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Your Directors have pleasure in presenting the 21st Board Report on the Company's business and operations, together with audited financial statements and accounts for the financial year ended March 31, 2016.
Bharti Airtel is among the top three mobile service providers globally with presence in 20 countries, including India, Sri Lanka, Bangladesh and 17 countries in the African continent.
The Company's diversified service range includes mobile, voice and data solutions, using 2G, 3G and 4G technologies. Its service portfolio comprises an integrated suite of telecom solutions to its customers, besides providing long–distance connectivity in India, Africa and the rest of the world. The Company also offers Digital TV and IPTV services in India. All these services are rendered under a unified brand 'airtel', either directly or through subsidiary companies.
The Company also deploys and manages passive infrastructure pertaining to telecom operations through its subsidiary, Bharti Infratel Limited, which also owns 42% of Indus Towers Limited. Together, Bharti Infratel and Indus Towers are the largest passive infrastructure service providers in India.
In compliance with the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (Listing Regulations), the Company has prepared its standalone and consolidated financial statements as per Indian Generally Accepted Accounting Principles (IGAAP) for the FY 2015–16. In addition, the Company has also prepared consolidated financials as per the International Financial Reporting Standards (IFRS). The standalone and consolidated financial highlights of the Company's operations are as follows:
The financial results and the results of operations, including major developments have been further discussed in detail in the Management Discussion and Analysis section.
During the year, there was no change in the Company's issued, subscribed and paid–up equity share capital. On March 31, 2016, it stood at Rs. 19,987 Mn, divided into 3,997,400,102 equity shares of Rs. 5/– each.
The Company has not transferred any amount to the General Reserve for the financial year ended March 31, 2016.
Your Directors have recommended a final dividend of Rs. 1.36 per equity share of Rs. 5 each fully paid–up (27.2 % of face value) for FY 2015–16. The total final dividend payout will amount to Rs. 5,436 Mn, excluding tax on dividend. The payment of final dividend is subject to the approval of shareholders in the Company's ensuing Annual General Meeting (AGM).
The Register of Members and Share Transfer Books will remain closed from Saturday, August 13, 2016 to Friday, August 19, 2016 (both days inclusive) for the purpose of payment of final dividend for the FY 2015–16, if declared at the ensuing AGM.
Transfer of amount to Investor Education and Protection Fund
Since the Company declared its maiden dividend in August 2009 for FY 2008–09, no unclaimed dividend was transferred to Investor Education and Protection Fund in the previous year.
Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on August 21, 2015 (date of last Annual General Meeting) on the Company's website www.airtel.com
The Company has not accepted any deposits and, as such, no amount of principal or interest was outstanding, as on the balance sheet closure date.
Capital Market Ratings
As on March 31, 2016, the Company was rated by two domestic rating agencies, namely CRISIL and ICRA and three international rating agencies, namely Fitch Ratings, Moody's and S&P
CRISIL and ICRA maintained their long–term ratings of the Company. Currently, they rate the Company at [CRISIL] AA+ / [ICRA] AA+, with a stable outlook. Short–term ratings were maintained at the highest end of the rating scale at [CRISIL] A1+ / [ICRA] A1+.
Fitch, Moody's and S&P also maintained the ratings at BBB–/ Stable, BBB–/Stable and Baa3/Stable, respectively.
As on March 31, 2016, the Company was rated 'Investment Grade' with a 'Stable' outlook by all three international credit rating agencies.
Employee Stock Option Plan
At present, the Company has two Employee Stock Option (ESOP) schemes, namely Employee Stock Option Scheme 2001 and Employee Stock Option Scheme 2005. Besides attracting talent, these schemes also helped retain talent and experience. The HR and Nomination Committee administers and monitors the Company's ESOP schemes.
Both the ESOP schemes are currently administered through Bharti Airtel Employees Welfare Trust (ESOP Trust), whereby shares held by the Trust are transferred to employees, upon exercise of stock options as per the terms of the Schemes. During the financial year 2015–16, the Company has obtained approval of members through postal ballot, authorising the ESOP Trust to acquire the Company's shares from secondary market, for implementation of ESOP Scheme 2005. Apart from the said change, there were no other changes in the ESOP Schemes of the Company.
Pursuant to the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 (ESOP Regulations), a disclosure with respect to ESOP Schemes of the Company as on March 31, 2016, is annexed as Annexure A to this report and has also been uploaded on the Company's website at <http://www.airtel.in/wps/wcm/> connect/c9e25993–5b80–4eb0–9874–37614225b876 Annexure+Pursuant+to+ESOP+Regulations.pdfRs.MOD=A JPERES&CONVERTTO=url&CACHEID=c9e25993–5b80–4eb0–9874–37614225b876.
