Provisions are recognised when the Companyhas a present obligation (legal or constructive)as a result of a past event, it is probable thatan outflow of resources embodying economicbenefits will be required to settle the obligationand a reliable estimate can be made of theamount of the obligation. The expense relatingto a provision is presented in the Statement ofProfit and Loss.
If the effect of the time value of money is material,provisions are discounted using a current pre-taxrate that reflects, when appropriate, the risksspecific to the liability. When discounting is used,the increase in the provision due to the passageof time is recognised as a finance cost.
ARO is provided for those lease arrangementswhere the Company has a binding obligationto restore the said location / premises atthe end of the period in a condition similarto inception of the arrangement. Therestoration and decommissioning costs areprovided at the present value of expectedcosts to settle the obligation using estimatedcash flows and are recognised as part ofthe cost of the particular asset. The cashflows are discounted at a current pre-taxrate that reflects the risks specific to thedecommissioning liability. The unwindingof the discount is expensed as incurred andrecognised in the Statement of Profit andLoss as a finance cost. The estimated futurecosts of decommissioning are reviewedannually and adjusted as appropriate.Changes in the estimated future costs orin the discount rate applied are added to ordeducted from the cost of the asset.
A Contingent Liability is disclosed wherethere is a possible obligation or a presentobligation that may, but probably will not,
require an outflow of resources. ContingentAssets are not recognised.
iii. Onerous Contract
An onerous contract is a contract underwhich the unavoidable costs (i.e., the coststhat the Company cannot avoid because ithas the contract) of meeting the obligationsunder the contract exceed the economicbenefits expected to be received under it. Theunavoidable costs under a contract reflect theleast net cost of exiting from the contract,which is the lower of the cost of fulfilling itand any compensation or penalties arisingfrom failure to fulfil it.
If the Company has a contract that is onerous,the present obligation under the contractis recognised and measured as a provision.However, before a separate provision foran onerous contract is established, theCompany recognises any impairment lossthat has occurred on assets dedicated tothat contract.
v) Business Combinations
Business Combinations are accounted for using IndAS 103 ‘Business Combination'. Acquisitions ofbusinesses are accounted for using the acquisitionmethod unless the transaction is between entitiesunder common control.
Business Combinations arising from transferof interests in entities that are under commoncontrol, are accounted using pooling of interestmethod wherein, assets and liabilities of thecombining entities are reflected at their carryingvalue. No adjustment is made to reflect fair values,or recognize any new assets or liabilities otherthan those required to harmonise accountingpolicies. The identity of the reserves is preservedand appears in the financial statements of thetransferee in the same form in which they appearedin the financial statements of the transferor.
w) Segment Information
The Chief Operating Decision maker primarilyfocusses on Mobility business in making decisions
on operating matters and on allocating resourcesin evaluating performance. Accordingly, theCompany operates only in one reportable segment
i.e. Mobility and hence no separate disclosure isrequired for Segment.
Ministry of Corporate Affairs (“MCA") notifiesnew standards or amendments to the existingstandards under Companies (India AccountingStandards) Rules as issued from time to time.During the year ended March 31, 2025, MCA hasnotified Ind AS-117 Insurance Contracts (videnotification no G.S.R 492(E)) and amendmentsto Ind AS 116- Leases, relating to sale andleaseback transactions (vide notification no G.S.R554(E)), applicable to the Company on or afterApril 1, 2024,
The Company has reviewed the new pronouncementsand based on its evaluation has determined that itdoes not have any material impact on the FinancialStatements of the Company.
The preparation of the financial statements requiresmanagement to make judgements, estimates andassumptions that affect the reported amounts ofrevenues, expenses, assets and liabilities, and theaccompanying disclosures including the disclosureof contingent liabilities. Uncertainty about theseassumptions and estimates could result in outcomesthat require an adjustment to the carrying amountof assets or liabilities in future periods. Differencebetween actual results and estimates are recognisedin the periods in which the results are known /materialise.
The Company has based its assumptions andestimates on parameters available when the financialstatements were prepared. Existing circumstances andassumptions about future developments, however,may change due to market changes or circumstancesarising that are beyond the control of the Company.Such changes are reflected in the assumptions whenthey occur.
The company provide for tax considering theapplicable tax regulations and based on reasonableestimates. Management periodically evaluatespositions taken in the tax returns giving dueconsiderations to tax laws and establishesprovisions in the event if required as a result ofdiffering interpretation or due to retrospectiveamendments, if any.
Deferred tax asset (DTA) is recognized only whenand to the extent there is convincing evidence thatthe company will have sufficient taxable profits infuture against which such assets can be utilized.Significant management judgement is required todetermine the amount of deferred tax assets thatcan be recognised, based upon the likely timingand the level of future taxable profits together withfuture tax planning strategies, recent businessperformance and developments.
