Vodafone Idea Ltd Auditors Report.

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To the Members of Vodafone Idea Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statements of Vodafone Idea Limited (formerly known as Idea Cellular Limited) ("the Company"), which comprise the Balance sheet as at March 31, 2019, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013, as amended ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, its loss including other comprehensive income its cash flows and the

Basis for Opinion

We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ‘Auditor’s Responsibilities for the Audit of the standalone Ind AS Financial Statements’ section of our report. We are independent of the Company in accordance with the ‘Code of Ethics’ issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Emphasis of Matter

We draw your attention to note 45(A)(i) of the standalone Ind AS financial statements which describes the uncertainties related to the legal outcome in respect of the Department of Telecommunications (DoT) demand notices for one time spectrum charges. Our report is not qualified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended March 31, 2019. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description in equity for the year ended on that date. of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the standalone Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.

Key audit matters How our audit addressed the key audit matter
Impairment assessment of intangibles (as described in note 65 of the Standalone Ind AS financial statements)
At March 31, 2019, the carrying value of intangible asset were 1,300,646 million. Our audit procedures included the following:
Impairment indicators were identified, that gave rise to a risk that intangible assets may be impaired. Consequently, impairment assessment was performed for spectrum assets amongst others that gave rise to the risk of impairment. • We read/understood managements assessment of the indicators of impairment and evaluated the significant assumptions adopted.
The inputs to the impairment testing model which have the most significant impact on the recoverable value include projected Earnings before interest, tax and depreciation and amortization (EBITDA), revenue growth rate, discount rates and capital expenditure. • Specifically, where impairment indicators were identified, we have evaluated the valuation models used to determine the amounts by assessing the key assumptions used by management.
• Evaluated the design and operating effectiveness of the key processes and controls associated with the estimation of impairment of intangible assets.
The impairment testing model included sensitivity testing of key assumptions, including EBITDA, revenue growth rate, discount rate and capital expenditure. • With the assistance of valuation experts, we tested the data and assumptions used by the management and evaluated the adequacy of headroom available for recoverable value by sensitivity analysis. We assessed the adequacy of impairment related disclosures in the financial statements
Claims and exposures relating to litigation from taxation matters and change in regulatory environment (as described in note 45 of the Standalone Ind AS financial statements)
At March 31, 2019, the value of tax and regulatory disputes disclosed as contingent liabilities was 326,260 million. Our audit procedures included the following:
Taxation, regulatory and litigation exposures have been identified as a key audit matter due to everchanging regulatory environment and significant judgement required by management in assessing the exposure of each case and thus a risk that such cases may not be adequately provided for or disclosed. • Obtained summary of all tax, regulatory and litigation matters and analysed managements position through detailed inquiries.
• Performed walkthroughs and test of controls of the managements risk assessment process for taxation, regulatory and legal matters.
• Obtained and read external legal opinions (where considered necessary) and other evidence to corroborate managements assessment of the risk profile in respect of legal claims.
• Engaged tax/regulatory specialists to technically assess the tax/ regulatory positions taken by management with respect to tax/ regulatory litigations.
• Inspected the relevant disclosures made within the financial statements to validate they appropriately reflect the facts and circumstances of the respective tax and regulatory exposures and are in accordance with the requirements of accounting standards.
Accounting for business combination and integration cost (as described in note 3 of the Standalone Ind AS financial statements)
Effective August 31, 2018, Vodafone India limited and Vodafone Mobile Services Limited, merged into the Company. The Company accounted for the merger under pooling of interest method. Our audit procedures included the following:
We have determined this to be a key audit matter in view of magnitude of the transaction, complexity involved in selection of accounting policy for merger, significant management judgment involved with respect to alignment of accounting policies, estimates and accounting for integration costs post-merger. • We evaluated the appropriateness of Pooling of interest method of accounting adopted by the management to account for the merger.
• We corroborated managements alignment of accounting policies and estimates by comparing the significant accounting policies and estimates of erstwhile Vodafone India Limited and comparing with the Companys accounting policies and estimates.
• We read the merger arrangements/scheme and focused on accounting for non-routine transaction, estimates and judgements in respect of the recognition and measurement of guarantees, indemnities etc.
• We performed specific procedures to validate the carrying amount of assets and liabilities merged on August 31, 2018.
• We validated the appropriateness of estimates used in recognition and measurement of integration cost through enquiries and testing of supporting documents.
• We inspected the disclosures in respect of this transaction including those disclosures related to significant accounting judgements and estimates.
Revenue recognition (as described in note 5(a) of the Standalone Ind AS financial statements)
For the year ended March 31, 2019, the revenue recognised was 367,668 million.
Revenue recognition has been identified as a key audit matter due to complexity of systems in recognizing revenues, constantly evolving pricing with heavily discounted tariffs and operation in highly competitive market place. Our audit procedures included the following: • Performed walkthroughs and test of controls, assisted by our IT specialists, of the revenue recognition processes and assessed the design and operating effectiveness of key IT and manual controls.
• Our audit procedures included evaluating the appropriateness of the Companys accounting policies and assessing compliance with the policies in terms of the applicable accounting standards, including revisions pursuant to implementation of Ind AS 115.
• We tested the revenue assurance procedures and reconciliations performed by the management to validate the billing minutes, tariffs and other revenue recognition parameters.
• Tested the relevant IT infrastructure and applications that result in generation of various IT reports used for billing and revenue recognition process.
• We performed other substantive procedures, including analytics, review of unusual items and trends.
Recoverability of Deferred Tax Assets (as described in note 58 of the Standalone Ind AS financial statements)
At March 31, 2019, net deferred tax assets recognised were 89,351 million. Our audit procedures included the following:
The deferred tax assets recognized includes carryforward losses, unabsorbed depreciation of Rs. 249,474 million. The recognition of deferred tax assets, involves judgement regarding the likelihood of the realization of these assets, in particular whether there will be sufficient taxable profits in future periods that support the recognition of these assets. • Our procedures included obtaining an understanding of the process and testing the controls over preparation of the taxable profit forecast.
• We performed procedures to test the inputs and assumptions used in the taxable profit forecast against historical performance, economic and industry indicators, publicly available information and including strategic plans.
Given the degree of judgment involved in considering these deferred tax assets as recoverable or otherwise, we considered this to be a key audit matter. • We inspected the disclosures in respect of the deferred tax asset balances including those disclosures related to significant accounting judgements and estimates.

