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NOTES TO ACCOUNTS

Vodafone Idea Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 16091.82 Cr. P/BV 0.28 Book Value (₹) 19.68
52 Week High/Low (₹) 23/5 FV/ML 10/1 P/E(X) 0.00
Bookclosure 27/08/2019 EPS (₹) 0.00 Div Yield (%) 0.00
Year End :2019-03 

1. SIGNIFICANT TRANSACTIONS/ NEW DEVELOPMENTS

i) On November 13, 2017, the Company entered into a Share Purchase Agreement with ATC Telecom Infrastructure Private Limited (ATC) for sale of its entire shareholding in Idea Cellular Infrastructure Services Limited (ICISL), a wholly owned subsidiary to ATC subject to regulatory approvals. Hence, effective November 13, 2017, in line with the requirements of Ind AS 105 - "Non-current Assets held for sale and Discontinued operations": total assets and total liability have been reclassified as Assets and liabilities held for sale. The transaction was finally consummated on May 31, 2018.

Accordingly, the Company has recognized a gain of Rs,37,644 Mn (net of expenses of Rs,9 Mn) being the difference between the consideration and net assets of ICISL included in the financial statements as of the effective date and disclosed it as an exceptional item in the financial statements. The related deferred tax charge is Rs,13,235 Mn.

ii) The Company has 49% investment in Aditya Birla Idea Payments Bank Limited (ABIPBL), a Payments Bank. Vodafone M-Pesa Limited (VMPL), a 100% subsidiary of erstwhile VInL is into the business of Prepaid Payment Instruments (PPI) and Business Correspondence (BC). With the merger of ICL and erstwhile VInL on August 31, 2018, the Company became a promoter in both the entities. RBI had permitted VMPL to continue with the PPI business till March 31, 2019 with the condition of not onboarding new customers and no increase in the balance of existing customers.

VMPL has, however, applied to the RBI for a fresh re-look/ extension to continue operations after March 31, 2019 while also evaluating the option of merging the PPI and Business Correspondence (BC) streams with the associate entity/ any willing third party (subject to regulatory approvals). Accordingly, the Company has classified the investment of VMPL as Held for Sale (AHFS) (Net investment of ' Nil (Investment of Rs,271 Mn and impairment provision on investment Rs,271 Mn after merger of VMSL and VinL with the Company)).

iii) On November 14, 2018, the Board of Directors of the Company approved the scheme of arrangement under section 230 to 232 of the Companies Act, 2013 between its wholly owned subsidiary VTL and VIL for transfer of Fibre Infrastructure assets and liabilities of the Company on an 'as is basis' to VTL. The scheme has been filed with the NCLT Ahmedabad after stock exchange approval. The transaction has not been consummated till March 31, 2019.

iv) Pursuant to agreement entered into by the Company, Bharti Airtel Limited and Vodafone Group for merging Indus Towers Limited (Indus) into Bharti lnfratel Limited (BIL) which is subject to requisite regulatory/ corporate approvals and certain closing conditions, the Company has an option to either sell its 11.15% stake to BIL before the merger based on a predetermined pricing formula, or receive shares on merger of the enlarged merged entity at an agreed share exchange ratio, as a part of the merger scheme. Till the time the decision on the option is taken, Indus continues to be accounted for as a joint venture of the Group and reflected as a noncurrent investment.

v) The Scheme of Amalgamation of Idea Mobile Commerce Services Limited (IMCSL), a wholly owned subsidiary with Aditya Birla Idea Payments Bank limited (ABIPBL), an associate was approved by the Hon'ble Mumbai High Court. The merger was subject to certain regulatory approvals and other conditions which got fulfilled on February 22, 2018. Accordingly, effective this date IMCSL merged with ABIPBL. During the previous year, pursuant to the merger, the Company was allotted 104,869,800 equity shares of ABIPBL in lieu of the shares held in IMCSL. The Company holds 49% stake in ABIPBL.

vi) On September 20, 2018, the Company had filed a Scheme of Amalgamation under sections 230 to 232 and other applicable provisions of the Companies Act, 2013 for the merger of Aditya Birla Telecom Limited (ABTL), a wholly owned subsidiary, with the Company with an appointed date of April 1, 2018. During the year, the Company has received the requisite regulatory approvals and the merger became effective on November 30, 2018 on filing the certified copies of the orders sanctioning the scheme with the RoC. This transaction has been accounted as per Ind AS 103 using the pooling of interest method and maintaining the identity of the reserves as those appeared in the standalone financial statements of ABTL.

Further, as the transactions and year end balances between the Company and ABTL have been eliminated in the financial statements, effects of the same have also been reflected in the related party disclosures (refer note 60).

vii) After the requisite shareholders' approval, the Company, during the previous year, has issued and allotted 326,633,165 equity shares of face value of Rs,10 to entities forming part of promoter/ promoter group on preferential basis at a price of Rs,99.50 per equity share, including a premium of Rs,89.50 per equity share (in line with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009), aggregating Rs,32,500 Mn.