The aforesaid ESOP Schemes of the Company are in compliance with the ESOP Regulations. A certificate from M/s. S. R. Batliboi & Associates LLP, Chartered Accountants, Statutory Auditors, with respect to the implementation of the Company's ESOP schemes, would be placed before the shareholders at the ensuing AGM. A copy of the same will also be available for inspection at the Company's registered office.
Material changes and commitments affecting the financial position between the end of financial year and date of report after the balance sheet date
There were no material changes and commitments affecting the financial position of the Company between the end of financial year and date of this report.
Directors and Key Managerial Personnel Inductions, Re–appointments, Retirements & Resignations
In line with the Company's policy on Independent Directors, the term of Ms. Obiageli Ezekwesili ended on September 25, 2015. Mr. Rajan Bharti Mittal resigned from the Company's Board w.e.f. January 07, 2016. The Board place on record its appreciation for help, guidance and contribution made by the outgoing Directors during their tenure on the Board.
Mr. Rakesh Bharti Mittal was appointed as an Additional Non–Executive Director on the Board w.e.f. January 07, 2016 and will hold the office till the date of ensuing Annual General Meeting and is eligible for re–appointment. The Company has received requisite notice from a member under Section 160 of the Companies Act, 2013, proposing the appointment of Mr. Rakesh Bharti Mittal as the Company's Non–Executive Director, liable to retire by rotation. Accordingly, the Board recommends his appointment.
Ms. Chua Sock Koong will retire by rotation at the ensuing AGM and being eligible, has offered herself for re–appointment.
Mr. Sunil Bharti Mittal, Chairman, will be completing his present term as Chairman of the Company on September 30, 2016. On the recommendation of the HR and Nomination Committee, the Board in its meeting held on April 27, 2016, subject to the approval of shareholders, has re–appointed Mr. Sunil Bharti Mittal as Chairman of the Company for a further term of five years w.e.f. October 01, 2016.
Brief resume, nature of expertise, details of directorships held in other companies of the Directors proposed to be appointed / re–appointed, along with their shareholding the Company, as stipulated under Secretarial Standard 2 and Regulation 36 of the Listing Regulations, is appended as an Annexure to the Notice of the ensuing AGM.
The Board has appointed Mr. Nilanjan Roy as the Global Chief Financial Officer w.e.f. August 05, 2015, in place of Mr. Srikanth Balachandran, who has taken up the role of Global Chief HR Officer of the Company.
Declaration by Independent Directors
The Company has received declarations from all Independent Directors of the Company confirming that they continue to meet with the criteria of independence, as prescribed under Section 149 of the Companies Act, 2013 and Regulation 25 of the Listing Regulations. The Independent Directors have also confirmed that they have complied with the Company's code of conduct.
Board Diversity and Policy on Director's Appointment and Remuneration
The Company believes that building a diverse and inclusive culture is integral to its success. A diverse Board, among others, enhances the quality of decisions by utilising different skills, qualifications, professional experience and knowledge of the Board members necessary for achieving sustainable and balanced development. The Board has adopted a policy on 'Nomination, Remuneration and Board Diversity', which sets out the criteria for determining qualifications, positive attributes and independence of a director. The detailed policy is available on the Company's website at <http://www>. airtel.in/wps/wcm/connect/92b49e0e–8810–497a–9c3e–9b80657a3688/Policy–on–Remuneration–Nomination–and–Board–Diversity.pdfRs.MOD=AJPERES and is also annexed as Annexure B to this report.
Annual Board Evaluation and Familiarisation Programme for Board Members
A note on the familiarisation programme adopted by the Company for orientation and training of the Directors, and the Board evaluation process undertaken in compliance with the provisions of the Companies Act, 2013 and the Listing Regulations is provided in the Report on Corporate Governance, which forms part of this Report.
Committees of Board, Number of Meetings of the Board and Board Committees
The Board of Directors met four times during the previous financial year. As on March 31, 2016, the Board has six committees, namely, the Audit & Risk Management Committee, the HR and Nomination Committee, the Corporate Social Responsibility ('CSR') Committee, the Stakeholders' Relationship Committee, the Committee of Directors and the Airtel Corporate Council.
