BHARAT SANCHAR NIGAM LIMITED

Transcription

1 28. ASSETS AND LIABILITIES TAKEN OVER FROM DoT 28.1 In pursuance of the Memorandum of Understanding (MOU), dated 30 September 2000 executed between Government of India and the Company, all assets and liabilities in respect of business carried on by Department of Telecom Services (DTS) and Department of Telecom Operations (DTO) were transferred to the Company with effect from 01 October 2000 at a provisional value of Rs. 6,300,000 lacs and up to the current financial year the Company has identified net assets of Rs. 6,327,152 lacs (previous year Rs. 6,329,439 lacs) against it. During the current financial year, based on physical verification of fixed assets and inventory and reconciliation of various heads of assets and liabilities in the subsidiary and general ledgers, the management has found some facts which has resulted in increase/ decrease in the following assets and liabilities taken over as on 01 October 2000 amounting to net reduction in the assets of Rs. 2,287 lacs [previous year 2,418 lacs]: Up to 31 March 2013 Additions/ (Deletions) during the year Up to 31 March 2014 Assets Fixed assets 5,409,071 (2,232) 5,406,839 Capital work-in-progress 502,627 (108) 502,519 Inventory 187, ,850 Trade receivables 683, ,196 Advance to contractors 39,448-39,448 Deposit with electricity boards /others 2,184-2,184 Total-A 6,824,376 (2,340) 6,822,036 Liabilities Customer deposits 393, ,704 Earnest money deposits 12,122 (6) 12,116 Security deposits from contractors /suppliers 29,005 (6) 28,999 Working expense liability as on 01 October ,513 (41) 43,472 Contractors bills payable as on 01 October ,593-16,593 Total-B 494,937 (53) 494,884 Net assets taken over by the Company (A-B) 6,329,439 (2,287) 6,327,152 Previous year 6,331,857 (2,418) 6,329,439 Note 1: The net assets and the contingent liabilities transferred to the Company as on 01 October 2000 are subject to confirmation by DoT as regard to their ownership and the value. Note 2: Trade receivables as on includes an amount of Rs. 36,458 lacs pertaining to period prior to 01 October 2000, which have been fully provided for and included in net current assets referred above The capital structure for the Company concurred by the Ministry of Finance and conveyed by the Department of Telecommunications vide their U.O. No. 1-2/2000-B (Pt.) dated 13 December 2001 has been treated as consideration for transferring the above stated assets and liabilities is as follows: As at 01 Additions/ Total structure October 2000 (Deletions) as at 01 (as on 31 during the October 2000 March, 2013) year ended 31 (as on 31 March, 2014 March, 2014) Equity 500, ,000 9% Non-cumulative preference shares 750, , year Government loan (Interest at prevalent Government lending rate) [note 1] 750, ,000 Loan from MTNL [note 2] 305, ,600 Capital reserves DoT [note 3] 4,023,839 (2,287) 4,021,552 Total 6,329,439 (2,287) 6,327,152 22

