35. RELATED PARTY DISCLOSURE 35.1 Key Management Personnel Designation Name Remarks CMD Shri S.C.Misra From 01.3.2011 to 30.4.2011 Shri R K Upadhyay From 30.4.2011 (A/N) Director (F) Shri S. C. Misra From 01.3.2011 to 30.4.2011 Shri R.K. Upadhyay From 30.4.2011 (A/N) Director (Consumer Mobility) Shri R. K. Agarwal From 11.4.2008 Director (HRD) Shri A. K. Garg From 28.3.2011 to 5.12.2011 Shri A. N. Rai From 5.12.2011 to 5.3.2012 Shri R.K. Upadhyay From 05.3.2012 Director (Consumer Fixed Access) Shri Rajesh Wadhwa From 01.8.2008 Director (Enterprise) Shri R.K. Agarwal From 01.3.2011 to 31.5.2011 Shri R.K. Upadhyay From 31.05.2011 to 19.9.2011 Shri A.N.Rai From 19.9.2011 Govt. Director Shri R.N.Jha From 12.2.2010 to 13.4.2011 Govt. Director Shri S.R.Rao From 13.4.2011 Govt. Director Shri M.P.Tangirala From 01.8.2011 to 14.2.2012 Govt. Director Shri Shahbaz Ali From 14.2.2012 Non-official part-time Director Shri Sanjiv Gupta From 05.9.2008 to 4.9.2011 Non-official part-time Director Shri Ashish Guha From 21.5.2010 35.2 Disclosure of transactions between the Company and related parties and the status of outstanding balances as on 31 st March 2012 Name of the Party Description of Transactions of Transaction during the F.Y. 2011-12 of Transaction during the F.Y.2010-11 (Rs. In Lakh) Payment of salary and allowances 88.60 79.13 Advance given: (Rs. In Lakh) Key Management Personnel Opening balance Extended During the year 9.70 8.71 9.31 8.21 Total 18.41 17.52 Repayment of Advance 18.41 7.82 Outstanding Advance - 9.70 35.3 The Company being a wholly State owned enterprise, no disclosure as regards related party relationship with other State controlled enterprises and transactions with such enterprises has been made. 36. MANAGERIAL REMUNERATION Remuneration to the Chairman-Cum-Managing Director & other Directors : (Rs. In Lakh) (Rs. In Lakh) Salaries & Allowances 80.32 73.95 Perquisites 3.63 3.26 EPF Contribution 8.28 5.18 Sitting Fees 1.10 5.30 Total 93.33 87.69 31
37. ADVANCE TO DIRECTORS (Rs. In Lakh) (Rs. In Lakh) due at the end of the year (TA Advance) - 9.70 Maximum amount due during the year 10.73 11.94 38. AUDITOR S REMUNERATION (STATUTORY/BRANCH AUDITORS) Particulars 2011-12 (Rs. in Lakh) Statutory Branch Auditor Auditor Note: Fees exclusive of Service Tax & Cess wherever applicable. 39. AS 29 DISCLOSURE REQUIREMENT The disclosure relating to provisions in terms of AS 29, to the extent available, are as under: Name of Provisions Wealth Tax Dividend Tax on Dividend Phased out assets Leave Encashment Gratuity Contingencies Opening Balance as at 01.04.2011 Fresh Provision made during the year 32 Provision utilized during the year 2010-11 (Rs. in Lakh) Statutory Branch Auditor Auditor Statutory Audit Fee 10.56 189 10.56 191 As advisor or in any other capacity: Certification Charges 4.74 54 1.58 32 Management Services 4.00 6 3.75 6 Reimbursement of Expenses 1.75 21 1.55 21 Tax Audit fee - 21-21 Provision written back during the year (Rs. in lakh) Closing balance as at 31.03.2012 403 92 98-397 (415) (98) (110) - (403) 629,574 42,956-7,789 664,741 (550,500) (84,513) (5,439) - (629,574) 6,044 3,044 14-9,074 (6,687) (6,044) (6,687) - (6,044) 623 631 60 2 1,192 (801) (207) (112) (273) (623) Total 636,644 46,723 172 7,791 675,404 (558,403) (90,862) (12,348) (273) (636,644) Note: Figures in bracket denotes previous year figures. 40. 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, are as under: 40.1 Value of Imports on CIF Basis: Raw Material - - Components & Spares Parts - - Capital Goods 579 31,956 Total 579 31,956
