Together good things happen - Airtel

with respect to labour cases and a potential claim for
liquidated damages.
The management believes that, based on legal advice, the
outcome of these contingencies will be favourable and
that a loss is not probable. No amounts have been paid or
accrued towards these demands.
k) Bharti Mobinet Limited (‘BMNL’) litigation
Bharti Airtel is currently in litigation with DSS Enterprises
Private Limited (DSS) (0.34 per cent equity interest in
erstwhile Bharti Cellular Limited (BCL)) for an alleged claim
for specific performance in respect of alleged agreements
to sell the equity interest of DSS in erstwhile BMNL to
Bharti Airtel. The case filed by DSS to enforce the sale of
equity shares before the Delhi High Court had been
transferred to District Court and was pending
consideration of the Additional District Judge. This suit
was dismissed in default on the ground of nonprosecution.
DSS had filed an application for restoration
of the suit but has subsequently withdrawn the
restoration application. In respect of the same
transaction, Crystal Technologies Private Limited
(‘Crystal’), an intermediary, has initiated arbitration
proceedings against the Company demanding Rs 194,843
thousand regarding termination of its appointment as a
consultant to negotiate with DSS for the sale of DSS stake
in erstwhile BMNL to Bharti Airtel. The Ld. Arbitrator has
partly allowed the award for a sum of Rs 31,222 thousand,
9% interest from period October 3, 2001 till date of award
(i.e May 28, 2009) included in Note 3 (b) above and a
further 18% interest from date of award to date of
payment. The Company has filed an appeal against the
said award. Hon’ble Delhi High Court, on October 28,
2009 has directed both the parties to file their submission
before the hearing on May 7, 2010.
DSS has also filed a suit against a previous shareholder of
BMNL and Bharti Airtel challenging the transfer of shares
by that shareholder to Bharti Airtel. The suit was
subsequently dismissed as frivolous, which has been
appealed to in the Delhi High Court by DSS and
subsequently transferred to District Court. DSS has also
initiated arbitration proceedings seeking direction for
restoration of the cellular license and the entire business
associated with it including all assets of BCL/BMNL to DSS
or alternatively, an award for damages. An interim stay
has been granted by the Delhi High Court with respect to
the commencement of arbitration proceedings. The stay
has been made absolute. Further against the
above Order of Single Judge making the stay in favour of
Bharti absolute, DSS filed an appeal before the Division
Bench of Delhi High Court. The matter has been admitted,
whereafter the matter reached for arguments and was
dismissed on account of non prosecution.
The liability, if any, of Bharti Airtel arising out of above
litigation cannot be currently estimated. Since the
amalgamation of BCL and erstwhile Bharti Infotel Limited
(BIL) with Bharti Airtel, DSS, a minority shareholder in BCL,
had been issued 2,722,125 equity shares of Rs 10 each
(5,444,250 equity shares of Rs 5 each post split) bringing
the share of DSS in Bharti Airtel down to 0.14% as at
March 31, 2010.
The management believes that, based on legal advice, the
outcome of these contingencies will be favorable and that
a loss is not probable. Accordingly, no amounts have been
accrued or paid in regard to this dispute.
4. Export Obligation
Bharti Airtel has obtained licenses under the Export
Promotion Capital Goods (‘EPCG’) Scheme for importing
capital goods at a concessional rate of customs duty
against submission of bank guarantee and bonds.
Under the terms of the respective schemes, the Company
is required to export goods of FOB value equivalent to, or
more than, five times the CIF value of imports in respect of
certain licenses and eight times the duty saved in respect
of licenses where export obligation has been refixed by
the order of Director General Foreign Trade, Ministry of
Finance, as applicable within a period of eight years from
the import of capital goods. The Export Promotion Capital
Goods Scheme, Foreign Trade Policy 2004-2009 as issued
by the Central Government of India, covers both
manufacturer exporters and service providers.
Accordingly, in accordance with Clause 5.2 of the Policy,
export of telecommunication services would also qualify.
Accordingly, the Company is required to export goods and
services of FOB value of Rs 1,002,766 thousand (March 31,
2009 Rs 2,596,473 thousand) by February 22, 2018.
5. a) Estimated amount of contracts to be executed on capital
account and not provided for (net of advances)
Rs 15,684,080 thousand as at March 31, 2010 (March
31, 2009- Rs 29,526,399 thousand).
b) Under the IT Outsourcing Agreement, the Group has
commitments to pay Rs 6,597,050 thousand as at
March 31, 2010 (March 31, 2009 - Rs 7,563,213
thousand) comprising of finance lease and service
charges. In addition, the future monthly rentals under
this contract are determined on a revenue share basis
over the non-cancellable period of the agreement.