The Company has also issued and allotted 424,242,424 equity shares of face value of Rs,10 each to eligible Qualified Institutional Buyers at a price of Rs,82.50 per equity share, including a premium of Rs,72.50 per equity share (in line with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009), aggregating Rs,35,000 Mn.

viii) Prior to the merger, ICL and erstwhile Vodafone were having tenancies on the same tower of various infrastructure service providers. Post the merger, these two tenancies on a single tower have been converted to a single tenancy with a higher loading as per the terms of the Master Service Agreement (MSA).

The Company has given notices to the infrastructure providers to exit certain additional sites based on its ongoing network integration plan. The Company has estimated that the combined settlement amount for tenancy conversion and additional exits undertaken till March 31, 2019 and has accordingly accrued an amount of Rs,20,170 Mn towards such exit charges and disclosed as exceptional item in the statement of profit and loss for the year ended March 31, 2019.

2. 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 Rs,31,455 Mn (March 31, 2018: Rs,12,980 Mn)

- Long term contracts remaining to be executed including early termination commitments (if any) are Rs,53,076 Mn (March 31, 2018: Rs,18,713 Mn)

3.CONTINGENT LIABILITIES NOT PROVIDED FOR A) Licensing Disputes:

i. One Time Spectrum Charges (Beyond 4.4 MHz):

In financial year 2012-13, DoT had issued demand notices towards one time spectrum charges

- For spectrum beyond 6.2 MHz in respective service areas for retrospective period from July 1, 2008 to December 31, 2012, amounting to Rs,10,687 Mn (March 31, 2018: Rs,3,691 Mn), and

- For spectrum beyond 4.4 MHz in respective service areas effective January 1, 2013 till expiry of the period as per respective licenses amounting to Rs,57,254 Mn (March 31, 2018: Rs,17,444 Mn)

The Company believes the above demands amount to alteration of financial terms of the licenses issued in the past. The Company had therefore, petitioned the Hon'ble High Court of Bombay/ TDSAT, where the matter was admitted and is currently sub-judice. The Hon'ble High Court of Bombay/ TDSAT has directed the DoT, not to take any coercive action until the matter is further heard.

- During the year when the matter of erstwhile VInL and erstwhile VMSL merging with the company was taken up with DoT for approval. DoT while granting the approval demanded that the Company submits a revised bank guarantee towards one-time spectrum fees beyond 4.4 MHz amounting to Rs,33,224 Mn (March 31, 2018: Nil) as per clause 3 (i) and (m) of the M&A guidelines dated February 20, 2014. The Company complied with the aforesaid demand and submitted the bank guarantee to DoT under protest. In September 2018, the Company approached TDSAT, seeking return of BG of Rs,33,224 Mn. On January 21, 2019, the Company has received a favourable order from TDSAT directing DoT to release the bank guarantee of Rs,21,135 Mn within 2 months. The Company has filed letter with DoT to release the bank guarantee. DoT reply is awaited. As at March 31, 2019, the matter is sub-judice.

ii. One Time Spectrum Charges (Less than 4.4 MHz):

In FY 2015-16 erstwhile VMSL received demands from DoT towards One time spectrum charges for less than 4.4 MHz pursuant to the transfer of licenses of certain subsidiaries amounting to Rs,33,495 Mn. The Company believes the charges levied by DoT are not tenable, since the merger guidelines are not applicable considering that the said merger did not involve any intra-circle merger and did not result in increase in spectrum holding of the Company. The demand is challenged and remains sub-judice at TDSAT.

Also, in FY 2015-16, erstwhile VMSL received demand from DoT towards extension of license of Tamil Nadu circle for making it co-terminus with license of Chennai circle amounting to Rs,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 as per clause 3 (i) and (m) of the M&A guidelines dated February 20, 2014. The demand is challenged and remains sub-judice at TDSAT.

iii. Other Licensing Disputes - Rs,171,236 Mn (March 31, 2018: Rs,107,710):

- Above amount for the year ended March 31, 2018 include matters considered remote of Rs,76,992 Mn

- Demands due to difference in interpretation of definition of adjusted gross revenue (AGR) and other license fee assessment related matters. Most of these demands are currently before the Hon'ble TDSAT, Hon'ble High Court and Hon'ble Supreme Court.

- The Company has received various demand notes from DoT on account of licensee fees and spectrum usage charges for the period 2007-08 to 2015-16. These demands include amounts raised by DoT based on special audit done by agencies relating to certain contentious matters which are sub-judice and pending at varous courts and certain disallowances as a result of submission of factual supporting/ information/ data by the Company. The Company has not disclosed demands raised which it believes are remote as per its assessments and largely relating to submission of factual data/ information.