2 Notes: 1. During the current year, the loan from the Government of India amounting to Rs. 98,318 lacs has been waived vide letter no. 1-43/2008-B dated 11 April 2014 and the same has been taken to the capital reserve created at the time of formation of the Company. 2. The entire amount has been repaid in the previous years. 3. Represents the difference between the total value of the assets taken over and the long term identified liabilities and the capital structure, as on 01 October 2000 as communicated by DoT In pursuance of clause 13 of agreement of transfer executed between the Government of India and the Company dated 30 September 2000 all costs, charges and expenses including stamp duties, registration charges, transfer duties, any other taxes, levies, duties or charges relating to or in connection with completion of transfer of assets and liabilities shall be borne by the Government of India. 29. LICENSE FEE AND SPECTRUM CHARGES 29.1 License and spectrum fee for the year ended is Rs. 224,330 lacs (previous year Rs. 205,236 lacs) During the year there was no change of formula in distribution of the revenue between various components and thus the same formula adopted during is followed this year also, as per the following percentage: Service Basic CMTS NLD ILD Leased circuits 30% - 70% - Basic services 70.72% % 11.7% CMTS services % 21.26% 3.24% The NLD/ILD portion of Point of Interconnection (POI) revenue has been taken on actual basis With effect from 01 April 2013, uniform rate of 8% is applicable for all the services i.e. Basic, CMTS, ISP, VSAT, NLD and ILD and for all the circles irrespective of the category, vide DoT letter no /2010-AS-I (Vol. II) (Pt.) dated 25 June EMPLOYEE COST 30.1 The Company has made pension contribution as per applicable rates to DoT on the basis of pay scales for absorbed employees and for other employees working on deemed deputation as per the Central Government pay scales in accordance with financial rule 116 of the Government of India. The liability on account of pension payable to all such employees will be that of the Government of India as communicated by the Secretary, DoT vide their DO No. 1-45/2003-B dated 15 March However, in the year DoT vide their letter No. 1-45/2003-B dated 15 June 2006 has intimated that annual pension liability of the Government in respect of employees of DoT / DTS / DTO who retired prior to 01 October 2000, those who have worked / are working in the Company on deemed deputation and for those who are absorbed in the Company shall not exceed 60% of the annual receipts to the Government from the item (a) Dividend income from MTNL/BSNL, (b) License fee from MTNL/BSNL, (c) Corporate Tax/Excise Duty/Service Tax paid by BSNL. Any amount exceeding the receipts on account of 3 items mentioned above shall be borne by MTNL/BSNL. The Company has taken up the matter with the Government stating that its liability is restricted to pension contribution as per the rates prescribed in financial rules During the year, the Company has recognised following amounts in the Statement of Profit and Loss : a) Defined contribution plans Contribution to defined contribution plan i.e. employer s contribution to provident fund and pension contribution to the Government of India for the year is charged to Statement Profit and Loss. These amounts are shown as under: Employer's contribution to provident fund 18,735 15,932 Pension contribution to the Government of India 88,914 91,641 23

3 b) Defined Benefit Plans Gratuity The employees gratuity fund scheme administered by the Company employees gratuity fund trust through two fund managers namely Life Insurance Corporation (LIC) of India and SBI Life Insurance Company Limited, is a defined benefit plan. The entire fund has been withdrawn from SBI Life Insurance Company Limited during the current financial year. The amount shown as fund invested with the SBI as on is the amount of interest for the year till the date of withdrawal. The present value of obligation is determined on actuarial valuation done by LIC using projected unit credit method to arrive the final obligation. i) Defined benefits / expenses for gratuity recognised for the year 31 March 2013 Current service cost 3,601 3,388 Interest cost 2,811 2,289 Expected return on plan assets ( 2,890) ( 2,443) Total actuarial (gain)/loss 2, Past service cost - - Curtailment and settlement cost/(credit) - - Net cost 6,435 4,142 ii) The assumptions used to determine the benefit obligations are as follows: Discount rate 8% 8% Expected rate of increase in compensation levels 7% 7% Expected average remaining working lives of employees (years) Mortality table LIC ( ) Ultimate LIC ( ) Ultimate iii) Reconciliation of opening and closing balances of defined benefit obligations for gratuity Present value of obligations as at beginning of year 35,128 28,617 Interest cost 2,811 2,289 Current service cost 3,601 3,388 Benefits paid ( 503) ( 74) Actuarial (gain)/loss on obligations 2, Present value of obligations as at end of year 43,950 35,128 iv) Reconciliation of opening and closing balances of fair value of plan assets for gratuity Fair value of plan assets at beginning of year 27,941 19,543 Contributions during the year 7,187 6,029 Expected return on plan assets 2,890 2,443 Benefits paid ( 503) ( 74) Actuarial gain / (loss) on plan assets - - Fair value of plan assets at the end of year 37,515 27,941 24