All the recommendations made by Committees of Board including the Audit & Risk Management Committee were accepted by the Board. A detailed update on the Board, its composition, detailed charter including terms and reference of various Board Committees, number of Board and Committee meetings held during FY 2015–16 and attendance of the Directors at each meeting is provided in the Report on Corporate Governance, which forms part of this Report.
Subsidiary, Associate and Joint Venture Companies
As on March 31, 2016, your Company has 109 subsidiaries, 2 associates and 3 joint ventures, as set out in page no. 344 of the Annual Report (for Abridged Annual Report please refer page no. 84).
During FY 2015–16, Augere Wireless Broadband India Private Limited (AWBIPL) and Airtel Money Transfer Limited became subsidiaries of the Company, and AWBIPL is in the process of amalgamation with the Company. Airtel DTH Services Congo (RDC) SARL, Burkina Faso Towers S.A., Niger Towers S.A.,
Bharti Airtel (Canada) Limited, Airtel Broadband Services Private Limited, Uganda Towers Limited, Kenya Towers Limited, Warid Congo S.A. and Zambian Towers Limited were liquidated and accordingly ceased to be subsidiaries of the Company.
During FY 2015–16, Indo Teleports Limited (formerly known as Bharti Teleports Limited) ceased to be an associate company and became a subsidiary of the Company, and Forum I Aviation Private Limited ceased to be a joint venture of the Company.
Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of Companies (Accounts of Companies) Rules, 2014, a statement containing salient features of financial statements of subsidiary, associate and joint venture companies is annexed on page no. 111 of the Abridged Annual Report and page no. 352 of the full version of Annual Report. The statement also provides the details of performance and financial position of each of the subsidiary, associate and joint venture.
The audited financial statements of each of its subsidiary, associate and joint venture companies would be available for inspection at the Company's registered office and also at registered offices of the respective companies.
Copies of the annual accounts of the subsidiary, associate and joint venture companies will also be made available to the investors of Bharti Airtel and those of the respective companies upon request.
Abridged Annual Report
In terms of the provision of Section 136(1) of the Companies Act, 2013, Rule 10 of Companies (Accounts of Companies) Rules, 2014 and Regulation 36 of the Listing Regulations, the Board of Directors has decided to circulate the Abridged Annual Report containing salient features of the balance sheet and statement of profit and loss and other documents to the shareholders for FY 2015–16, who have not registered their e–mail id. The Abridged Annual Report is being circulated to the members excluding Annexures to the Board's Report viz. the 'Disclosure on ESOPs', 'Policy on Nomination, Remuneration and Board Diversity', 'Secretarial Audit Report', 'Annual Report on Corporate Social Responsibility u/s 135 of the Companies Act, 2013', 'Business Responsibility Report', 'Report on Corporate Governance and Auditors' Certificate on compliance of conditions of Corporate Governance', 'Extract of Annual Return', 'Note on Energy Conservation, Technology Absorption and Foreign Exchange Earnings & Outgo' and 'Disclosures relating to remuneration u/s 197(12) read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel), Rules, 2014'.
Members who desire to obtain the full version of the report may write to the Company Secretary at the registered office address and will be provided with a copy of the same. Full version of the Annual Report will also be available on the Company's website www.airtel.com
Auditors and Auditors' Report Statutory Auditors
In terms of the provisions of Section 139 of the Companies Act, 2013, M/s. S. R. Batliboi & Associates LLP Chartered Accountants, were appointed as the Company's Statutory Auditors by the shareholders in the AGM held on September 01, 2014, for a period of three years i.e. till the conclusion of 22nd AGM.
The said appointment is subject to ratification by the members at every AGM. Accordingly, the appointment of M/s. S. R. Batliboi & Associates LLP, Chartered Accountants, as the Company's Statutory Auditors, is placed for ratification by the members. The Company has received a certificate from the Statutory Auditors to the effect that ratification of their appointment, if made, shall be in accordance with the provisions of Section 141 of the Companies Act, 2013.
The Board has duly examined the Statutory Auditors' Report to the accounts, which is self–explanatory. Clarifications, wherever necessary, have been included in the Notes to Accounts section of the Annual Report.
As regards the comments under para i(a) of the Annexure 1 to the Independent Auditors' Report regarding updation of quantitative and situation details relating to certain fixed assets, the Company is in the process of executing a comprehensive project with the involvement of technical experts, for deploying automated tools and processes which will enable near real–time tracking of fixed assets and reconciliation thereto. This project is expected to be completed by next year.