- Disputes relating to alleged non-compliance of licensing conditions & other disputes with DoT, either filed by or against the Company and pending before Hon'ble Supreme Court/ TDSAT.

- Demands on account of alleged violations in license conditions relating to amalgamation of erstwhile Spice Communications Limited, currently sub-judice before the Hon'ble TDSAT.

- Demand with respect to upfront spectrum amounts for continuation of services from February 2, 2012 till various dates in the service areas where the licenses were quashed following the Hon'ble Supreme Court Order.

In October 2015, DoT issued interim guidelines, wherein Microwave Spectrum held by expired/ expiring licenses was declared as being held on a provisional basis subject to final outcome of DoT's decision on recommendation by TRAI on the allocation and pricing of Microwave Spectrum. The interim guidelines issued by DoT are not in line with the understanding provided during the earlier auctions as part of Notice Inviting Application (NIA) for the spectrum auction.

Basis the interim guidelines, DoT has instructed erstwhile VInL and erstwhile VMSL to provide an undertaking that the pricing and allocation decisions of DoT would be considered final in this respect. Erstwhile VInL and erstwhile VMSL had not provided the said undertaking or signed the agreement being against the express and binding confirmations under

NIA and had challenged the DoT guidelines in TDSAT. Recently on March 13, 2019, TDSAT issued judgment stating that microwave guidelines dated October 16, 2015 cannot be applied to the petitioner ('The Company'), however it did not grant any relief on the ongoing issue relating to microwave rates. The Company has approached TDSAT seeking clarification on its recent judgment. As at March 31, 2019 the matter is sub judice.

i. Income Tax Matters (including Tax deducted at source)

- Appeals filed by the Company against the demands raised by the Income Tax Authorities relates to disputes on no applicability of tax deductions at source on prepaid margin allowed to prepaid distributors & roaming settlement, disputes relating to denial of tax holiday benefit from certain business receipts etc.

The matters are contested by the Company at various appellate authorities against the tax authorities.

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 Broadband Connectivity, SIM cards etc. 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. However, the Company has challenged the constitutional validity of the levy.

iii. Service Tax/ Goods and Service Tax (GST)

Service Tax/ GST demands mainly relates to the following matters:

- Denial of Cenvat credit related to towers and shelters;

- 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 including on removal of passive infrastructure;

- Demand of tax on telecommunication services provided to employees;

- Demand of interest on the credit availed but not utilized.

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 challenged these 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, Electricity Board and other miscellaneous sub-judiced disputes.

The future cash outflows in respect of the above matters are determinable only on receipt of judgments/ decisions from such forums/ authorities. Further, based on the Company's evaluation, it believes that it is not probable that the claims will materialize and therefore, no provision has been recognized for the above.

C) P5 Asia Holdings Investments (Mauritius) Limited (P5) has a right to sell equity share of Indus Towers Limited (Indus) held by P5 to the Company at its fair value in the event of non-meeting certain conditions. Such right is suspended pursuant to the proposed merger of Indus with BIL effective from April 25, 2018 until the date of merger.

4. OPERATING LEASE

(.) Company as lessee

The Company has entered into non-cancellable operating leases for offices, switches and cell sites for periods ranging from 36 months to 240 months.

Lease payments amounting to Rs,78,769 Mn (March 31, 2018: Rs,51,560 Mn) are included in passive infrastructure charges, no network rent and switching and cell site rent in the Statement of Profit and Loss. Terms of the lease include operating term for renewal, increase in rent in future periods and terms for cancellation, where applicable.

(b) Company as lessor

The Company has leased certain Optical Fibre Cables pairs (OFC) on Indefeasible Rights of Use ("IRU") basis and certain cell sites under operating lease arrangements. The gross block, accumulated depreciation and depreciation expense of the assets given on lease are not separately identifiable and hence not disclosed.

5. The Company, till February 28, 2019, had composite IT outsourcing agreements where in Property, plant and equipment, computer software and services related to IT were supplied by the vendor. Such Property, plant and equipment received were accounted for as finance lease. Correspondingly, such assets were recorded at fair value at the time of receipt and depreciated on the stated useful life applicable to similar IT assets of the Company.

6. SHARE BASED PAYMENTS

a) Employee stock option plan - options granted by Vodafone Idea Limited

The Company has granted stock options under the employee stock option scheme (ESOS) 2006 and stock options as well as restricted stock units (RSU's) under ESOS 2013 to the eligible employees of the Company and its subsidiaries from time to time. These options, subject to fulfillment of vesting conditions, would vest in 4 equal annual installments after one year of the grant and the RSU's will vest after 3 years from the date of grant. The maximum period for exercise of 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 Rs,10 each of the Company. The options granted under ESOS 2006 and options as well as RSUs granted under the ESOS 2013 scheme carry no rights to dividends 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 Schools Model, taking into account the terms and conditions upon which the share options were granted.