4 v) Reconciliation of fair value of assets and obligations for gratuity Fair value of plan assets at the end of year 37,515 27,941 Present value of obligations as at end of year 43,950 35,128 Net liability recognised in Balance Sheet 6,435 7,187 vi) Gratuity fund investment details (Fund manager wise, to the extent funded) Life Insurance Corporation of India 37,496 24,676 SBI Life Insurance 19 3,265 Total 37,515 27,941 Leave encashment: Leave encashment is also a defined benefit plan. The liability towards leave encashment has been determined through actuarial valuation as per the notified Accounting Standard 15 (Revised 2005) Employee Benefits using projected unit credit method. i) Defined benefits / expenses for leave encashment recognised for the year Current service cost 10,184 10,019 Interest cost 58,407 53,179 Expected return on plan assets ( 60,563) ( 56,159) Total actuarial (gain)/loss 42,818 2,151 Past service cost - - Curtailment and settlement cost/(credit) - - Net cost 50,846 9,190 ii) The assumptions used to determine the benefit obligations are as follows: Discount rate 8% 8% Expected rate of increase in compensation levels 7% 7% Expected average remaining working lives of employees (years) Withdrawal rate 1% to 3% depending on age Mortality table LIC ( ) Ultimate % to 3% depending on age LIC ( ) Ultimate 25

5 iii) Reconciliation of opening and closing balances of defined benefit obligations for leave encashment. Present value of obligations as at beginning of year 730, ,741 Interest cost 58,407 53,179 Current service cost 10,184 10,019 Benefits paid - - Actuarial (gain)/loss on obligations (balancing figure) 42,818 2,151 Present value of obligations as at end of year 841, ,090 iv) Reconciliation of opening and closing balances of fair value of plan assets for leave encashment. Fair value of plan assets at beginning of year 637, ,352 Contributions during the year - - Expected return on plan assets 60,563 56,159 Benefits paid - - Actuarial gain / (loss) on plan assets - - Fair value of plan assets at the end of year 698, ,511 v) Reconciliation of fair value of assets and obligations for leave encashment Fair value of plan assets at the end of year 698, ,511 Present value of obligations as at end of year 841, ,090 Unfunded amount recognised in Balance Sheet 143,425 92,579 vi) Leave encashment fund investment details (fund manager wise, to the extent funded) Life Insurance Corporation of India (100%) 698, , FIXED ASSETS / DEPRECIATION AND AMORTIZATION/ CAPITAL WORK-IN-PROGRESS 31.1 Fixed assets taken over from DoT as on 01 October 2000 are based on physical verification conducted by the management. The value of fixed assets taken over including capital work-in-progress has been determined by the management using the original cost of the asset (wherever available) or alternatively the value arrived at by applying Strategic Business Plan ( SBP ) rates, which is based on technical assessment, as reduced by the depreciation up to 30 September 2000 on straight line basis at the rates prescribed by DoT. Capital assets acquired by the Company after 01 October 2000 are valued at the cost including all direct charges incurred up to the time of installation or put to use. The transfer values, as indicated above, in respect of assets transferred from DoT on 01 October 2000 have been treated as its original cost and depreciation has been provided on written down value method at the rates prescribed in Schedule XIV of the Companies Act, 1956 without reassessing the remaining useful life of such assets as on that date. Depreciation has been provided at the rates as stated above for all the assets acquired after 01 October 2000 except in the case of Subscribers Installations which are depreciated over the useful life of 5 years on written down value method. Depreciation has been calculated by the circles, as per the policies of the Company. 26

