AuditorsTo the Members of
Idea Celluar Limited
1. We have audited the attached Balance Sheet of Idea Cellular Limited (‘theCompany’) as at March 31, 2010, the Profit and Loss Account and the Cash FlowStatement of the Company for the year ended on that date, both annexed thereto (togetherreferred to as ‘financial statements’). These financial statements are theresponsibility of the Company’s Management. Our responsibility is to express anopinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally acceptedin India. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. 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 the 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, (‘the saidOrder’ / ‘CARO’) issued by the Central Government in terms of Section227(4A) of the Companies Act, 1956, we enclose in the annexure a statement on the mattersspecified in the paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we reportas follows:
(a) we have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit;
(b) in our opinion, proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith by this report are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash FlowStatement dealt with by this report are in compliance with the Accounting Standardsreferred to in Section 211(3C) of the Companies Act, 1956;
(e) in our opinion and to the best of our information and according to the explanationsgiven to us, the said financial statements read together with the notes thereon give theinformation required by the Companies Act, 1956 in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as atMarch 31, 2010;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for theyear ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for theyear ended on that date.
5. On the basis of the written representations received from the Directors as on March31, 2010 and taken on record by the Board of Directors, none of the Directors isdisqualified as on March 31, 2010 from being appointed as a director in terms of Section274(1)(g) of the Companies Act, 1956.
For Deloitte Haskins & Sells
Chartered Accountants
(Registration No. 117 366W)
Hemant M. Joshi
Partner
(Membership No: 38019)
Place: Mumbai
Date: May 3, 2010
Annexure to the Auditors’ Report
(Referred to in paragraph 3 of our report of even date)
1. In respect of its fixed assets:
a) The Company has maintained proper records showing full particulars, includingquantitative details and situation of fixed assets.
b) The fixed Assets were physically verified during the year by the Management inaccordance with a regular programme of verification which, in our opinion, provides forphysical verification of all the fixed assets at reasonable intervals. According toinformation and explanation given to us the Management is in the process of reconcilingthe results of such physical verification with the fixed assets register. Managementbelieves that differences if any, arising out of such reconciliation are not expected tobe material.
c) The fixed assets disposed off during the year, in our opinion, do not constitute asubstantial part of the fixed assets of the Company and such disposal has, in our opinion,not affected the going concern status of the Company.
2. In respect of its inventory:
a) As explained to us, the inventories, except for those lying with the third parties,were physically verified during the year by the Management at reasonable intervals.
b) In our opinion and according to the information and explanations given to us, theprocedures of physical verification of inventories followed by the management werereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
c) In our opinion and according to the information and explanations given to us, theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.
3. According to the information and explanations given to us, the Company has neithergranted nor taken any loans, secured or unsecured, to / from companies, firms or otherparties listed in the register maintained under Section 301 of the Companies Act, 1956.
4. In our opinion and according to the information and explanations given to us, havingregard to explanation that certain items purchased are of special nature and suitablealternative sources are not readily available for obtaining comparable quotations, thereare adequate internal control procedures commensurate with the size of the Company and thenature of its business with regard to purchase of inventory and fixed assets and for thesale of goods and services. During the course of our audit, we have not observed any majorweaknesses in such internal controls systems.
5. In our opinion and according to the information and explanations given to us, therewere no contracts, particulars of which needed to be entered in the register maintainedunder Section 301 of the Companies Act, 1956 and hence provisions of paragraph 4(v)(b) ofthe said Order relating to reasonableness of price having regard to prevailing marketprice is not applicable to the Company.
6. According to the information and explanations given to us, the Company has notaccepted any deposits from the public to which the directives issued by the Reserve Bankof India and the provisions of Sections 58A and 58AA of the Companies Act, 1956 and therules framed there under are applicable.
7. In our opinion, the Company has an internal audit system commensurate with the sizeand nature of its business.
8. We have broadly reviewed the books of account maintained by the Company pursuant tothe rules made by the Central Government for maintenance of cost records under Section209(1)(d) of the Companies Act, 1956 in respect of telecommunication activities and are ofthe opinion that prima facie, the prescribed accounts and records have been made andmaintained. We have, however, not made a detailed examination of the records with a viewto determining whether they are accurate or complete.