The expected life of the share options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The volatility is based on the historical share price over a period similar to the expected life of the options.

b) Employee stock option plan - options granted by Vodafone Group Plc

i. Global Long Term Incentive ("GLTI"):

GLTI is a restricted share plan granted to incentivize delivery of sustained performance over the long term plan to selected employees of the Group. In addition to the 2 years/ 3 years vesting conditions, options of certain schemes would depend on achievement of the performance conditions of the Group and Vodafone Group Plc. The plans are administered by Vodafone Group Plc. and the information disclosed is to the extent available.

ii. Global Long Term Retention ("GLTR"):

GLTR plan is a restricted share plan granted as a retention tool to selected employees in the middle management. The options vest in 3 years/ 2 years after the grant date provided the employees remain in the continued employment of the Group during the vesting period.

iii. Vodafone Global Incentive Plan ("VGIP"):

VGIP is a restricted plan granted as an investment plan to senior management. These options vest in 3 years after the grant date provided the employee remains in the continued employment of the Group during the vesting period. The vesting of these options were subject to satisfaction of performance conditions of the Group and Vodafone Group Plc and market based condition, based on total shareholder return (TSR), which is taken into account when calculating the fair value of share awards. The valuation for the TSR is based on Vodafone's ranking within the same group of companies, where possible over the past five years.

The exercise price is Nil and hence the weighted average exercise price is not disclosed. Liability at the end of the year March 31, 2019 is Rs,1,071 Mn.

Fair value of option is measured by deducting the present value of expected dividend cash flows over the life of the awards from the share price as at the grant date.

(1) Vesting percentage: 77.20%

(2) Vesting percentage: 48.30%

7. EMPLOYEE BENEFITS A. 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 employees are based on the employee's service and last drawn salary at the time of leaving. The benefit is payable on termination of service or retirement, whichever is earlier. The employees do not contribute towards this plan and the full cost of providing these benefits are 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 fiduciary responsibility to act according to the provisions of the trust deed and rules. Since the fund is income tax approved, the Company and the trustees have to ensure that they are at all times fully compliant with the relevant provisions of the income tax act and rules. The Company is bound to pay the statutory minimum gratuity as prescribed under Gratuity Act. There are no minimum funding requirements for a gratuity plan in India. The Company's philosophy is to fund the benefits based on its own liquidity and tax position as well as level of underfunding of the plan vis-a-vis settlements. The trustees of the trust are responsible for the overall governance of the plan. The trustees of the plan have outsourced the investment management of the fund to insurance companies which in turn manage these funds as per the mandate provided to them by the trustees and applicable insurance and other regulations.

Inherent risks

The plan is of a final salary defined benefit in nature which is sponsored by the Group and hence it underwrites all the risks pertaining to the plan. In particular, there is a risk for the Group that any significant change in salary growth or demographic experience or inadequate returns on underlying plan assets can result in an increase in cost of providing these benefits to employees in future.

The Company is committed to spend Rs,727 Mn towards CSR activities arising from the short fall of previous years and the same has been accrued during the current year. This is disclosed as an exceptional item in the statement of profit and loss.

(c) During the year ended March 31, 2019, the Company reassessed recognition of deferred tax assets on carry forward losses, unabsorbed depreciation and MAT credit. The Company recognized net deferred tax assets in respect of carry forward losses, unabsorbed depreciation and other temporary difference of Rs,89,351 Mn as at March 31, 2019 and de-recognized the deferred tax asset in respect of MAT credit of Rs,13,123 Mn during the year ended March 31, 2019. In assessing the reliability of its deferred tax assets, management considers 10 year approved projections and believes that such projections are reliable and represent a convincing evidence that sufficient taxable profit will be available against which the carry forward losses and unabsorbed depreciation can be utilized. Deferred tax assets of Rs,89,351 Mn is realizable over a period of 8-9 years.

Out of total unrecognized deferred tax on MAT credit of Rs,25,699 Mn, Rs,2,631 Mn is expiring within 0-5 years, Rs,9,730 Mn is expiring within 5-10 years and Rs,13,337 Mn is expiring beyond 10 years.

8. RELATED PARTY TRANSACTIONS

The related parties where control, joint control and significant influence exists are subsidiaries, joint ventures and associate respectively. Key Management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any Director whether executive or otherwise.