6 31.2 Land at several locations has been taken over at a nominal value say Re. 1, wherever original cost is not available. As at, thirty one circles (previous year thirty two circles) have identified the leasehold land. In the absence of the information relating to such acquisition in other cases, no adjustment has been made for amortising the cost of such unidentified lease hold land over the lease period. The lease period of a few leasehold lands on which buildings are constructed, have not been renewed / or the renewals are under dispute. Since expected terms, conditions and rentals for renewal/ surrender are not ascertainable, no provision has been made for the 'surrender value / written down value of the buildings' Pending transfer of the immovable property in the name of the Company, documents in respect of some land and buildings acquired during the period are under legal process/execution. Further in respect of assets taken over from DoT, formalities for vesting the assets in favour of the Company wherever necessary/applicable are under process The Company, as per instructions issued by the Ministry of Communications and Information Technology through letters having number P-11014/13/2008-PP dated nil and number P /13/2008-PP dated 12 June 2010, has provided Rs. 1,018,658 lacs and Rs. 831,380 lacs as one time charge for 3G spectrum and BWA spectrum respectively in the financial year , which was earmarked for the Company on 08 August Above-mentioned amount has been paid to the Government of India during the financial year As per terms and conditions of NIA the right to use above-mentioned spectrum is for 20 years from the date of awards of right to commercially use the allocated spectrum block. Accordingly, the Company is amortising the one time spectrum fee over the period of twenty years as per straight-line method. During the current year, the Company received approval of the cabinet vide Department of Telecommunication letter no /2012-SU.I(vol. II) dated 15 January 2014, for surrender of BWA Spectrum by the Company and refund of upfront charges paid by the Company for six (6) LSAs amounting to Rs. 672,451 lacs. Accordingly, the Intangible assets of BWA spectrum amounting to Rs. 672,451 lacs has been decapitalised and claims recoverable from DoT for BWA spectrum refund has been debited by the corresponding amount. Further, the to-date accumulated amortisation amounting to Rs. 149,228 lacs has been netted off with the current year amortisation charge of the gross block Certain assets that have been completed and put to use, have not been capitalised in fourteen circles (previous year thirteen circles) pursuant to the policy of capitalising only after completion certificates have been obtained and till then these are still shown as capital work-in-progress. The amount ascertained in respect of ten circles (previous year nine circles) is Rs. 45,808 lacs (previous year Rs. 33,292 lacs). Consequently depreciation is also not charged on the same Establishment and administration expenses incurred in units where project work is also undertaken are allocated to capital and revenue mainly on actual man-month basis and only where such actual allocation is not possible then on proportionate basis In two circles (previous year one circle), there is difference between the CWIP subsidiary ledger and general control ledger. 32. DoT BALANCES Net amount of Rs. 807,011 lacs (Previous year Rs. 123,778 lacs) recoverable on current account from DoT, out of which an amount of Rs. 672,451 lacs has been confirmed to be refunded by DoT vide letter no /2012-SU.I (vol. II) dated 15 January 2014, is subject to confirmation, reconciliation and consequential adjustment. There is no practice of getting confirmation of such balances with Government department due to huge number of transactions. There is no agreement between the Company and DoT for interest recoverable/payable on outstanding amounts of DoT on current account. Hence, no accrual for interest has been made on the amount payable to/recoverable from DoT. 27

7 33. INTER/INTRA CIRCLE REMITTANCE The management is in the process of reconciling the various differences between the subsidiary records and the corresponding control accounts and balance of Rs. 86,537 lacs (previous year Rs. 102,458 lacs) in Inter/Intra-Circle Remittances account. This amount pertains mainly to reconciliation of assets and liabilities, and marginally to expenditure and revenue amongst various circles of the Company. The reconciliation of the remittances is done on continuous basis throughout the year and proper effect is taken in the books of accounts for reconciled amount. 34. EARNINGS PER SHARE Description Unit F.Y F.Y Profit/(Loss) after tax (Rs. in lacs) (701,976) (788,444) Number of equity shares outstanding (in number) 5,000,000,000 5,000,000,000 Face value of shares (in Rs.) Basic/Diluted earnings per share (in Rs.) (14.04) (15.77) This page has been intentionally left blank 28