40.2 The expenditure in foreign currency: Expenses on Services 24,264 2,688 Travelling 37 70 Others 3,889 11,280 Total 28,190 14,038 40.3 Consumption of imported and indigenous stores & spares parts (to the extent identified): (Rs. in lakh) % (Rs. in lakh) % Imported 3,574 15.96 17,090 23.01 Indigenous 18,813 84.04 57,174 76.99 Total 22,387 100.00 74,264 100.00 40.4 Earnings in Foreign currency: Training Fee 109 3 Income from Services 9,747 2,824 Others 908 0 Total 10,764 2,827 41. LEASE The company has taken vehicles for Senior Executives under Operating Lease, which expires between Oct. 2012 to Dec. 2016 ( P.Y. May 2009 to January 2015). The gross rental expenses, excluding service tax, for such vehicles are Rs. 101 Lakh (P.Y. Rs. 106 Lakh). The committed lease rentals in the future are: (Rs. In Lakh) (Rs. In Lakh) Not later than one year (excluding service tax) 89 90 Later than one year and not later than five years (excluding service tax) 147 325 Total 236 415 42. OTHERS 42.1 In the absence of any agreement between BSNL and MTNL generally no income and expenditure have been recognized on account of use of jointly occupied buildings and other infrastructure owned by either party. 43. CONTINGENT LIABILITIES AND COMMITMENTS: 43.1 Contingent Liabilities (i) Claims not acknowledged as debts are as follows: Particulars As at 31.03.2012 As at 31.03.2011 No. of Cases No. of Cases TR Billing 63 113 25 8 Enhanced Sales Tax in lieu of C/D Forms 18 2,430 11 1,838 On account of service tax disputed 94 18,076 84 20,430 Sales tax disputed 45 7,812 59 9,211 Customs duty disputed 2 2 5 49 Central Excise claims 24 1,064 30 1,884 Others 190 12,478 741 10,448 Total 436 41,975 955 43,868 33
(ii) Claims pending in court related to Land Acquisition, TR Billing, Service Tax, Central Excise & Sales tax, Arbitration cases and others. Particulars As at 31.03.2012 As at 31.03.2011 No. of cases 20,463 19,508 (Rs. in lakh) 1,706,195 1,027,166 (iii) Demands raised by the Income Tax Departments not acknowledged as debt are as follows: Assessment Year As at 31.03.2012 As at 31.03.2011 2001-02 (Refer Note-1) 2002-03 (Refer Note-2) Forum where pending Writ pending at Hon ble Delhi High court against re-assessment u/s 147 Appeal pending at CIT (A) against penalty order u/s 271(1)(c) 2003-04 Appeal pending at ITAT 2004-05 Appeal pending at ITAT 2004-05 (Refer Note-3) Appeal pending at ITAT 263 / 2005-06 Appeal pending at ITAT 2005-06 (Refer Note -4) 2006-07 (Ref Note - 5) 2007-08 (Refer Note 6) 2008-09 (Refer Note No.7) 2009-10 (Refer Note Appeal filed before ITAT against penalty order u/s 271(1)(c) Appeal pending at ITAT Appeal pending at ITAT Appeal being filed at Assessment u/s 143 (3) Appeal filed at CIT(A) against Assessment u/s 143 (3) 34 (Rs. In lakh) Forum where pending 81,899 Writ pending at Hon ble Delhi High court against re-assessment u/s 147 27,307 Appeal pending at CIT (A) against penalty order u/s 271(1)(c) 197,943 Appeal pending at assessment u/s 36,110 Appeal pending at assessment u/s 9,684 Appeal pending at assessment u/s 263/ 31,667 Appeal pending at assessment u/s 115,316 Appeal pending at CIT (A) against penalty order u/s 271(1)(c) 92,606 Appeal pending at assessment u/s 97,095 Appeal pending at assessment u/s 70,891 Appeal pending at CIT (A) against Assessment u/s 143 (3) (Rs. In lakh) 81,899 27,307 197,943 36,110 9,684 31,667 115,316 92,606 97,095 100,202 59,429 - - No.8) Total 819,947 789,829 Note: 1. The Income Tax Department has initiated re-assessment proceedings against the Company for the A.Y. 2001-02 and A.Y. 2002-03. The main contention of the department is that the amount shown in the balance sheet of the respective years under the head Reserve amounting to Rs. 3,316,000 lakh is to be treated as financial relief/grant/subsidy hence is to be reduced from the actual cost of fixed assets. Consequently the depreciation charged would be lower than what has been claimed by the Company. The re-assessment proceedings will be having cascading effect on all the subsequent assessment years also.