List of subsidiaries

Relationship Related Party_

Mobile Commerce Solutions Limited (effective from August 31, 2018)

Vodafone Business Services Limited (effective from August 31, 2018)

Vodafone Foundation (effective from August 31, 2018)

Vodafone India Ventures Limited (effective from August 31, 2018)

Vodafone m-pesa Limited (effective from August 31, 2018)

Vodafone Technology Solutions Limited (effective from August 31, 2018)

Vodafone India Digital Limited (effective from August 31, 2018)

Sbidii (Sb) Vodafone Towers Limited (effective from August 31, 2018)

u si iaries u s You System Integration Private Limited (effective from August 31, 2018)

You Broadband India Limited (effective from August 31, 2018)

Connect (India) Mobile Technologies Private Limited (effective from August 31, 2018)

Aditya Birla Telecom Limited (Merged with VIL with effect from November 30, 2018 (refer note 43(vi))

Idea Cellular Infrastructure Services Limited (ceased from May 31, 2018) (refer note 43(i))

Idea Mobile Commerce Services limited (ceased to exist from February 22, 2018) (refer note 43(v)) Idea Cellular Services Limited Idea Telesystems Limited Apart from the above, the Company has transactions with the below related parties Relationship Related Party

Associate Aditya Birla Idea Payments Bank Limited

Indus Towers Limited Joint Venture (JV)

Firefly Networks Limited (effective from August 31, 2018)

Grasim Industries Limited

Hindalco Industries Limited

Euro Pacific Securities Limited (effective from August 31, 2018)

Prime Metals Limited (effective from August 31, 2018)

Mobilvest (effective from August 31, 2018)

Vodafone Telecommunications (India) Limited (effective from August 31, 2018)

Promoter Grou Omega Telecom Holdings Private Limited (effective from August 31, 2018)

Telecom Investment India Private Limited (effective from August 31, 2018)

Asian Telecommunications Investments (Mauritius) Limited (effective from August 31, 2018)

Al-Amin Investments Limited (effective from August 31, 2018)

Jaykay Finholding (India) Private Limited (effective from August 31, 2018)

CCII (Mauritius) Inc (effective from August 31, 2018)

Usha Martin Telematics Private Limited (effective from August 31, 2018)

Trans Crystal Limited (effective from August 31, 2018)

Aditya Birla Capital Advisors Private Limited Aditya Birla Finance Limited

Aditya Birla Capital Limited (Erstwhile Aditya Birla Financial Services Limited)

Aditya Birla Financial Shared Services Limited

Entities having s'gnificant Aditya Birla Health Insurance Company Limited

'nf'uence [incutdhes , t Aditya Birla Housing Finance Limited Subsidiaries of the entity to , , a ,

which the Company is a JV] Aditya Birla Insurance Brokers Limited

Aditya Birla Management Corporation Private Limited (effective from August 31, 2018)

Aditya Birla Money Limited

Aditya Birla Money Mart Limited (ABMML)

Aditya Birla Wellness Private Limited

Relationship_Related Party_

Axiata Group Berhad (ceased from August 16, 2018)

Axiata Investments 1 India Limited (ceased from August 16, 2018)

Axiata Investments 2 India Limited (ceased from August 16, 2018)

Birla Institute of Technology and Science Company

Adity Birla Sun Life AMC Limited (Erstwhile Birla Sun Life Asset Management Company Limited)

Birla Sun Life Insurance Company Limited

Celcom Axiata Berhad (ceased from August 16, 2018)

Dialog Axiata PLC- Sri Lanka. (ceased from August 16, 2018)

Ncell Private Limited (ceased from August 16, 2018)

PT. XL Axiata, Tbk (ceased from August 16, 2018)

Robi Axiata Limited (ceased from August 16, 2018)

Smart Axiata Co. Ltd (ceased from August 16, 2018)

Vodafone Enterprise Luxembourg S.A (effective from August 31, 2018)

Ultratech Cement Limited

Vodafone Limited (effective from August 31, 2018)

Vodafone Enterprise Global Limited (effective from August 31, 2018)

Vodafone India Services Private Limited (effective from August 31, 2018)

Vodafone Network Pty Limited (effective from August 31, 2018)

Vodafone New Zealand Limited (effective from August 31, 2018)

Vodafone International Services LLC (effective from August 31, 2018)

Vodafone Libertel B.V. (effective from August 31, 2018)

Vodafone Telekomunikasyon A.S (effective from August 31, 2018)

Vodafone Gmbh (effective from August 31, 2018)

Vodafone Italia S.P.A. (effective from August 31, 2018)

Entities having significant Vodafone Ireland Limited (effective from August 31, 2018) influence [includes Vodafone Espana S.A.U. (effective from August 31, 2018)

Subsidiaries of the entity to Vodacom (Pty) Limited (effective from August 31, 2018)

which the Company is a JV] Vodafone-Panafon Hellenic Telecommunications Company S.A. (effective from August 31, 2018)

Vodafone Romania S.A (effective from August 31, 2018)

Vodafone Magyarorszag (ZRT) (effective from August 31, 2018)

Vodacom Lesotho (Pty) Limited (effective from August 31, 2018)

Vodafone Albania Sh.A (effective from August 31, 2018)

Vodafone Czech Republic A.S. (effective from August 31, 2018)

Safaricom PLC (effective from August 31, 2018)

Vodafone Portugal Communicators Pessoais, S.A. (effective from August 31, 2018)

Vodafone Malta Limited (effective from August 31, 2018)

Vodafone Net Iletisim Hizmetleri A.S. (effective from August 31, 2018) (formerly known as Vodafone Alternatif Telekom Hizmetleri A.S.)