Minimum alternative tax (MAT) is recognized asan asset only when and to the extent there isconvincing evidence that the Company will paynormal income tax and will be able to utilize suchcredit during the specified period. In the year inwhich the MAT credit becomes eligible to berecognized as an asset, the said asset is createdby way of a credit to the Statement of Profit andloss and is included in Deferred Tax Assets. TheCompany review the same at each Balance Sheetdate and if required, writes down the carryingamount of MAT credit entitlement to the extentthere is no longer convincing evidence to the effectthat Company will be able to absorb such creditduring the specified period. Further details abouttaxes refer note 55 and 56.
The Company's obligation on account of gratuityand compensated absences is determined basedon actuarial valuations. An actuarial valuationinvolves making various assumptions that maydiffer from actual developments in the future.These include the determination of the discountrate, future salary increases, attrition rate and
mortality rates. Due to the complexities involvedin the valuation and its long-term nature, theseliabilities are highly sensitive to changes in theseassumptions.
All assumptions are reviewed at each reportingdate. The parameter subject to frequent changesis the discount rate. In determining the appropriatediscount rate, the management considers theinterest rates of government bonds in currenciesconsistent with the currencies of the post¬employment benefit obligation.
The mortality rate is based on publicly availablemortality tables in India. Those mortality tablestend to change only at interval in response todemographic changes. Future salary increases arebased on expected future inflation rates.
Further details about gratuity obligations are givenin note 53 (A).
For the purpose of measuring the expected creditloss for trade receivables, the Company estimatesirrecoverable amounts based on the ageing ofthe receivable balances and historical experience.Further, a large number of minor receivables aregrouped into homogeneous groups and assessedfor impairment collectively depending on theirsignificance. Individual trade receivables arewritten off when management deems them notto be collectible on assessment of facts andcircumstances. Refer note 15.
The useful life to depreciate or amortiseproperty, plant and equipment and Intangibleassets respectively is based on technicalobsolescence, nature of assets, estimated usageof the assets, operating conditions of the asset,and manufacturers' warranties, maintenanceand support period, etc. The charge for thedepreciation or amortisation is derived afterconsidering the expected residual value at endof the useful life.
The residual values, useful lives and methods ofdepreciation or amortisation of property, plant and
equipment and Intangible assets respectively arereviewed by the management at each financial yearend and adjusted prospectively over the remaininguseful life.
The Company cannot readily determine the interestrate implicit in the lease, therefore, it uses itsincremental borrowing rate (IBR) to measure leaseliabilities. The IBR is the rate of interest that theCompany would have to pay to borrow over asimilar term, and with a similar security, the fundsnecessary to obtain an asset of a similar valueto the right-of-use asset in a similar economicenvironment. The Company estimates the IBRusing observable inputs (such as market interestrates) when available and is required to makecertain specific estimates such as Company'scredit rating.
vi. Leases-Estimate of lease period
Ind AS 116 requires lessees to determine thelease term as the non-cancellable period of a leaseadjusted with any option to extend or terminatethe lease, if the use of such option is reasonablycertain. The Company makes an assessment onthe expected lease term on a lease-by-lease basisand thereby assesses whether it is reasonablycertain that any options to extend or terminatethe contract will be exercised.
Provisions and contingent liabilities are reviewedat each balance sheet date and adjusted toreflect the current best estimates. Evaluationsof uncertain provisions and contingent liabilitiesand assets requires judgement and assumptionsregarding the probability of realization and thetiming and amount, or range of amounts, that mayultimately be incurred. Such estimates may varyfrom the ultimate outcome as a result of differinginterpretations of laws and facts. Refer note 46for details about Contingent liabilities.
NOTE 44: SIGNIFICANT TRANSACTIONS / NEW DEVELOPMENTS
i) On July 23, 2018, the Company had paid an amount of ' 39,263 Mn under protest for the differential amount of entry fees paid andmarket determined price of 4.4 Mhz, as demanded by the DoT. The Company had thereafter filed a petition with TDSAT disputing' 13,636 Mn as excess amount calculated by the DoT. Based on probability assessment of ultimate outflow, the Company hadcapitalised ' 39,263 Mn, paid under protest, along with the respective spectrum of the circles and amortised substantially overthe balance life of the respective spectrum.
During the previous year, the DoT accepted the Company’s contention to the extent of ' 7,555 Mn resulting in TDSAT issuingorder dated December 15, 2023, directing the DoT to adjust this amount. The DoT vide letter dated December 27, 2023 hascommunicated such adjustment. Accordingly, the Company has recognised the same as an Exceptional Items in the Statementof Profit and loss in financial year 2023-24.
ii) On October 16, 2023, the Honourable Supreme Court of India pronounced a judgement, on an ongoing litigation, regarding thetax treatment of annual Revenue Share License Fee (RSLF) paid to the DoT since July 1999 and held that it merits the same taxtreatment as the upfront fee that is paid at the time of acquisition of a telecom license. The Company has been treating RSLF asrevenue expenses for the purpose of taxation. This decision does not result in a permanent disallowance but leads to a staggeredallowance of RSLF over the balance period of the license resulting into lower taxable deduction in the initial years of a license anda higher deduction in the later period of the license.
