TELESERVICES LIMITED 1

CORPORATE DETAILS BOARD OF DIRECTORS (As of August 17, 2020)

Mr. Saurabh Agrawal - Non Executive Director Dr. Narendra Damodar Jadhav - Independent Director Ms. Bharati Rao - Independent Director Mr. Ankur Verma - Non Executive Director Mr. N. Srinath (w. e. f. April 01, 2020) - Non Executive Director

Directors Ceased During the Year Ms. Vibha Paul Rishi (upto July 17, 2019) - Independent Director Mr. N. Srinath (upto March 31, 2020) - Managing Director

KEY MANAGERIAL PERSONNEL Mr. Harjit Singh - Manager (w.e.f August 17, 2020) President - Enterprise Business Mr. Ilangovan Gnanaprakasam - Chief Financial Officer

Mr. Rishabh Aditya - Company Secretary (w.e.f. December 1, 2019) Company Secretary and Vice President Legal & Secretarial Mr. Pravin Jogani - Assistant Company Secretary (upto November 29, 2019)

SENIOR MANAGEMENT Ms. Richa Tripathi - Chief Human Resources Officer Mr. Neeraj Dindore - Vice President - Network Mr. Ram Prasad Mamidi - Chief Information Officer

STATUTORY AUDITORS - M/s. Price Waterhouse Chartered Accountants LLP

INTERNAL AUDITORS ANB Solutions Private Limited Ernst & Young LLP

REGISTERED OFFICE Jeevan Bharati Tower I 10th Floor, 124 Connaught Circus New Delhi -110 001

CORPORATE OFFICE D 26, TTC Industrial Area, MIDC Sanpada, Turbhe, Navi Mumbai - 400703. Maharashtra

CORPORATE IDENTITY NUMBER (CIN) U74899DL1995PLC066685 2 25th 2019-20

LIST OF BANKS AND FINANCIAL INSTITUTIONS

Bank Name

Axis Bank Ltd Bank of Baroda Bank of India Citibank Deutsche Bank HDFC Bank ICICI Bank IDBI Bank Indusind Bank Ltd. Oriental Bank of Commerce Punjab National Bank Standard Chartered Bank State Bank of India Syndicate Bank UCO Bank Union Bank of India Yes Bank Ltd.

FINANCIAL INSTITUTION

Axis Mutual Fund HDFC Asset Management Co. Ltd. ICICI Prudential Asset Management Co. Ltd Tata Asset Management Ltd.

TELESERVICES LIMITED 3

NOTICE

Notice is hereby given that the Twenty Fifth Annual General RESOLVED FURTHER THAT the Board of Directors of Meeting (“AGM”) of Tata Teleservices Limited (the “Company”) the Company (which term shall be deemed to include will be held on Tuesday, September 22, 2020, at 10:00 hours any Committee of the Board constituted to exercise through Video Conferencing facility or Other Audio Visual its powers, including the powers conferred by this Means to transact the following business: Resolution), be and is hereby authorized to do all such acts, deeds and things and to take all the necessary A. ORDINARY BUSINESS: steps as may be necessary, proper and expedient to give effect to this Resolution.” 1. Adoption of Accounts - Standalone 5. Appointment of Mr. Srinath Narasimhan (DIN: To receive, consider and adopt the Audited Financial 00058133) as Non-Executive Director with effect Statements of the Company for the financial year ended from April 1, 2020 March 31, 2020 together with the Reports of the Board of Directors and the Auditors thereon. To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution: 2. Adoption of Accounts - Consolidated “RESOLVED THAT Mr. Srinath Narasimhan (DIN: To receive, consider and adopt the Audited Consolidated 00058133), who was appointed as an Additional Director Financial Statements of the Company for the financial of the Company by the Board of Directors with effect year ended March 31, 2020 together with the Report of from April 1, 2020 and who holds office upto the date of the Auditors thereon. this Annual General Meeting pursuant to Section 161 of the Companies Act, 2013 (the ‘Act’) and who is eligible 3. To appoint a Director in place of Mr. Ankur Verma (DIN for appointment and has consented to act as Director 07972892), who retires by rotation and, being eligible, of the Company and in respect of whom the Company offers himself for re-appointment. has received a notice in writing from a Member under Section 160(1) of the Act proposing his candidature for B. SPECIAL BUSINESS: the office of Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation; 4. Re-appointment of Mr. Srinath Narasimhan (DIN: 00058133) as Managing Director with effect from RESOLVED FURTHER THAT the Board of Directors of February 1, 2020 till March 31, 2020 the Company (which term shall be deemed to include any Committee of the Board constituted to exercise To consider and, if though fit, to pass the following its powers, including the powers conferred by this resolution as a Special Resolution: Resolution), be and is hereby authorized to do all such acts, deeds and things and to take all the necessary “RESOLVED THAT pursuant to the provisions of steps as may be necessary, proper and expedient to Sections 196, 197, 203, and other applicable provisions, give effect to this Resolution.” if any, of the Companies Act, 2013 (‘Act’) (including any statutory modification or re-enactment thereof for the 6. Appointment of Mr. Harjit Singh as Manager & Key time being in force) read with Schedule V to the Act Managerial Personnel with effect from August 17, and the Companies (Appointment and Remuneration of 2020 till August 16, 2023 Managerial Personnel) Rules, 2014, as amended from time to time, Articles of Association of the Company To consider and, if though fit, to pass the following and any other applicable provisions, the consent of resolution as a Special Resolution: the Company be and is hereby accorded for the re- appointment of Mr. Srinath Narasimhan (DIN:00058133) “RESOLVED THAT pursuant to the provisions of as Managing Director of the Company, for a period of 2 Sections 196, 197, 203, and other applicable provisions, months commencing February 1, 2020 till March 31, 2020 if any, of the Companies Act, 2013 (‘Act’) (including any (who was also the Managing Director of Tata Teleservices statutory modification or re-enactment thereof for the (Maharashtra) Limited during the same period) upon the time being in force) read with Schedule V to the Act terms and conditions set out in the Explanatory Statement and the Companies (Appointment and Remuneration of annexed to the Notice convening this meeting; Managerial Personnel) Rules, 2014, as amended from 4 25th 2019-20