Vodacom Tanzania PLC. (effective from August 31, 2018)

Vodacom Congo (RDC) S.A. (effective from August 31, 2018)

Ghana Telecommunications Company Limited (effective from August 31, 2018)

Vodafone Group Services Limited (effective from August 31, 2018)

VM, SA (Vodafone Mozambique) (effective from August 31, 2018)

Vodafone Enterprise Singapore Pte. Ltd (effective from August 31, 2018)

Vodafone Global Enterprise Limited (effective from August 31, 2018)

LLC Vodafone Enterprise Ukraine (effective from August 31, 2018)

Vodafone Egypt Telecommunications S.A.E. (effective from August 31, 2018)

Vodafone Roaming Services S.A R.L (effective from August 31, 2018)

Vodafone Procurement Company S.A R.L (effective from August 31, 2018)

Vodacom Group Limited (effective from August 31, 2018)

C&W Global Networks Ltd (effective from August 31, 2018)

CABLE AND WIRELESS GLOBAL Bangalore (effective from August 31, 2018)

Relationship_Related Party_

Smt. Rajashree Birla (ceased from August 31, 2018)

Mr. Kumar Mangalam Birla Mr. Akshaya Moondra

Mrs. Alka Bharucha (ceased from March 31, 2018)

Mr. Arun Thiagarajan Mr. Himanshu Kapania

Mr. Pejavar Murari (ceased from August 31, 2018)

Mr. Baldev Raj Gupta (ceased from August 31, 2018)

Key Management Personnel Mr. Sanjeev Aga (ceased from August 31, 2018)

(KMP) Ms. Tarjani Vakil (Ceased from September 17, 2018)

Mr. Balesh Sharma (effective from August 31, 2018)

Smt. Neena Gupta (effective from September 17, 2018)

Mr. Arun Adhikari (effective from August 31, 2018)

Mr. Uday Khanna (from August 31, 2018 till September 28, 2018)

Mr. Ashwani Windlass (effective from August 31, 2018)

Dr. Shridhir Sariputta Hansa Wijaysriya (Representative of Axiata and ceased from March 30, 2018

Mr. Mohan Gyani (ceased from August 31, 2018)

Mr. Douglas Baillie (from August 31, 2018 till November 14, 2018)

Breach Candy Hospital and Research Centre (ceased from August 31, 2018)

Bharucha and Partners (Ceased from March 31, 2018)

Citec Engineering India Private Limited (ceased from March 30, 2018)

Others G.D Birla Medical Research & Education Foundation

Bhubaneshwari Coal Mining Limited (ceased from August 31, 2018)

Svatantra Microfin Private Limited

Interglobe hotels private limited

ICL Employee's Group Gratuity Scheme

ICL Employee Superannuation Scheme

Trust(1) -

Idea Cellular Services Limited Employee's Group Gratuity Scheme

Hutchison Max Telecom Limited Superannuation Fund (effective from August 31, 2018)

(1) Transaction with trust includes contribution to provident fund, pension, gratuity and superannuation funds and refer note 54 for information on transaction with post-employment benefit plans mentioned above.

(Figures in brackets are for the year ended March 31, 2018)

(1) Excludes charge taken towards share based payments.

* Numbers are below one million under the rounding off convention adopted by the Company and accordingly not reported.

A Includes amounts accrued on account of onerous contract (Site Exits) involving invoicing and settlements over a 3 years period.

# excludes shares received in lieu of shares held in IMCSL pursuant to merger of IMCSL with ABIPL (refer note 43(v)).

AA Includes Rs,3,152 Mn and Rs,1,422 Mn towards Business Support Services availed from Vodafone Group Services Ltd and Aditya Birla Management Corporation Private Limited, respectively.

Note: Related Party transactions excludes assets/ liabilities transferred to VIL pursuant to ABTL merger.

Above excludes any cash inflow/ outflow that could possibly arise from the settlement of certain outstanding disputes pertaining to the period until May 31, 2018 pursuant to the implementation agreement entered between the Company and VInL shareholders (refer note 3).

C. Commitments with Related Parties

The Company has lease commitments towards its joint venture amounting to Rs,227,183 Mn (March 31, 2018: Rs,134,185 Mn) and towards its subsidiaries amounting to ' Nil (March 31, 2018: Rs,36,250 Mn). Also the Company has opex commitments towards its subsidiaries amounting to ' Nil (March 31, 2018: Rs,1 Mn).

(1) Represents contribution to provident and superannuation funds. As Gratuity expense is based on actuarial valuations, the same cannot be computed for individual employees and hence not included.

A the charge for the year is net of reversal on account of cancellation of unvested options.