8 35. SEGMENT REPORTING 29

9 36. RELATED PARTY DISCLOSURE 36.1 Key Management Personnel Designation Name of Incumbent Remarks CMD Shri. R K Upadhyay From 30 April 2011 (A/N) Director (Finance) Shri. K.C.G.K. Pillai From 25 April 2013 (A/N) to 31 November 2013 Shri. R K Upadhyay Shri. Anupam Shrivastava From 01 December 2013 (F/N) to 04 February 2014 From 05 February 2014 Director (Consumer Mobility) Shri. R. K. Agarwal Shri. Anupam Shrivastava From 11 April 2008 to 30 April 2013 (F/N) From 01 May 2013 (F/N) Director (HRD) Shri. A.N. Rai From 19 June 2012 Director (Consumer Fixed Access) Shri. N. K Gupta From 01 June 2012 (F/N) Director (Enterprise) Shri. A.N.Rai From 19 September 2011 Government director Shri. Shahbaz Ali From 14 February 2012 Ms. Rita Amitabh Teaotia From 04 September 2012 Non-official part-time Shri. Ashish Guha From 21 May 2010 to 20 May 2013 director Prof. N. Balakrishnan From 17 July 2012 Shri. Ajai Vikram Singh From 17 July Disclosure of transactions between the Company and related parties and the status of outstanding balances. Name of the party Description of transactions Key Management Personnel Remuneration paid : Payment of salary and allowances Perquisites 4 5 Sitting fees 2 2 Total Advance given [note below] : Opening balance Extended during the year Total Repayment of advance Outstanding advance 4 1 Note: These advances are in the normal course of business The Company being a wholly State owned enterprise, disclosure as regards related party relationship with other State controlled enterprises and transactions with such enterprises has not been made in accordance with the notified Accounting Standard-18 Related party disclosures. 37. AUDITOR S REMUNERATION (STATUTORY/BRANCH AUDITORS) Statutory auditor Branch auditor Statutory auditor Branch auditor Statutory audit fee Certification charges Reimbursement of expenses Total Other services Tax audit fee Note: Fees exclusive of service tax and cess wherever applicable

10 38. AS 29 DISCLOSURE REQUIREMENT The disclosure relating to provisions in terms of AS 29, to the extent available, are as under: Name of Provisions Opening balance as at 01 April 2013 Fresh provision made during the year Provision utilized during the year Provision written back during the year Closing balance as at 31 March 2014 Wealth tax (397) (85) (92) - (390) Contingencies 1, ,544 (1,192) (120) (56) - (1,256) Total 1, ,933 (1,589) (205) (148) - (1,646) Note: Figures in bracket denotes previous year figures. 39. OTHER SCHEDULE-VI REQUIREMENTS Information required as per Note 5(viii) of General Instructions for preparation of Statement of Profit and Loss, Part II of Revised Schedule VI of Companies Act, 1956, to the extent available, is as under: 39.1 Value of Imports on CIF Basis: Raw material - 2,401 Components and spares parts Capital goods 15,721 57,861 Total 16,678 60,262 Note: One circle (previous year one circle) has not ascertained the value of import on CIF basis The expenditure in foreign currency: Expenses on services 937 7,307 Travelling Others 8,685 9,086 Total 9,645 16,412 Note: One circle (previous year one circle) has not ascertained the value of expenditure in foreign currency Consumption of imported and indigenous stores and spares parts (to the extent identified): (Rs. in lacs) % (Rs. in lacs) % Imported 21, , Indigenous 17, , Total 39, , Note: One circle (previous year one circle) has not ascertained the consumption of imported and indigenous stores and spares parts Earnings in foreign currency: Training fee Income from services 2,548 8,423 Others Total 3,289 9,043 Note: One circle (previous year one circle) has not ascertained the value of earnings in foreign currency. 31