9. According to information and explainations given to us in respect of statutory dues:
a) The Company has generally been regular in depositing undisputed dues, includingProvident Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax,Service Tax, Customs Duty, Cess and other material statutory dues applicable to it withthe appropriate authorities. As explained to us, the Company did not have any dues onaccount of Excise duty and Investor Education and Protection Fund.
b) There were no undisputed amount payable in respect of Income Tax, Wealth Tax,Customs Duty, Excise Duty, Cess and other material statutory dues in arrears, as at March31, 2010 for a period of more than six months from the date they became payable.
c) There are no dues of Excise Duty, Wealth Tax, Employees’ State Insurance whichhave not been deposited on account of any dispute. Details of dues of Income Tax, CustomsDuty, Entry Tax, Service Tax and Sales Tax which have not been deposited as on March 31,2010 by the Company on account of disputes:
| Name of the Statute | Nature of Dues | Period to which the amount pertains | Amount (Rs. Million) | Forum where the dispute is pending |
| Income Tax Act, 1961 | Income tax | 2006-07, 2007-08, 2008-09, 2009-10 | 106.84 | Assessing Officer |
| Income Tax Act, 1961 | Income tax | 2003 to 2010 | 51.41 | Assistant Commissioner of Income Tax |
| Income Tax Act, 1961 | Income tax | 2002-03, 2004-05, 2008-09, 2009-10 | 396.10 | Commissioner of Income Tax (Appeals) |
| Andhra Pradesh General Sales Tax Act, 1957 | Sales tax | 1997-98, 2002-03 to 2004-05 | 227.46 | Andhra Pradesh High Court |
| Andhra Pradesh Value Added Tax, 2005 | Sales tax | 2005-06 to 2007-08 | 81.95 | Andhra Pradesh High Court |
| Delhi Sales Tax Act, 1975 | Sales tax | 2002-03, 2003-04, 2004-05 | 92.74 | Additional Commissioner (Appeals) |
| Uttar Pradesh Trade Tax Act, 1948 | Sales tax | 2004-05 | 0.05 | Joint Commissioner (Appeals) |
| Gujarat Sales Tax Act, 1969 | Sales tax | 1998-99 to 2001-02 | 7.04 | Sales Tax Tribunal |
| Gujarat Sales Tax Act, 1969 | Sales tax | 2006-07 | 0.83 | Assessing Officer |
| Kerala Sales Tax, 1963 | Sales tax | 1997-98 | 0.39 | Sales Tax Appellate Tribunal |
| Kerala Sales Tax, 1963 | Sales tax | 1998-99 | 0.06 | Deputy Commissioner, Sales Tax |
| Kerala Sales Tax, 1963 | Sales tax | 2000-01 | 16.05 | Kerala High Court |
| Madhya Pradesh Commercial Tax Act, 1994 | Sales tax | 2004-05, 2005-06, 2006-07 | 15.36 | Appellate Deputy Commissioner |
| Madhya Pradesh Commercial Tax Act, 1994 | Sales tax | 2000-01 | 0.31 | Appellate Board |
| Madhya Pradesh Commercial Tax Act, 1994 | Sales tax | 2004-05 | 2.50 | Commissioner Appeals |
| Madhya Pradesh Commercial Tax Act, 1994 | Sales tax | 2003-04, 2004-05 | 1.97 | MP Commercial Tax Tribunal, Bhopal |
| Punjab VAT Act, 2005 | Sales tax | 2006-07, 2007-08 | 61.56 | Asstt.Excise & Taxation Commissioner |
| Uttar Pradesh Trade Tax Act, 1948 | Sales tax | 1999-00, 2000-01, 2002-03, 2007-08 | 11.72 | Trade Tax Tribunal |
| Uttar Pradesh VAT Act, 2008 | Sales tax | 2009-10 | 13.03 | Joint Commissioner (Appeals) |
| Finance Act, 1994 (Service Tax provisions) | Service tax | 2004-05 to 2008-09 | 625.65 | Central Excise Service Tax Appellate Tribunal |
| Finance Act, 1994 (Service Tax provisions) | Service tax | 2003-04, 2005-06, 2006-2007, 2007-08 | 45.14 | Commissioner Appeals |
| Finance Act, 1994 | Service tax | 1998-99, 2002-03 | 2.98 | Punjab & Haryana High Court |
| (Service Tax provisions) Finance Act, 1994 (Service Tax provisions) | Service tax | 1999-2000 to 2003-04 | 3.10 | Supreme Court |