E. The Company has committed to extend appropriate financial support as required by its wholly owned subsidiaries i.e. Vodafone m-pesa Limited. You Broadband India Limited, You System Integration Private Limited, Vodafone India Digital Limited, Idea Telesystmes Limited and Vodafone Technology Solutions Limited to meet the capital requirements upto the year ending March 31, 2020.

(1) Pursuant to amalgamation of VMSL and VInL with the Company (refer note 3)

9. The Company is one of the members of Aditya Birla Management Corporation Private Limited ('ABMPCL'), a Company limited by guarantee, which has been formed to provide common pool of facilities and resources to its members with a view to optimise the benefits of specialisation and minimize cost to each member. The Company's share of expenses incurred under the common pool has been accounted for at actuals in the respective heads in the Statement of Profit and Loss. Further, the Company has entered into a recharge agreement with ABMPCL pursuant to amalgamation of VMSL and VInL with the Company effective August 31, 2018.

iii. The carrying amounts of the following financial assets and financial liabilities are a reasonable approximation of their fair values. Accordingly, the fair values of such financial assets and financial liabilities have not been disclosed separately.

a) Financial Assets

- Non-current investments

- Trade Receivables

- Loans

- Cash and Cash equivalents

- Bank balance other than cash and cash equivalents

- Deposit with Body Corporates, Government Authorities and Others

- Interest Receivable

- Others

b) Financial Liabilities

- Floating Rate Borrowings including Interest accrued but not due

- Trade Payables

- Payable for capital expenditure

- Security Deposits from Customers and Others

- Indemnity liability

(1) Includes Deferred Payment Liability, NCD and others.

C) Valuation Technique used to determine fair value including fair value though OCI:

Investments traded in active markets are determined by reference to quotes from the financial institutions; for example: Net asset value (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 a current transaction between knowledgeable and willing parties, other than in a forced or liquidation sale. The valuation techniques used to determine the fair values of financial assets and financial liabilities classified as level 2 include use of quoted market prices or dealer quotes for similar instruments and generally accepted pricing models based on a discounted cash flow analysis using rates currently available for debt on similar terms, credit risk and remaining maturities.

The Company enters into derivative financial instruments such as forward, interest rate swap and cross currency swaps with various counterparties. The fair value of such derivatives instruments are determined using forward exchange rates, currency basis spreads between respective currencies and interest rate curves.

10. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company's principal financial liabilities comprise borrowings, derivative liabilities, trade and other payables. The main purpose of these financial liabilities is to finance and support the Company's operations. The Company's principal financial assets comprise investments, cash and bank balance, trade and other receivables. The Company also enters into derivative transactions such as foreign forward exchange contracts, Interest rate swaps as a part of Company's financial risk management policies. It is the Company's policy that no trading 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 management comprising of a team of qualified finance professionals with appropriate skills and experience oversees management of these risks and provides assurance to the management that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives. All derivative activity for risk management purposes are carried by specialist team having appropriate skills and 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, such as equity price risk. Financial instruments affected by market risk include borrowings, bank deposits, investments and derivative financial instruments.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2019 and March 31, 2018.

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 in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. To manage this, the Company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. At March 31, 2019, after taking into account the effect of interest rate swaps, approximately 87.07% of the Company's borrowings are at a fixed rate of interest (March 31, 2018: 80.70%).

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.

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 foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenue or expense is denominated in a foreign currency).

The Company's foreign currency risks are identified, measured and managed at periodic intervals in accordance with the Company's policies.

When a derivative is entered into for the purpose of hedging any foreign currency exposure, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. The Company has major foreign currency risk in USD.

The Company hedged 38.60% (March 31, 2018: 27.19%) of its foreign currency trade payables and 10.99% (March 31, 2018: 10.05%), of its foreign currency loans. This foreign currency risk is hedged by using foreign currency forward contracts and cross currency rate swaps (refer note 49).

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in foreign currency rates, with all other variables held constant. The impact on the Company's profit/ (loss) before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives. The Company's exposure to foreign currency changes for all other currencies is not material.

The derivatives have not been designated in a hedge relationship, they act as a hedge and will offset the underlying transactions when they occur.

c) Price risk

The Company invests its surplus funds in various debt instruments and debt mutual funds. These comprise of mainly liquid schemes of mutual funds (liquid investments) and fixed deposits.