The Board, on the recommendation of the Audit & Risk Management Committee, has approved the appointment of M/s. R. J. Goel & Co., Cost Accountants, as Cost Auditors, for the financial year ending March 31, 2017. The Cost Auditors will submit their report for the financial year ending 2015–16 on or before the due date.
In accordance with the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, since the remuneration payable to the Cost Auditors is required to be ratified by the shareholders, the Board recommends the same for approval by shareholders at the ensuing AGM.
The Company had appointed M/s. Chandrasekaran Associates, Company Secretaries, to conduct its Secretarial Audit for the financial year ended March 31, 2016. The Secretarial Auditors have submitted their report, confirming compliance by the Company of all the provisions of applicable corporate laws. The Report does not contain any qualification, reservation or adverse remark. The Secretarial Audit Report is annexed as Annexure C to this report.
The Board has reappointed M/s. Chandrasekaran Associates, Company Secretaries, New Delhi, as Secretarial Auditor of the Company for FY 2016–17.
Over the past few years, sustainability has not only been an integral part but also invariably complementary to Airtel's business agenda. Airtel's sustainability journey endeavours to contribute further to its society and environment. The Company made social inclusion as a cornerstone of its sustainability programme in order to create value across its entire value chain. To drive this agenda, Airtel has an undivided focus on bridging the digital divide and ensuring that millions more are empowered through sustainable social and economic development. It has been pushing boundaries and changing the business paradigms across industries by enabling the growth of sectors like finance and banking, education, health, agriculture and put in place innovative ways to reduce the carbon footprint. Airtel has been strengthening its efforts to reiterate its commitment towards bringing a positive transformation by enabling digital inclusion, well–being of communities and enriching their lives through its core competencies. It is passionate to actively support Bharti Foundation and its educational and other initiatives.
Airtel's sustainability and business responsibility initiatives have been detailed in its Sustainability Reports, which can be located on the Company's website <http://www.airtel.in/sustainability–>file/home.html.
Corporate Social Responsibility (CSR)
At Bharti Airtel, Corporate Social Responsibility (CSR) encompasses much more than social outreach programmes. It lies at the heart of the Company's business operations. Over the years, the Company has aligned its business processes and goals to make a more deep–rooted impact on the society's sustainable development.
In accordance with the requirements of Section 135 of the Companies Act, 2013, the Company has constituted a CSR Committee. The composition and terms of reference of the CSR Committee is provided in the Report on Corporate Governance, which forms part of this Report.
The Company has also formulated a Corporate Social Responsibility Policy, which is available on the Company's website at http://www.airtel.in/wps/wcm/connect/ fd7b3172–02e5–4e25–af7e–51d64cc17534/CSR+Policy. pdfRs.MOD=AJPERES&ContentCache=NONE.
During FY 2015–16, the Company has spent over Rs. 534.69 Mn towards the CSR activities. Being the initial years, the Company is in the process of evaluating the focus areas / locations of intervention for CSR activities to cater to the pressing needs of society and deliver optimal impact. As a socially responsible Company, your Company is committed to increase its CSR impact and spend over the coming years, with its aim of playing a larger role in India's sustainable development by embedding wider economic, social and environmental objectives.
A detailed update on the CSR initiatives of the Company is provided in the Corporate Social Responsibility and Sustainability Report, which forms part of the Annual Report.
The Annual Report on Corporate Social Responsibility u/s 135 of the Companies Act, 2013 is annexed as Annexure D to this Report.
Business Responsibility Report
As stipulated under the Listing Regulations, the Business Responsibility Report, describing the initiatives taken by the Company from environmental, social and governance perspective forms part of the Annual Report.
Management Discussion and Analysis Report
Pursuant to Regulation 34 of the Listing Regulations, the Management Discussion and Analysis Report for the year under review, is presented in a separate section, forming part of the Annual Report.
A detailed report on Corporate Governance, pursuant to the requirements of Regulation 34 of the Listing Regulations, forms part of the Annual Report.
A certificate from M/s. S. R. Batliboi & Associates LLP Chartered Accountants, the Statutory Auditors of the Company, confirming compliance of conditions of Corporate Governance, as stipulated under the Listing Regulations, is annexed as Annexure H to this report.
Risk management is embedded in Bharti Airtel's operating framework. The Company believes that managing risks goes hand–in–hand with maximising returns. To this effect, there is a robust process in place to identify key risks across the Group and prioritise relevant action plans to mitigate these risks. Risk Management framework is reviewed periodically by the Board and the Audit & Risk Management Committee, which includes discussing the management submissions on risks, prioritising key risks and approving action plans to mitigate such risks.