Over the years, the Company has acquired various licenses from the DoT and also acquired companies having telecom licensesand merged these entities into the Company resulting in cancellation of licenses pertaining to those entities on merger. Duringprevious year, based on initial evaluation and after considering the allowable deductions for the periods and on a best estimate basis,a tax provision of ' 8,220 Mn and interest of ' 2,630 Mn has been recorded under “Current tax” and “Finance costs” respectively,and corresponding effect has been recorded as Current tax liability of ' 5,217 Mn and adjusted ' 5,633 Mn in Other Non-CurrentAssets in the financial statements in financial year 2023-24. Due to tax losses carried forward, higher deductions in future periodsdo not meet the criteria for the recognition of deferred tax assets under Ind AS 12 - Income Taxes. During the current year, onMay 17, 2024 the Honourable Supreme Court of India pronounced a further judgement in this regard waiving applicable interest.Based on this judgement, the Company has reversed the accrued interest charge of ' 2,630 Mn under finance cost.
iii) The Board of Directors of the Company at its meeting held on January 31, 2023 has re-approved issuance of upto 16,000optionally convertible, unsecured, unrated and unlisted Indian Rupee denominated debentures (OCDs) having a face value of' 1,000,000 each, in one or more tranches, aggregating upto ' 16,000 Mn, each convertible into 100,000 equity shares of facevalue of ' 10/- each at a conversion price of ' 10/- to ATC Telecom Infrastructure Private Limited (‘ATC’), a non-promoter of theCompany, on a preferential basis. On March 18, 2024, in accordance with the terms of the OCDs, ATC requested the Company forconversion of 14,400 OCDs into 1,440,000,000 fully paid-up Equity Shares and accordingly, on March 23, 2024, the Companyallotted 1,440,000,000 equity shares of face value of ' 10/- each at an issue price of ' 10/- per equity share to ATC.
During the current year, on July 11, 2024, ATC requested the Company for conversion of balance 1,600 OCDs into 160,000,000fully paid-up Equity Shares and accordingly, on July 12, 2024, the Company allotted 160,000,000 equity shares of face value of' 10/- each at an issue price of ' 10/- per equity share to ATC. All the outstanding OCDs stand converted into equity shares.
iv) Further Public Offer (FPO)
On April 23, 2024 the Company has allotted 16,363,636,363 equity shares of ' 10 each at an issue price of ' 11 (including apremium of Re. 1.00 per equity share) aggregating to ' 180,000 Mn by way of FPO. The issue proceeds have been utilised inaccordance with the issue object(s) stated in offer document.
v) Preferential issue
a) On May 21, 2024, the Company has allotted 1,395,427,034 equity shares of ' 10 each at an issue price of ' 14.87 (includinga premium of ' 4.87 per equity share) aggregating to ' 20,750 Mn on a preferential basis to an existing shareholder entityforming part of the promoter group.
b) On July 18, 2024, and July 19, 2024, the Company has allotted 1,027,027,024 equity shares to Nokia Solutions and NetworksIndia Private Limited and 633,783,780 equity shares to Ericsson India Private Limited of face value of ' 10 each at an issueprice of '14.80 (including a premium of ' 4.80 per equity share) aggregating to ' 24,580 Mn on a preferential basis.
c) On January 9, 2025, the company has allotted 1,693,218,361 equity shares of face value of ' 10/- each at an issue price of' 11.28 (including a premium of ' 1.28 per equity share) aggregating to ' 19,100 Mn on a preferential basis to an existingshareholder entity forming part of the promoter group.
All the above preferential issue proceeds have been utilised in accordance with the issue object(s) as stated in respective offerdocument.
vi) The DoT conducted auctions for various spectrum bands which got concluded on June 26, 2024. The Company successfully bid for50 MHz of spectrum (900 MHz, 1800 MHz and 2500 MHz) in 11 circles at a total cost of ' 34,967 Mn. The validity of the spectrumis for a period of 20 years starting from the effective date as per the Frequency Assignment Letter for Respective Service Areas.The Company has made the upfront payment of ' 3,315 Mn and based on the available payment options, the Company has optedfor the deferred payment option for balance amount. The Company has capitalised the cost under “Intangible Assets”.
vii) The Implementation Agreement (IA) entered between the parties defines a settlement mechanism between the Company and thepromoters of erstwhile Vodafone India Limited (“VInL”) for any cash inflow/outflow that could possibly arise to/by the Companytowards settlement of certain outstanding disputes pertaining to the period until May 31, 2018. Based on the AGR judgementfrom Hon’ble SC in October 2019, the Company had recognised a receivable of ' 83,694 Mn, being the cap under the IA, as theAGR liability which was contingent at the time of the merger, got crystalized following this judgement.
Basis the discharge of AGR liability by the Company until March 2020, VInL promotors had paid ' 19,750 Mn as per the IA inApril 2020 and hence, the net settlement amount receivable by VIL was reduced to ' 63,939 Mn. The settlement of such assetsrecognized was to happen periodically based on outflow towards AGR dues, as defined in the Implementation Agreement for theperiod June 2020 to June 2025 (Settlement period).
