy Commissioner Appeals |
| Madhya Pradesh Commercial Sales Tax Act | Sales Tax | 15.44 | 2007-08 | Appellate Authority |
| UP VAT Act | Sales Tax | 1.13 | 2002-05 | Assistant Commissioner |
| Karnataka Sales Tax Act | Sales Tax | 3,449.57 | 2002-09 | Tribunal |
| Kerala Sales Tax Act | Sales Tax | 0.80 | 2009-11 | Intelligence Officer Squad No. V, Palakkad |
| Bihar Value Added Sales Tax Act | Sales Tax | 11.33 | 2005-07 | Joint Commissioner Appeals |
| Bihar Value Added Sales Tax Act | Sales Tax | 19.87 | 2006-07; 2007-08 | Assistant Commissioner |
| Delhi Value Added Tax Act | Sales Tax | 12.75 | 2005-06 | Sales Tax Department |
| J&K General Sales Tax | Sales Tax | 28.85 | 2004-07 | High Court |
| Karnataka Sales Tax Act | Sales Tax | 0.15 | 2005-06 | High Court |
| Tamil Nadu Sales Tax Act | Sales Tax | 634.28 | 1996-2001 | Commercial Tax Officer |
| Sub Total (A) | | 10,336.88 | | |
| Finance Act, 1994 (Service tax provisions) | Service Tax | 1,458.99 | 1997-2009; 2010-11 | Customs, Excise and Service Tax Appellate Tribunal |
| Finance Act, 1994 (Service tax provisions) | Service Tax | 46.81 | 1999-00, 2002-08 | Commissioner (Appeals) |
| Finance Act, 1994 (Service tax provisions) | Service Tax | 0.45 | 2004-06 | Deputy Commissioner Appeals |
| Finance Act, 1994 (Service tax provisions) | Service Tax | 231.02 | 2000-01 & 2005-08 | Suppdt. of Mohali |
| Finance Act, 1994 (Service tax provisions) | Service Tax | 19.77 | 2004-07 | Commissioner of Excise |
| Finance Act, 1994 (Service tax provisions) | Service Tax | 334.52 | 2004-08 | Commissioner of Service Tax |
| Finance Act, 1994 (Service tax provisions) | Service Tax | – | 2006-07 | Joint Commissioner of Central Excise |
| Finance Act, 1994 (Service tax provisions) | Service Tax | 5.56 | 2001-02; 2005-06 | Deputy Commissioner of Service Tax (Appeals) |
| Finance Act, 1994 (Service tax provisions) | Service Tax | 0.97 | 1994-95 | Additional Commissioner of Service Tax |
| Finance Act, 1994 (Service tax provisions) | Service Tax | 1.17 | 1994-95; 2003-04 | Assistant Commissioner of Service Tax |
| Finance Act, 1994 (Service tax provisions) | Service Tax | 3.66 | 2006-07 | Joint Commissioner of Service Tax |
| Sub Total (B) | | 2,102.91 | | |
| Income Tax Act, 1961 | Income Tax | 2,884.73 | 1994-2011 | Commissioner of Income Tax (Appeals) |
| Income Tax Act, 1961 | Income Tax | 5.95 | 1994-1995; 1996-97; 1999-00; 2003-05 | High Court |
| Income Tax Act, 1961 | Income Tax | 7,958.59 | 2006-07 | Dispute Resolution Panel |
| Income Tax Act, 1961 | Income Tax | 1,602.90 | 1996-97; 2005-10 | Assessing Officer |
| Income Tax Act, 1961 | Income Tax | 1,296.30 | 1997-98, 2000-01 to 2006-07 | Income Tax Appelate Tribunal |
| Sub Total (C) | | 13,748.46 | | |
| Customs Act-1962 | Custom Act | 2,167.15 | 2001-04; 2007-08 | Commisioner of Customs |
| Customs Act-1962 | Custom Act | 31.19 | 2005-06 | Customs, Excise and Service Tax Appellate Tribunal, Chennai |
| Sub Total (D) | | 2,198.35 | | |
The above mentioned figures represent the total disputed cases without any assessmentof Probable, Possible and Remote, as done in case of Contingent Liabilities. Of the abovecases, total amount deposited in respect of Sales Tax is Rs 1,024 Mn, Service Tax is Rs 15Mn, Income Tax is Rs 1,572 Mn and Custom Duty is Rs 74 Mn.
(x) The Company has no accumulated losses at the end of the financial year and it hasnot incurred cash losses in the current and immediately preceding financial year.
(xi) Based on our audit procedures and as per the information and explanations given bythe management, we are of the opinion that the Company has not defaulted in repayment ofdues to a financial institution, bank or debenture holders.
(xii) According to the information and explanations given to us and based on thedocuments and records produced to us, the Company has not granted loans and advances onthe basis of security by way of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefitfund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’sReport) Order, 2003 (as amended) are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in shares, securities,debentures and other investments. Accordingly, the provisions of clause 4(xiv) of theCompanies (Auditor’s Report) Order, 2003 (as amended) are not applicable to theCompany.
(xv) According to the information and explanations given to us, the Company has givenguarantee for loans taken by others from bank or financial institutions, the terms andconditions whereof in our opinion are not prima facie prejudicial to the interest of theCompany.
(xvi) Based on information and explanations given to us by the management, term loanswere applied for the purpose for which the loans were obtained.
(xvii) According to the information and explanations given to us and on overallexamination of the balance sheet of the Company, funds amounting to Rs 40,796 Mn raised onshort-term basis (primarily represented by capital creditors) have been used for long-terminvestment (primarily represented by fixed assets).
(xviii) The Company has not made any preferential allotment of shares to parties orcompanies covered in the register maintained under Section 301 of the Companies Act, 1956.
(xix) The Company has created security or charge in respect of debentures outstandingat the year end.
(xx) The Company has not raised any money by public issues during the year.
(xxi) According to the information and explanations furnished by the management, whichhave been relied upon by us, there were no frauds on or by the Company noticed or reportedduring the course of our audit except few cases of fraud, primarily in the nature ofunauthorized use of Company’s services, on the Company by employees and externalparties estimated at Rs 5 Mn and Rs 63.7 Mn, respectively, as detectedby the management for which appropriate steps were taken to recover the amount and Rs 2.8Mn out of such estimated amounts, has been recovered by the Company.
For S.R. BATLIBOI & ASSOCIATES
Firm Registration No. 101049W
Chartered Accountants
per Prashant Singhal
Partner
Membership No. 93283
Place: New Delhi
Date: May 5, 2011