The Company has a duly approved Risk Management Policy. The objective of this policy is to have a well–defined approach to risk. The Policy lays broad guidelines for the appropriate authority so as to be able to do timely identification, assessment, and prioritisation of risks affecting the Company in the short and foreseeable future. The Policy suggests framing an appropriate response action for the key risks identified, so as to make sure that risks are adequately compensated or mitigated.
The Internal Audit function is responsible to assist the Audit & Risk Management Committee on an independent basis with a full status of the risk assessments and management.
Operationally, risk is being managed at the top level by Management Boards (AMB and Africa Exco) and at operating level by Executive Committees of Circles in India and Operating Companies in the international operations.
Detailed discussion on Risk Management forms part of Management Discussion & Analysis under the section 'Risks and Concerns', which forms part of this Annual Report. At present, in the opinion of the Board of Directors, there are no risks which may threaten the existence of the Company.
Internal Financial Control and its Adequacy
The Company has in place adequate tools, procedures and policies, ensuring orderly and efficient conduct of its business, including adherence to the Company's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.
Other Statutory Disclosures
The Code of Conduct and vigil mechanism applicable to Directors and Senior Management of the Company is available on the Company's website at <http://www.airtel.in/> about–bharti/investor–relations/corporate–governance.
A brief note on the highlights of the Whistle Blower Policy and compliance with Code of Conduct is also provided in the Report on Corporate Governance, which forms part of this Annual Report.
Extract of Annual Return
In terms of provisions of Section 92, 134(3)(a) of the Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, 2014, the extracts of Annual Return of the Company in form MGT–9 is annexed herewith as Annexure E to this report.
Significant and Material Orders
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.
Particulars of Loans, Guarantees and Investments
Particulars of loans, guarantees and investments form part of Note no. 18 & 24, 26 and 17 & 20 respectively to the financial statements provided in the full version of the Annual Report.
Related Party Transactions
A detailed note on procedure adopted by the Company in dealing with contracts and arrangements with Related Parties is provided in the Report on Corporate Governance, which forms part of this Annual Report.
All arrangements / transactions entered by the Company with its related parties during the year were in the ordinary course of business and on arm's length basis. During the year, the Company has not entered into any arrangement / transaction with related parties which could be considered material in accordance with the Company's Policy on Related Party Transactions and accordingly, the disclosure of Related Party Transactions in Form AOC – 2 is not applicable. However, names of Related Parties and details of transactions with them have been included in Note no. 47 to the financial statements provided in the full version of the Annual Report and Note no. 21 of the financial statements provided in abridged version of the Annual Report under Accounting Standard 18.
The Policy on the Related Party Transactions is available on the Company's website at <http://www>. airtel.in/wps/wcm/connect/36a5305d–f0ba–490c–9eff–152ef6811917/BALPolicy–on–Related–Party Transactions. pdfRs.MOD=AJPERES.
Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo
The details of energy conservation, technology absorption and foreign exchange earnings and outgo as required under Section 134(3) of the Companies Act, 2013, read with the Rule 8 of Companies (Accounts of Companies) Rules, 2014 is annexed as Annexure F to this report.
Particulars of Employees
Disclosures relating to remuneration of Directors u/s 197(12) read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure G to this report.
The information, as required to be provided in terms of Section 197(12) of the Companies Act, 2013, read with Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure I to this report.
Directors' Responsibility Statement
Pursuant to Section 134 of the Companies Act, 2013, the Directors, to the best of their knowledge and belief, confirm that:
a) in the preparation of the annual accounts, the applicable accounting standards had been followed, along with proper explanation relating to material departures;
b) the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors had prepared the annual accounts on a going concern basis;
e) the Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
f) t he Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
The Board wish to place on record their appreciation to the Department of Telecommunications (DoT), the Central Government, the State Governments in India, Government of Bangladesh, Government of Sri Lanka and Governments in the 17 countries in Africa, Company's bankers and business associates, for the assistance, co–operation and encouragement they extended to the Company.
The Directors also extend their appreciation to the employees for their continuing support and unstinting efforts in ensuring an excellent all–round operational performance. The Directors would like to thank various partners, viz., Bharti Telecom Limited, Singapore Telecommunications Ltd. and other shareholders for their support and contribution. We look forward to their continued support in future.
For and on behalf of the Board
Sunil Bharti Mittal
Date: April 27, 2016