Under the IA, the Company can claim the amounts should it discharge part of the AGR dues by 30th June 2025. However,considering the moratorium by GoI, these amounts have not been paid by the Company. Subsequent to the balance sheet date,the parties have agreed to extend the settlement date from June 30, 2025 to September 30, 2025. The Company believes thatit will be able to realise this asset.
viii) One Time Spectrum Charges (Beyond 4.4 MHz):
During the financial year 2012-13, the DoT had issued demand notices towards one time spectrum charges (hereinafter referred toas “OTSC”). The demands on the Company i.e. formerly Idea Cellular Limited have been challenged by way of writ petition beforethe Bombay High Court (BHC). The erstwhile Vodafone India Limited (VInL) and erstwhile Vodafone Mobile Services Limited (VMSL)had challenged the demands before the TDSAT. The grounds taken before BHC and TDSAT were different though.
On July 4, 2019 TDSAT in its judgement quashed the demands levied on erstwhile VInL and VMSL and inter alia held that:
- For spectrum up to 6.2 MHz, OTSC is not chargeable and accordingly demand set aside.
- For spectrum beyond 6.2 MHz,
• Allotment after July 1, 2008, OTSC shall be levied from the date of allotment of such spectrum.
• Allotment before July 1, 2008, OTSC shall be levied from January 1, 2013 till the date of expiry of license.
• Conditions as stated in para 1 (v) of the impugned order dated December 28, 2012 (given hereunder) is arbitrary andillegal and is accordingly set aside, i.e. Upfront charges in the case of spectrum holding in multiple bands (900 MHz and1800 MHz), spectrum in 1800 MHz band will be accounted for first, towards the limit of 4.4 MHz was held to be arbitraryand illegal and accordingly set aside.
Thereafter the Company filed an appeal before the Honourable Supreme Court against the TDSAT judgement. On March 16, 2020,Honourable Supreme Court dismissed the petition filed by the Company challenging the levy of OTSC beyond 6.2 MHz. Followingthe dismissal of the Company’s appeal by the Honourable Supreme Court on March 16, 2020, the Company is yet to receive anydemand from the DoT in line with the TDSAT order. The DoT preferred an appeal against the entire TDSAT judgement and sought
stay on the impugned judgement. The matter is pending before the Honourable Supreme Court. The Company proceedings beforethe BHC in respect of Idea Cellular Limited is under adjudication.
The Company, on prudence basis, has recognized a charge for spectrum holding beyond 6.2 MHz in line with the TDSAT order. Theamount has been calculated basis the demand computation that was raised by the DoT in July 2018 for Bank Guarantees to begiven for OTSC in line with the M&A guidelines at the time of merger. Accordingly, the Company has recognised interest cost of '10,403 Mn (March 31, 2024: ' 8,961 Mn) in the Statement of Profit and loss. Accordingly, the Company has disclosed an accrualtowards One Time Spectrum Charges of ' 75,813 Mn (March 31, 2024: ' 65,410 Mn) under Other current financial liabilities.
ix) On March 28, 2023, the Company has entered into a term sheet with a prospective buyer for assignment of certain leaseholdrights of land. Accordingly, the Company has reclassified such leasehold land from RoU assets to Assets held for sale (AHFS) inFY 2023. The sale transaction has been completed during the current financial year.
NOTE 45: CAPITAL AND OTHER COMMITMENTS
Estimated amount of commitments are as follows:
• Contracts remaining to be executed for capital expenditure (net of advances) and not provided for are ' 31,511 Mn (March 31,2024: ' 23,361 Mn).
• Long term contracts remaining to be executed including early termination commitments (if any) are ' 19,057 Mn (March 31, 2024:' 17,219 Mn).
NOTE 46: CONTINGENT LIABILITIES NOT PROVIDED FOR
A) Licensing Disputes:
i. OTSC (Less than 4.4 MHz) - ' 38,570 Mn (March 31, 2024: ' 38,570 Mn):
In FY 2015-16 erstwhile VMSL received demands from DoT towards One time spectrum charges for less than 4.4 MHzpursuant to the transfer of licenses of certain subsidiaries amounting to ' 33,495 Mn. The Company believes the chargeslevied by DoT are not tenable, since the merger guidelines are not applicable considering that the said merger did not involveany intra-circle merger and did not result in increase in spectrum holding of the Company. The Demand is challenged andremains sub-judice at TDSAT.
Further, erstwhile VMSL received demand from DoT towards extension of license of Tamil Nadu circle for making it co-terminuswith license of Chennai circle amounting to ' 5,075 Mn. The Company believes the charges levied by DoT are not tenable,considering the merger of licenses is as per the guidelines issued by DoT in 2005 and as such does not get covered under asper clause 3 (i) and (m) of the M&A guidelines dated February 20, 2014. The Demand is challenged and remains sub-judiceat TDSAT.
ii. Other Licensing Disputes - ' 105,800 Mn (March 31, 2024: ' 97,805 Mn):
a) In December 2016, the Company had challenged the TRAI recommendation of levying penalty for allegedly denyingpoints of interconnect (PoIs) to Reliance Jio, citing Telecom Regulatory Authority of India’s (TRAI) move “arbitrary andbiased” and one which exceeds the sectorial watchdog jurisdiction. The Honourable Delhi High Court suggested thatDoT could consider objections raised by VIL in its plea along with the TRAI recommendations.