2. The appeal filed against the Penalty Order u/s 271(1)(c) of the I.T. Act, 1961 passed for the A.Y. 2002-03 and the demand of Rs. 27,307 lakh is pending before CIT (A). 3. Assessment Order u/s 263/ dated 25.09.2009 has been passed for the A.Y. 2004-05, whereby deduction u/s 80-IA amounting to Rs. 452,830 lakh was disallowed. An additional demand of Rs. 100,856 lakh has been raised against the company. The Appeal filed against this Assessment has been decided partly by CIT (A) in favour of BSNL vide their Order dated 30.04.2010. As per Appeal effect u/s 250/263/ dated 30.06.2010 for effecting Order of CIT (A) dated 30.04.2010, the additional demand of Rs. 100,856 lakh has been reduced to 9,684 lakh. Further Appeal has been filed with Hon ble the order of CIT(A). 4. The appeal filed against the penalty for A.Y. 2005-06 under Section 271(1)(c) imposed to the extent of Rs.115,316 lakh has been disposed of by CIT (A) vide their order dated 14.03.2012. Substantial relief has been allowed to the company as mentioned below. Further Appeal is being filed with Hon ble the order of CIT (A). S.No. Particulars Additions under Normal Provisions/Section 115JB Penalty(100%) (Rs.) 1 Depreciation Normal 8,299,361,961/- 2 Write off other than Bad Debts Normal 36,592/- 3 Disallowance of claims of deductions Normal 2,583,833,018/- u/s 80-IA 4 Provision of bad & Doubtful debts Section 115JB 563,000,000/- Total Rs. 11,446,231,571/- 5. For A.Y. 2006-07, an additional demand of Rs. 51,890 lakh was raised against the company vide Assessment Order u/s dated 27.12.2007. The additional demand for A.Y. 2005-06 has further been increased from Rs. 51,890 lakh to Rs. 92,606 lakh vide Assessment Order u/s 154/ dated 24.09.2010. The Appeal filed against this Assessment has been decided partly in favour of BSNL by CIT (A) vide their Order dated 28.03.2008. The Company has filed appeal before the Order of CIT(A). 6. For A.Y. 2007-08, an additional demand of Rs. 35,218 lakh was raised against the company vide Assessment Order u/s dated 14.12.2009. The additional demand for A.Y. 2007-08 has further been increased from Rs. 35,218 lakh to Rs. 97,095 lakh vide Assessment Order u/s 154/ dated 10.08.10. The Appeal filed against this Assessment has been decided partly in favour of BSNL by CIT (A) vide their Order dated 29.03.2011. The Company has filed appeal before the Order of CIT(A). 7. For AY 2008-09, an additional demand of Rs. 100,202 lakh was raised vide Assessment Order dated 23.12.2010. Vide Rectification Order u/s 154/ dated 30.01.2012, the additional demand raised vide Assessment Order u/s dated 23.12.2010 has been reduced from Rs. 100,202 lakh to Rs. 70,891 lakh. First Appeal filed before CIT(A) 143 has been disposed of by CIT(A) vide their Order dated 16.02.2012 and Order u/s 154 dated 12.03.2012. Second Appeal is being filed with abovementioned Orders of CIT (A). 8. During the year additional demand of Rs. 59,429 lakh has been raised vide Assessment Order dated 02.11.2011 for the A.Y. 2009-10. The Company has filed appeal before CIT (A) against the Assessment Order. 9. Penalty proceedings u/s 271(1)(c) of the I.T. Act 1961 which was initiated against the Company for A.Y. 2001-02, A.Y. 2003-04, A.Y. 2004-05, A.Y. 2006-07, A.Y. 2007-08 and 2008-09 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 crystallized against the Company. 35
11. shown are nearest to rupees in lakh. 12. The Advance Income Tax (net of provision for Tax of Rs. 717,196 lakh) which has been shown under other current assets, is Rs. 577,682 lakh. As per records, an amount of Rs. 565,372 lakh (P.Y. 507,726 lakh) has been adjusted by Income Tax Department against the additional demand of Rs. 819,947 lakh (P.Y. 789,829 lakh) 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 31.03.2012 As at 31.03.2011 *With cash *Without cash *With cash *Without cash No. of cases 35 304 37 343 476 5,336 401 6,326 (*) One circle has not ascertained the details of bank guarantee (v) In case of few circles, the amount of contingent liability has not been ascertained. (vi) As per Office Memorandum dated 19th November, 2009, Pension Contribution was payable on the actual pay drawn as on 1st January 2007 (being the date of implementation of second pay commission for IDA). Whereas BSNL was paying pension contribution on maximum of the scale as advised by DOT. However during the current year, from 1st December 2011 the management has decided to pay the pension contribution as per office memorandum dated 19th November, 2009. 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 19.04.12 of Director(A/cs-I)IA, DoT. The actual difference between these two methods of Pension Contribution payment upto 31 st March 2012 is Rs. 10,282 Lakhs 43.2 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. 192,656 lakh. (ii) In case of few 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 is unascertained 44. 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 (MAT) of the Income Tax Act, 1961. 45. BSNL is executing various projects for various Government departments on reimbursement basis. 46. (a) Information required relating to consumption of stores & spare parts under Schedule VI of the Companies Act, 1956 is not ascertainable for the year ended 31 st March 2012 (P.Y. : unascertainable), since consumption of stores is included under the normal heads of repairs & maintenance. (b) Information required under Schedule VI of the Companies Act, 1956 in respect of opening stock, closing stock and sales of finished goods have not been shown as the production of goods by the Company is for captive consumption. 36
47. Figures of the previous year have been regrouped or reclassified wherever necessary to conform to the current years grouping and classification. As per our report of even date For Sharma Goel & Co. Chartered Accountants FRN 000643N For and on behalf of Bharat Sanchar Nigam Limited R.K. Upadhyay Chairman and Managing Director Amar Mittal Partner M. No: 017755 K.C.G.K Pillai Director (Finance) Rajeev Singh General Manager (Corporate Accounts) Place : New Delhi Date : 28th August 2012 H.C.Pant Company Secretary and Sr. General Manager (Legal) 37