11 40. LEASE The Company has taken vehicles for senior executives under operating leases, which expire between May 2013 to May 2018 (previous year April 2014 to July 2017). The gross rental expenses, excluding service tax, for such vehicles are Rs. 92 lacs (previous year Rs. 92 lacs). The committed lease rentals in the future are: 31 March March 2013 Not later than one year (excluding service tax) Later than one year and not later than five years (excluding service tax) Total Vide a MoU entered during the year between the Company and MTNL, rentals will be calculated at mutually agreed rates after review of space occupied by both the aforementioned Public Sector Undertakings (PSUs) in each others buildings. 42. CONTINGENT LIABILITIES AND COMMITMENTS: 42.1 Contingent liabilities (i) Claims not acknowledged as debts are as follows: As at As at No. of Amount No. of Amount cases cases TR Billing Enhanced sales tax in lieu of C/D Forms 11 1, ,495 On account of service tax disputed , ,127 Sales tax disputed 57 14, ,747 Central excise claims 20 3, ,216 License fee and spectrum charges [note 1] 2 1,136, ,186 Foreign exchange fluctuation loss [note 2] 1 2, Others [note 3] 43, , ,012 Total 43,431 1,335, ,926 Note 1: Demand raised by DoT amounting to: i) Rs. 691,186 lacs on account of one time spectrum charges for Global System for Mobile (GSM) spectrum held by the Company, the matter is subjudice by other operators and the amount is not finally crystallized. ii) Rs. 445,492 lacs on account of provisional assessment of license fee for the years to , the matter has been taken up with DoT for revision. Note 2: The net amount payable to Pakistan Telecom Company Limited for settlement of telecom dues amounting to Rs.17,671 lacs payable in Gold Franc currency have been accounted for in the book of Maharashtra telecom circle in the year pertaining to the period upto June No claim has been received from Pakistan Telecom Company Limited on account of telecom traffic. In the absence of relevant details of traffic data, no recognition of income and provisioning for expenditure related to it has been accounted for, for the above period. The Management has decided not to recognise the foreign exchange fluctuation for the claims recoverable/payable from/to PTCL in the books of accounts. Henceforth, the same will be shown as contingent liabilities. Note 3: The contingent liability in connection to 23 cases included under the head Others in the above table is not ascertainable. (ii) Claims pending in court related to Land acquisition, TR billing, Service tax, Central Excise and Sales tax, Arbitration cases and others. As at As at No. of cases 14,438 16,520 Amount 848, ,354 32

12 (iii) Demands raised by the Income Tax Departments not acknowledged as debt are as follows: Assessment year As at 31 March 2014 As at 31 March 2013 Forum where pending Amount Forum where pending Amount (refer note 1) (refer note 1) Appeal pending at ITAT - - Writ at Hon'ble Delhi High Court against reassessment u/s Appeal pending at ITAT against penalty order u/s 271(1)(c) 197,943 Appeal pending at ITAT 81,899 27, , Appeal pending at ITAT Appeal pending at ITAT (refer note 2) 263 / Appeal pending at ITAT Appeal pending at ITAT against penalty order (refer note 3) u/s 271(1)(c) 36,110 Appeal pending at ITAT 9,684 Appeal pending at ITAT 263 / 31,667 Appeal pending at ITAT 115,316 Appeal pending at ITAT against penalty order u/s 271(1)(c) 36,110 9,684 31, , (refer note 4) Appeal pending at ITAT 92,606 Appeal pending at ITAT 92, (refer note 5) Appeal pending at ITAT 97,095 Appeal pending at ITAT 97, (refer note 6) Appeal pending at ITAT against assessment u/s 70,891 Appeal filed at ITAT 70, (refer note 7) Appeal pending at ITAT 29,749 Appeal filed at ITAT 59, Appeal pending at CIT (A) against assessment u/s (refer note 8) Appeal pending at CIT (A) against assessment u/s 3, ,422 Appeal filed at CIT (A) 3,071 Total 1,307, ,018 33