On September 29, 2021, DoT had issued demand notice for imposition of financial penalty amounting to ' 20,000 Mn forviolation of the provisions of license agreements and standards of Quality of service of basic telephone service (wireline)and SMTS regulation 2009. On October 11,2021, The Company had filed petition with Hon’ble TDSAT challenging thedemand raised by DoT. In the recent hearing, interim relief has been granted stating no coercive action shall be takenfor realisation of penalty under challenge. The matter is pending adjudication.
b) Additional demands towards AGR dues till FY 2018-19 (mainly including amounts for the period till FY 16-17 not formingpart of the affidavit submitted by the DoT to SC) which are subject to correction/revision on account of disposal ofrepresentations and any other outcome of litigations as finally determined by December 31, 2025 (refer note 3).
c) Disputes relating to alleged non-compliance of licensing conditions & other disputes with DoT (including those towardsCAF Audit and EMF), either filed by or against the Company or pending before Hon’ble Supreme Court / TDSAT. Thematter is pending with Term-cell (DoT).
d) Demands on account of alleged violations in license conditions relating to amalgamation of erstwhile Spice CommunicationsLimited currently sub-judice before the Hon’ble TDSAT. The matter is pending adjudication.
e) Demand with respect to upfront spectrum amounts for continuation of services from February 2, 2012 till various datesin the service areas where the licenses were quashed following the Hon’ble Supreme Court Order. The matter is pendingadjudication.
In October 2015, DoT issued guidelines, wherein Microwave Spectrum held by expired /expiring licenses was declared as beingheld on a provisional basis subject to final outcome of DoT’s decision on recommendation by TRAI on the allocation and pricingof Microwave Spectrum. The guidelines issued by DoT are not in line with the understanding provided during the earlier auctionsas part of Notice Inviting Application (NIA) for the spectrum auction. Basis the guidelines, DoT has instructed the Company toprovide an undertaking that the pricing and allocation decisions of DoT would be considered final in this respect. The Companyhas not provided the said undertaking or signed the agreement being against the express and binding confirmations under NIA.Further TDSAT vide its order dated March 13, 2019 set aside the Impugned guidelines and stated 2006 rates hold to be valid,which should be applied from future date as and when notified by DoT as per the judgment. Both DoT and Company challenged theTDSAT judgement dated March 13, 2019 before the Supreme Court. The Honorable Supreme Court vide its order dated November8, 2019 stayed the TDSAT judgement and directed the Company to furnish bank guarantee till the next date of hearing. The matterwas last listed on March 01, 2024 where Supreme Court admitted the appeals, pending adjudication, the impact of the said orderis not considered in these Financial Statements.
i. Income Tax Matters (including Tax deducted at source)
- Appeals filed by the Group against the demands raised by the Income Tax. Authorities relates to disputes on notallowing full deduction under section 80IA due to other income on account of rent, interest and other similar incomeand determination of initial assessment year.
ii. Sales Tax and Entertainment Tax
- Sales Tax demands mainly relates to the demands raised by the VAT/Sales Tax authorities of few states on SIM cardsetc. on which the Company has already paid Service Tax.
- Demand of tax for non-submission of Declaration forms viz. C forms & F forms in stipulated time limit.
- In one state entertainment tax is being demanded on revenue from value added services.
iii. Service Tax/ Goods and Service Tax (GST)
Service Tax / GST demands mainly relates to the following matters:
- Disallowance of Cenvat Credit on input services viewed as ineligible credit.
- Demand of service tax on SMS termination charges.
- Demand of service tax on reversal of input credit on various matters.
- Disallowance of carry forward of transitional credit on cesses, disallowances of input tax credit on ineligible items.
- Demand of GST on revenue difference between returns and Financial Statements.
During the year, Honourable Supreme court ruled in favour of telecom companies, granting them the right to claim tax creditson duties and taxes paid for infrastructure components like tower parts and green shelters and installation thereof, resultingin reduction of the contingent liability mainly with respect to this matter.
iv. Entry Tax and Customs
- Entry Tax disputes pertains to classification / valuation of goods.
- Demand of customs duty/anti-dumping duty on dispute relating to classification issue. The Company has challengedthese demands which are pending at various forums.
v. Other claims not acknowledged as debts
- Mainly include consumer forum cases, disputed matters with local Municipal Corporation, Regional Provident FundCommission and other miscellaneous sub-judiced disputes.
- Disputes with the Electricity Boards on matters relating classification of Mobility Towers into Industrial v/s commercial.
The future cash outflows in respect of the above matters are determinable only on receipt of judgments/ decisions fromsuch forums/ authorities. Further, based on the Company’s evaluation, it believes that it is not probable that the claims willmaterialise and therefore, no provision has been recognised for the above.