| Customs Act, 1962 | Custom duty | 2003-04 | 1.15 | Cenrtal Excise Service Tax Appellate Tribunal |
| Customs Act, 1962 | Custom duty | 2003-04 | 4.16 | Commissioner of Customs |
| Haryana Land Developement Tax Act, 2001 | Entry tax | 2002-03 | 9.52 | Tribunal |
| Karnataka Tax on Entry of | Entry tax | 2004-05 | 8.92 | High Court of Karnataka |
| Goods Act, 1979 MP Entry Tax Act, 1976 | Entry tax | 2003-04 to 2005-06 | 5.19 | Appellate Deputy Commissioner |
| MP Entry Tax Act, 1976 | Entry tax | 1998-99,1999-2000, 2000-01 | 0.13 | Assistant Commissioner |
| MP Entry Tax Act, 1976 | Entry tax | 2005-06 | 3.20 | Commissioner Appeals |
| MP Entry Tax Act, 1976 | Entry tax | 1998-99 to 2002-03 | 7.94 | Madhya Pradesh Commercial Tax Tribunal |
| Orissa Entry Tax Act, 1999 | Entry tax | 2009-2010 | 5.20 | High Court of Orissa |
| Uttar Pradesh Trade Tax Act, 1948 | Entry tax | 2005-06 | 0.30 | Joint Commissioner (Appeals) |
| The Uttar Pradesh Tax on Entry of Goods Act, 2000 | Entry tax | 1999-00 to 2003-04 | 8.89 | Trade Tax Tribunal |
| The Uttar Pradesh Tax on Entry of Goods Act, 2000 | Entry tax | 2004-05 | 5.15 | Joint Commissioner |
| Uttar Pradesh Trade Tax Act, 1948 | Entry tax | 2001-02 to 2003-04 | 1.14 | Joint Commissioner |
10. The accumulated losses of the Company are less than fifty percent of its net worthand the Company has not incurred cash losses during the current financial year covered byour audit and the immediately preceding financial year.
11. In our opinion and according to the information and explanations given to us, theCompany has not defaulted in repayment of dues to the financial institutions and banks.
12. According to the information and explanations given to us, the Company has notgranted loans and advances on the basis of security by way of pledge of shares, debenturesand other securities.
13. The Company is not a chit fund or a nidhi / mutual benefit fund / society.Therefore, the provisions of paragraph 4(xiii) of the said Order are not applicable to theCompany.
14. In our opinion and according to the information and explanations given to us, theCompany is not dealing in or trading in shares, securities, debentures and otherinvestments.
15. According to the information and explanations given to us, the Company has notgiven any guarantee for loans taken by others from banks or financial institutions.Therefore, the provisions of paragraph 4 (xv) of the said Order are not applicable to theCompany.
16. In our opinion and according to the information and explanations given to us, theterm loans have been applied for the purposes for which they were obtained.
17. In our opinion and according to the information and explanations given to us and onan overall examination of the Balance Sheet, we report that funds raised on the short termbasis have not been used during the year for long term investment.
18. According to information and explainations given to us, the Company has not madepreferential allotment of shares to parties and companies covered in the registermaintained under Section 301 of the Companies Act, 1956.
19. According to information and explainations given to us, the Company has not issuedany debentures during the year.
20. According to information and explainations given to us, the Company has not raisedany money by public issue.
21. 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 by employees and by externalparties estimated at Rs. 51 Million detected by the Management for which appropriate stepswere taken to strengthen controls.
For Deloitte Haskins & Sells
Chartered Accountants
(Registration No. 117 366W)
Hemant M. Joshi
Partner
(Membership No: 38019)
Place: Mumbai
Date: May 3, 2010