13 Notes: 1. The cases have been decided in the favour of the Company hence not acknowledged as contingent liability. 2. Assessment order under section(u/s) 263/, dated 25 September.2009 has been passed for assessment year , whereby deduction u/s 80-IA amounting to Rs. 452,830 lacs was disallowed. An additional demand of Rs. 100,856 lacs has been raised against the Company. The appeal filed against this assessment has been decided partly by CIT (A) in favour of the Company vide their order dated 30 April 2010.As per appeal effect u/s 250/263/ dated 30 June 2010 for effecting order of CIT (A) dated 30 April 2010, the additional demand of Rs. 100,856 lacs has been reduced to Rs. 9,684 lacs. Further appeal has been filed with Hon ble ITAT against the order of CIT (A). 3. The appeal filed against the penalty for A.Y under section 271(1)(c) imposed to the extent of Rs. 115,316 lacs has been disposed of by CIT(A) vide their order dated 14 March Substantial relief has been allowed to the Company as mentioned below. S.No. Additions under normal provisions/ section 115JB 34 Penalty (100%) 1 Depreciation Normal 82,994 2 Write off other than bad debts Normal - 3 Disallowance of claims Normal 25,838 of deductions u/s 80-IA 4 Provision of bad and doubtful debts Section 115JB 5,630 Total 114,462 Further, second Appeal has been filed by both the Company and Income Tax Department with Hon ble ITAT against order of CIT(A) vide Appeal No 2196/DEL-2012 and 2799/DEL-2012 respectively. 4. For assessment year , an additional demand of Rs. 51,890 lacs was raised against the Company vide assessment order u/s dated 27 December The additional demand for assessment year has further been increased from Rs. 51,890 lacs to Rs. 92,606 lacs vide assessment order u/s 154/ dated 24 September The appeal filed against this assessment has been decided partly in favour of the Company by CIT (A) vide their order dated 28 March The Company has filed appeal before ITAT against the order of CIT (A). 5. For assessment year , an additional demand of Rs. 35,218 lacs was raised against the Company vide assessment order u/s dated 14 December The additional demand for A.Y has further been increased from Rs. 35,218 lacs to Rs. 97,095 lacs vide assessment order u/s 154/ dated 10 August The appeal filed against this assessment has been decided partly in favour of the Company by CIT (A) vide their Order dated 29 March The Company has filed appeal before ITAT against the order of CIT (A). 6. For assessment year , an additional demand of Rs. 100,202 lacs was raised vide assessment order dated 23 December Vide rectification order u/s 154/ dated 30 January 2012, the additional demand raised vide assessment order u/s dated 23 December 2010 has been reduced from Rs. 100,202 lacs to Rs. 70,891 lacs. First appeal filed before CIT (A) against Assessment u/s 143 has been disposed off by CIT (A) vide their order dated 16 February 2012 and order u/s 154 dated 12 March Second appeal has been filed with ITAT against above mentioned orders of CIT (A). 7. For assessment year an additional demand of Rs. 59,429 lacs had been raised vide assessment order dated 02 November This amount has already been paid by the