NOTE 52: SHARE BASED PAYMENTS
Employee stock option plan - options granted by Vodafone Idea Limited
The Company has granted stock options and restricted stock units (RSU’s) under ESOS 2013 to the eligible employees of the Companyand its subsidiaries (“Group”) from time to time. These options, subject to fulfilment of vesting conditions, would vest in 4 equal annualinstalments after one year of the grant and the RSU’s will vest after 3 years from the date of grant. The maximum period for exerciseof options and RSU’s is 5 years from the date of vesting. Each option and RSU when exercised would be converted into one fully paid-up equity share of ' 10 each of the Company. The options and options RSUs granted under the ESOS 2013 scheme carry no rights todividends and no voting rights till the date of exercise.
The fair value of the share options is estimated at the grant date using Black and Scholes Model, taking into account the terms andconditions upon which the share options were granted.
There were no modifications to the options/RSU’s during the year ended March 31, 2025 and March 31, 2024. During the year,certain unvested options were cancelled on non-fulfilment of certain vesting conditions under ESOS 2013. In the current year, ' 2 Mn(March 31, 2024: ' 4 Mn) is adjusted against Retained earnings in respect of cancellation/expiration of vested stock option.
NOTE 53: EMPLOYEE BENEFITSA. Defined Benefit Plan (Gratuity)
General description and benefits of the plan
The Company operates a defined benefit final salary gratuity plan through a trust. The gratuity benefits payable to the employeesare based on the employee’s service and last drawn salary at the time of leaving. The benefit is payable on termination of serviceor retirement, whichever is earlier. The employees do not contribute towards this plan and the full cost of providing these benefitsare borne by the Company.
Regulatory framework, funding arrangement and governance of the Plan
The gratuity plan is governed by the Payment of Gratuity Act, 1972 (Gratuity Act). The trustees of the gratuity fund have a fiduciaryresponsibility to act according to the provisions of the trust deed and rules. Since the fund is income tax approved, the Companyand the trustees have to ensure that they are at all times fully compliant with the relevant provisions of the income tax act andrules. The Company is bound to pay the statutory minimum gratuity as prescribed under Gratuity Act. There are no minimumfunding requirements for a gratuity plan in India. The Company’s philosophy is to fund the benefits based on its own liquidity andtax position as well as level of underfunding of the plan vis-a-vis settlements. The trustees of the trust are responsible for theoverall governance of the plan. The trustees of the plan have outsourced the investment management of the fund to insurancecompanies which in turn manage these funds as per the mandate provided to them by the trustees and applicable insurance andother regulations.
Inherent risks
The plan is of a final salary defined benefit in nature which is funded by the Company and hence it underwrites all the risks pertainingto the plan. In particular, there is a risk for the Company that any significant change in salary growth or demographic experience orinadequate returns on underlying plan assets can result in an increase in cost of providing these benefits to employees in future.
The following tables summarizes the components of net benefit expense recognized in the Statement of Profit and Loss and thefunded status and amounts recognized in the Balance Sheet for gratuity:
(Figures in bracket are as at March 31, 2024)
(1) Includes rental expenses pertaining to Indus Towers Limited. However, the same has been accounted for, in accordance withIND AS 116 in these financial statements.
(2) Remuneration includes amounts towards LTIP and ESOP basis actual payment/exercise.
* Numbers are below one million under the rounding off convention adopted by the Company and accordingly not reported.Note:
(i) Above excludes any cash inflow/outflow that could possibly arise from the settlement of certain outstanding disputes pertaining tothe period until May 31, 2018 pursuant to the implementation agreement entered between the Company and VInL shareholders.The Company has recognized settlement assets (net) amounting to ' 63,939 Mn as at March 31, 2025 (March 31, 2024 :' 63,939 Mn) (refer note 44(vii)).
(ii) Guarantees given by bankers to third party on behalf of the Company, counter guaranteed by the VITIL of ' 19,350 Mn (March 31,2024: ' 39,350 Mn), is availed by the Company.
(iii) With respect to options that have already exercised there is an outstanding liability of ' 1,296 Mn payable to entities havingsignificant influence (March 31, 2024: ' 1,232 Mn).
C) Valuation Technique used to determine fair value:
Investments traded in active markets are determined by reference to quotes from the financial institutions; for example: Net assetvalue (NAV) for investments in mutual funds declared by mutual fund house.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in acurrent transaction between knowledgeable and willing parties, other than in a forced or liquidation sale. The valuation techniquesused to determine the fair values of financial assets and financial liabilities classified as level 2 include use of quoted market pricesor dealer quotes for similar instruments and generally accepted pricing models based on a discounted cash flow analysis usingrates currently available for debt on similar terms, credit risk and remaining maturities.
NOTE 61: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company’s principal financial liabilities comprise of borrowings, lease liabilities, trade and other payables. The main purpose ofthese financial liabilities is to finance and support the Company’s operations. The Company’s principal financial assets comprise ofcurrent investments, cash and bank balance, trade and other receivables. The Company also enters into derivative transactions suchas foreign forward exchange contracts as a part of Company’s financial risk management policies. It is the Company’s policy that notrading in derivatives for speculative purposes may be undertaken.