Other Information

The Company’s Board of Directors are responsible for the other information. The other information comprises the Performance Highlights, Corporate Governance Report, Directors’ Report, Management Discussion and Analysis Report and Business Responsibility Report, but does not include the standalone Ind

AS financial statements and our auditor’s report thereon. The Performance Highlights, Corporate Governance Report, Directors’ Report, Management Discussion and Analysis Report and Business

Responsibility Report is expected to be made available to us after the date of this auditor’s report.

Our opinion on the standalone Ind AS financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information identifiedabove when it becomes available and, in doing so, consider whether such other information is materially inconsistent with the standalone Ind AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

Responsibilities of Management for the Standalone Ind AS Financial Statements

The Company’s Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone Ind AS financial statements that fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting

Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone Ind AS financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the audit findings, Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone Ind AS financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we a true and are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditionsthatmaycastsignificantdoubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit including any significant deficiencies andsignificant in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements for the financial year ended March 31, 2019 and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge 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 the Company so far as it appears from our examination of those books; (The Balance Sheet, the Statement of Profit and Loss

c) including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended; (On the basis of the written representations received frome) the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report; (I

g) n our opinion, the managerial remuneration for year ended March 31, 2019 has been paid/ provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act; (With

h) respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements Refer Note 45 to the standalone Ind AS financial statements;

ii The Company did not have any long-term contractsi. including derivative contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company

For S.R. Batliboi & Associates LLP

Chartered Accountants

ICAI Firm Registration Number: 101049W/E300004

per Prashant Singhal

Partner

Membership Number: 93283

Place: Mumbai

Date: May 13, 2019