14 Company/adjusted by way of refund of other assessment years. The Company filed appeal before CIT(A) against the assessment order which was decided vide appellate order dated 24 September 2012.The additional demand was reduced from Rs. 59,429 lacs to Rs. 29,749 lacs. Hence a relief of Rs. 29,679 lacs has been obtained by the Company by appeal effect of order dated 24 September 2012 passed by CIT(A)-V, New Delhi. A refund of Rs. 31,163 lacs has been granted to the Company (including interest u/s 244A amounting to Rs. 1,484 lacs) which has been adjusted against the outstanding demand of assessment year Income Tax Department has filed an appeal in ITAT against appellate order. The Company also filed the appeal. 8. For assessment year , an additional demand of Rs.623,422 lacs was raised against the Company vide assessment order u/s dated. The Company has filed appeal before CIT (A) against the assessment order u/s on 29 April Penalty proceedings u/s 271(1)(c) of the Income Tax Act 1961 which was initiated against the Company for A.Y , A.Y , A.Y , A.Y , A.Y , A.Y has been kept in abeyance. The additional demand, if any, has not been quantified. 10. Additional interest u/s 234B and 220, if any, arising out of above-mentioned income tax proceedings has not been quantified since demand has not been finally crystallised against the Company. 11. As per records, an amount of Rs. 521,930 lacs (previous year Rs. 596,535 lacs) has been adjusted by Income Tax Department against the additional demand of Rs. 1,307,554 lacs (previous year Rs. 823,018 lacs) mentioned above which is contested by the Company at appropriate forums. (iv) Liability on account of bank guarantees given by the Company. Item As at As at With cash margin Without cash margin With cash margin Without cash margin No. of cases Amount 1,169 6, ,331 (v) As per Office Memorandum (OM) dated 19 November 2009, pension contribution was payable on the actual pay drawn as on 01 January 2007 (being the date of implementation of second pay commission for IDA). Whereas the Company was paying pension contribution on maximum of the scale as advised by DoT. However, from 01 December 2011 the management has decided to pay the pension contribution as per office memorandum dated 19 November For those who are retiring within six months, pension contribution is paid on maximum of the pay scale as per letter no 7-45/2008-TA-I Dated 19 April 2013 of Director(A/cs-I)IA, DoT. The actual difference between these two methods of pension contribution payment upto is Rs. 70,703 lacs (previous year Rs. 30,844 lacs) Commitments a) Capital commitments (i) The estimated amounts of contracts remaining to be executed on capital account and not provided for in relation to execution of works and purchase of equipments are Rs. 121,749 lacs (previous year 231,039 lacs). (ii) In six circles (previous year thirteen circles) the estimated amount of contract remaining to be executed on capital account has not been ascertained. b) Other commitments (i) The amount of other commitments amounting to Rs. 8,333 lacs is ascertained in two circles (previous year NIL circle). 35

15 43. CURRENT TAX The provision for income tax for the current year has not been made since the Company is not having any taxable income either under normal provision of Income Tax Act, 1961 or special provision u/s 115JB (Minimum alternate tax) of the Income Tax Act, The Company is executing various projects for various Government departments on reimbursement basis. 45. An agreement dated 16 May 2013 has been entered into between the Company and Bharat Broad band Nigam Limited (BBNL) with regard to contracting of laying OFC, installation of equipment, operation and maintenance on agreed terms and conditions of the network so built in pursuance of MOU dated 04 December The said agreement has come into effect from 17 May During the current year employees of the Company have contributed an amount of Rs. 1,488 lacs in the Prime Minister National Relief Fund for disaster relief measures and rehabilitation of the victims of flood in Uttarakhand. 47. The Company has discontinued its Telegram business (including Telex and Long Distance Telegraph and Telex system) with effect from 15 July 2013 and decommissioning of assets (other than land, building, furniture & fixture and computers) is under process in the circles having Telegram service assets. The net depreciated value of such assets is Rs. 1,044 lacs as on. 48. In Uttarakhand circle of the Company natural calamity due to cloud burst and heavy flood occurred in the month of June 2013 and assets worth Rs. 91 lacs having net depreciated value of Rs. 16 lacs were destroyed. The same have been written off in the books of accounts. 49. Figures of the previous year have been regrouped or reclassified wherever necessary to conform to the current years grouping and classification. for Walker Chandiok and Co LLP (formerly Walker, Chandiok and Co) Chartered Accountants per Atul Seksaria Partner For and on behalf of Bharat Sanchar Nigam Limited A.N. Rai Chairman and Managing Director Anupam Shrivastava Director (Finance) Rajeev Singh General Manager (Corporate Accounts) Place : New Delhi Date : 29 August 2014 H.C. Pant Company Secretary and Sr. General Manager (Legal) 36