The Company is exposed to various financial risks such as market risk, credit risk and liquidity risk. The Company’s senior managementcomprising of a team of qualified finance professionals with appropriate skills and experience oversees management of these risks andprovides assurance to the management that financial risks are identified, measured and managed in accordance with the Company’spolicies and risk objectives. All derivative activity for risk management purposes are carried by specialist team having appropriate skillsand experience. The risks and measures to mitigate such risks is reviewed by the committee of Board of Directors periodically.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices.Market risk comprises three types of risk: interest rate risk, currency risk and other price risk. Financial instruments affected by marketrisk include borrowings, bank deposits, current investments and derivative financial instruments.
The sensitivity of the relevant profit or loss item reflects the effect of the assumed changes in respective market risks, factors basedon the financial assets and financial liabilities held at March 31, 2025 and March 31, 2024.
a) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inmarket interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’slong-term borrowing with floating interest rates.
The Company manages its interest rate risk by having a balanced portfolio of fixed and floating rate loans from banks & others. Asat March 31, 2025, approximately 98.76% of the Company’s borrowings are at a fixed rate of interest (March 31, 2024: 98.06% ).
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on the portion of loans andborrowings affected, after taking hedge accounting into account. With all other variables held constant, the Company’s profit/(loss) before tax is impacted through floating rate borrowings, as follows:
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable marketenvironment.
b) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreignexchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’soperating activities (when revenue or expense is denominated in a foreign currency), payables for capital expenditure denominatedin foreign currency.
The Company’s foreign currency risks are identified, measured and managed at periodic intervals in accordance with the Company’spolicies.
When a derivative contract is entered into for the purpose of hedging any foreign currency exposure, the Company negotiates theterms of those derivatives contracts to match the terms of the hedged exposure. The Company has major foreign currency risk inUSD, EURO and GBP.
The Company has not hedged its foreign currency trade payables and other financial liabilities in USD, EURO and GBP.
Foreign currency sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in foreign currency rates, with all other variablesheld constant. The impact on the Company’s profit/(loss) before tax is due to changes in the fair value of monetary assets andliabilities including non-designated foreign currency derivatives. The Company’s exposure to foreign currency changes for all othercurrencies other than USD, EURO and GBP is not material.
c) Price risk
The Company invests its surplus funds in various debt mutual funds. These comprise of mainly liquid schemes of mutual funds(overnight liquid investments).
Mutual fund investments are susceptible to market price risk, mainly arising from changes in the interest rates or market yieldswhich may impact the return and value of such investments. However due to the very short tenor of the underlying portfolio in theliquid schemes, these do not pose any significant price risk.
d) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to afinancial loss. The Company is exposed to credit risk from its operating activities (primarily trade and other receivables) and fromits financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
- Trade receivables
Customer credit risk is managed in accordance with the Company’s established policy, procedures and controls relating tocustomer credit risk management. Trade receivables are non-interest bearing and are generally on 15 to 30 days’ credit terms.Outstanding customer receivables are regularly monitored.
The Company follows a ‘simplified approach’ (i.e. based on lifetime Expected credit losses (ECL)) for recognition of impairmentloss allowance on Trade receivables. A large number of minor receivables are grouped into homogeneous groups and assessedfor impairment collectively. For the purpose of measuring lifetime ECL allowance for trade receivables, the Company estimatesirrecoverable amounts based on the ageing of the receivable balances and historical experience. The Company, based onpast trends, recognizes allowance for trade receivables: a) for retail subscribers (net of security deposit) remaining unpaid
beyond 90/120 days from date of billing and b) for other trade receivables on account of Interconnect, Roaming, Fixed lineVoice and data service etc. remaining unpaid beyond 180/365 days. Further, allowance is also recognised for cases indicatingany specific trail of credit loss within the ageing brackets mentioned above. Individual trade receivables are written off whenmanagement deems them not to be collectible. Any subsequent recovery is recognized as Income in the Statement of Profitand Loss. Refer Note 15 for the carrying amount of credit exposure as on the Balance Sheet date.
- Other financial assets and cash deposits
Credit risk from balances with banks is managed by the Company’s treasury department. Investments of surplus funds aremade only with approved counterparties and within credit limits assigned to each counter party. Counterparty credit limitsare reviewed by the Company’s Treasury Department periodically, and may be updated throughout the year. The limits areintended to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failureto make payments.
The Company’s maximum exposure to credit risk for the components of the balance sheet as at March 31, 2025 and March 31,2024 on its carrying amounts as disclosed in notes 11, 14, 15, 16, 17, 18 and 19 except for derivative financial instruments.The Company’s maximum exposure relating to financial derivative instrument is noted in liquidity table below note 61 (e).
e) Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations withoutincurring unacceptable losses. The Company’s objective is to, at all times maintain optimum levels of liquidity to meet its cashand collateral requirements. The Company monitors its risk of a shortage of funds using a liquidity planning tool.