Mutual fund investments are susceptible to market price risk, mainly arising from changes in the interest rates or market yields which may impact the return and value of such investments. However due to the very short tenor of the underlying portfolio in the liquid 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 a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade and other receivables) and from its 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 to customer 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 ECL) for recognition of impairment loss allowance on Trade receivables (including lease receivables). A large number of minor receivables are grouped into homogeneous groups and assessed for impairment collectively. For the purpose of measuring lifetime ECL allowance for trade receivables, the Company estimates irrecoverable amounts based on the ageing of the receivable balances and historical experience. The Company, based on past 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 receivables on account of roaming, IUC and passive infrastructure sharing remaining unpaid beyond 180/ 365 days. Further, allowance is also recognized for cases indicating any specific trail of credit loss within the ageing brackets mentioned above. Individual trade receivables are written off when management deems them not to be collectible. Any subsequent recovery is recognized as Income in the Statement of Profit and 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 are made only with approved counterparties and within credit limits assigned to each counter party. Counterparty credit limits are reviewed by the Company's Treasury Department on an annual basis, and may be updated throughout the year. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty's potential failure to make payments.

The Company's maximum exposure to credit risk for the components of the balance sheet as at March 31, 2019 and March 31, 2018 on its carrying amounts as disclosed in notes 11, 16, 18 and 19 except for derivative financial instruments. The Company's maximum exposure relating to financial derivative instrument is noted in note 64 (e) and liquidity table below.

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 without incurring unacceptable losses. The Company's objective is to, at all times maintain optimum levels of liquidity to meet its cash and 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 and finance leases. Approximately 9.00% of the Company's debt excluding interest will mature in less than one year at

March 31, 2019, without considering reclassification into current maturity on debt convent breach (March 31, 2018: 1.80%) based on the carrying value of borrowings reflected in the financial statements. Based on the past performance and future expectation, the Company believe that cash generated from operations, capital raised through rights issue (refer note 67), working capital management and available sources from raising funds (including monetization of certain assets and additional borrowings) as needed will satisfy its cash flow requirement associated with repayment of borrowings due and its operation, through at least the next twelve months (refer note 4 and 24(b)).

The table below summarizes the maturity profile of the Company's financial liabilities based on contractual undiscounted payments:

*The Company has classified gross amount Rs,102,802 Mn from non-current borrowings to current maturities of long term although the Company is confident that there will be no acceleration of payment in this regard (refer note 24(b)).

(1) Interest accrued but not due of Rs,64,150 Mn (March 31, 2018: Rs,27,808 Mn) has been excluded from other financial liabilities and included in borrowings and interest thereon.

(2) Payable for capex expenditure of Rs,70,433 Mn (March 31, 2018: Rs,29,523 Mn) has been excluded from other financial liabilities and included in trade and other payables.

(3) Included as part of maturity profile as the underlying of these derivatives are borrowings and other financial liabilities included above.

11. IMPAIRMENT REVIEW:

As at March 31, 2019, since the market capitalization of the Company is below the net assets value in the books, it indicates potential impairment of the non-current assets of the Company. Accordingly, the Company has tested for impairment of non- current assets and such testing did not result in any impairment in the carrying value of non-current assets.

The recoverable amount has been determined based on value-in-use calculation using cash flow projections from financial budgets approved by board of directors covering a five-year period. The cash flow beyond the planning period are extrapolated using appropriate terminal growth rate.

The key assumptions used to calculate the value-in-use are as follows:

- Earnings before interest, tax, depreciation and amortization (EBITDA)

- Discount rate (post tax rate)

- Growth rate

- Capital expenditure

EBITDA: The EBITDA margins have been estimated based on the past experience, synergy realization and other cost optimisation initiatives being undertaken by the Company and after considering incremental revenues from existing and new customers from all revenue streams.

Discount rate: Discount rate reflects the current market assessment of the risks specific to the Company taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate is derived based on the weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Company's investors. The cost of debt is based on the interest-bearing borrowings the Company is obliged to service. The post-tax discount rate currently used to discount the estimated cash flows is 12%.

Growth rate: The terminal growth rate used for extrapolating cash flows beyond the planning period of 5 years is 5% and is in line with the long-term average growth rate of the telecom industry in India and are consistent with internal/ external sources of information.

Capital expenditure: The cash flow forecasts of capital expenditure are based on additional estimated capital expenditure towards incremental coverage and capacity enhancement requirements.

66 CAPITAL MANAGEMENT

For the purpose of the Company's capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company's capital management is to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using the debt-equity ratio, which is net debt divided by total equity. The Company includes within net debt, interest bearing loans and borrowings less cash and cash equivalents and investment in liquid mutual funds.

No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2019 and March 31, 2018.

12. SUBSEQUENT EVENT

The board of directors of the Company, in its meeting held on January 23, 2019, had approved a Rights Issue of Rs,250,000 Mn. Subsequent to the year end on May 4, 2019, the Company has allotted 19,999,830,91 1 Equity Shares of face value of Rs,10 each to the eligible existing equity shareholders under a Rights Issue at a price of Rs,12.50 (including a premium of Rs,2.50) per equity share aggregating to Rs,249,998 Mn.

13. Financial statements for the year ended March 31, 2019 are not comparable with the previous year due to the facts as mentioned in note 3. Previous year figures have been regrouped/ rearranged wherever necessary to conform to the current year grouping.

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