The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts,bank loans. As at March 31, 2025, approximately 6.58% of the Company’s debt excluding interest will mature in less than oneyear, without considering reclassification into current maturity of debt due to convent breach (March 31, 2024: 1.26%) based onthe carrying value of borrowings reflected in the financial statements.
The Company’s ability to settle the above liabilities is dependent on further support from the DoT on the AGR matter as explainedin note 3, fund raise through equity and debt and generation of cash flow from operations. Based on current efforts, the Companybelieves that it would be able to get DoT support, successfully arrange funding and generate cash flow from operations, it will beable to settle its liabilities as they fall due.
(1) Interest accrued but not due on loans from banks and others of ' 197 Mn (March 31, 2024: ' 166 Mn) has been excluded fromother financial liabilities and included in Loans from banks and others.
(2) Interest accrued but not due on Deferred Payment Obligations of ' 9,404 Mn (March 31, 2024: ' 80,377 Mn) has been excludedfrom other financial liabilities and included in Deferred Payment Obligations.
(3) Payable for capital expenditure of ' 54,096 Mn (March 31, 2024: ' 70,260 Mn) and accrual towards One Time SpectrumCharges (OTSC) of ' 75,813 Mn (March 31, 2024: ' 65,410 Mn) has been excluded from other financial liabilities and includedin trade and other payables.
* The Company has classified an amount of ' 7,260 Mn (March 31, 2024: ' 23,636 Mn) from non-current borrowings to currentmaturities of long term debt although the Company believes that there will be no acceleration of payment in this regard (refernote 24(C)).
AA Includes payable for capital expenditure of ' 8,812 Mn (March 31, 2024 : 53,864 Mn) due for payment.
NOTE 62: CAPITAL MANAGEMENT
For the purpose of the Company’s capital management, capital includes issued equity capital, securities premium and all other equityreserves attributable to the equity holders. The primary objective of the Company’s capital management is to maximise the value ofshareholders.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions. The Company monitorscapital using the net debt-equity ratio, which is net debt divided by total equity
(1) Current Ratio = [Current assets/Current liabilities (excluding short term borrowings]
(2) Debt-Equity Ratio = [Debt (excluding interest accrued but not due)/ Equity]
(3) DSCR = [Profit/(loss) before exceptional items and tax Depreciation & Amortisation expenses (excluding depreciation onROU assets) Finance costs (excluding fair value gains/losses on derivatives and interest on lease liabilities)] / [Finance costs(excluding fair value gains/losses on derivatives and interest on lease liabilities) interest capitalised scheduled long termprincipal repayments(excluding prepayments)]
(4) Return on Equity Ratio = [Net Profit/(loss) after tax/ Average Equity]
(5) Trade Receivables turnover ratio = [(Average trade receivables/(Revenue from operations)*Number of days during the year]
(6) Trade Payables turnover ratio = [Total purchases/Average Trade Payables]
(7) Net capital turnover ratio = [Revenue from operations / (Current asset - Current liability (excluding Short term borrowings))
(8) Net profit ratio = [Profit after tax/Revenue from operations]
(9) Return on Capital employed = [(Profit/(loss) before tax Finance costs-Other income) / (Equity share capital Other equity Debt (excluding interest accrued but not due)
(10) Return on investment = [Gain on Mutual Fund (including fair value gain/(loss)) / Average Investment in Mutual Fund]
* This ratio is not applicable as the Net-worth as on March 31, 2025 and as on March 31, 2024 is negative.
NOTE 64
The Company uses accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facilityand the same has operated throughout the year for all relevant transactions recorded in the accounting software.
The Company also uses certain other peripheral software applications that support the recording of revenue, related subscriber acquisitioncosts, and vendor invoice validation, wherein, the audit trail feature is fully enabled through the year at application and at database levelfor all transactions except for a few of the other peripheral software application, for which audit trail is not enabled. Further, there are noinstances of audit trail feature being tampered with. Additionally, the audit trail has been preserved as per the statutory requirementsfor record retention in respect of software where the audit trail is enabled.
Further, the Company uses software applications which are operated by third-party software service providers, for processing the payrolland for roaming revenue accounting. The Company has obtained the Service Organisation Controls (“SOC”) report from the payrollservice provider covering audit trail feature at application and at database level. Also, the Company is in process of obtaining revisedSOC report from roaming revenue accounting service provider covering audit trail feature.
As per our report of even date
For S.R. Batliboi & Associates LLP For and on behalf of the Board of Directors of Vodafone Idea Limited
Chartered Accountants
ICAI Firm Registration No: 101049W/E300004 Sunil Sood Himanshu Kapania
Non-Executive Director Non-Executive Director
(DIN : 03132202) (DIN : 03387441)
Amit Poddar Akshaya Moondra Murthy G.V.A.S. Pankaj Kapdeo
Partner Chief Executive Officer Chief Financial Officer Company Secretary
Membership No.: 509192
Place: MumbaiDate : May 30, 2025