time to time, Articles of Association of the Company necessary or desirable for the purpose of giving effect to and any other applicable provisions, the consent of the this Resolution, including without limitation to settle any Company be and is hereby accorded for the appointment question, difficulty or doubt that may arise in this regard.” of Mr. Harjit Singh as Manager and Key Managerial Personnel of the Company for a period of 3 (Three) By order of the Board years commencing August 17, 2020 till August 16, 2023 For and on behalf of upon the terms and conditions set out in the Explanatory Tata Teleservices Limited Statement annexed to the Notice convening this meeting (including the remuneration to be paid in the event of loss or inadequacy of profits in any financial year during the tenure of his appointment), with liberty to the Board Rishabh Aditya of Directors to alter and vary the terms and conditions of Company Secretary the said appointment in such manner as may be agreed (ICSI No. F3598) to between the Board of Directors and Mr. Harjit Singh; Registered Office: RESOLVED FURTHER THAT the Board of Directors of Jeevan Bharati Tower I, 10th Floor, the Company (which term shall be deemed to include 124, Connaught Circus, New Delhi – 110 001 any Committee of the Board constituted to exercise CIN: U74899DL1995PLC066685 its powers, including the powers conferred by this Corporate Office: Resolution), be and is hereby authorized to do all such D-26, TTC Industrial Area, MIDC Sanpada, P.O., acts, deeds and things and to take all the necessary Turbhe, Navi Mumbai - 400 703 steps as may be necessary, proper and expedient to give effect to this Resolution.” Website:www.tatateleservices.com e-mail: [email protected] 7. Ratification of Remuneration of Cost Auditors Tel: +91 22 6661 5111 Fax:+91 22 6660 5517 To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution: Place: Mumbai Date: August 17, 2020 “RESOLVED THAT pursuant to the provisions of Section 148(3) and all other applicable provisions, if Notes: any, of the Companies Act, 2013 (the “Act”), (including any statutory modifications thereof for the time being in 1. In view of the global outbreak of the Covid-19 pandemic, force) and the Companies (Audit and Auditors) Rules, the Ministry of Corporate Affairs (“MCA”) has vide its 2014, as amended from time to time, the Company General Circular No. 20/2020 dated May 5, 2020 in hereby ratifies the remuneration of Rs. 11,00,000/- relation to “Clarification on holding of Annual General (Rupees Eleven Lakhs only) plus applicable tax and Meeting (AGM) through Video Conferencing (VC) or out of pocket expenses (incurred in connection with the Other Audio Visual Means (OAVM)” read with General audit) not exceeding 10% of the remuneration, incurred Circular No. 14/ 2020 dated April 8, 2020 and the in connection with the audit, payable to M/s. Sanjay General Circular No. 17/ 2020 dated April 13, 2020 Gupta & Associates, Cost Accountants, having Firm in relation to “Clarification on passing of ordinary and Registration Number 000212, who are appointed by the special resolutions by companies under the Companies Board of Directors of the Company as Cost Auditors to Act, 2013 and the rules made thereunder on account of conduct the audit of the cost accounting records of the the threat posed by Covid-19” (collectively referred to Company as prescribed under the Companies (Cost as “MCA Circulars”) permitted the holding of the AGM Records and Audit) Rules, 2014 for the Financial Year through VC / OAVM, without the physical presence of ending on March 31, 2021; the Members at a common venue. In compliance with the provisions of the Companies Act, 2013 (“Act”) and MCA Circulars, the AGM of the Company is being held RESOLVED FURTHER THAT the Board (which through VC / OAVM on expression shall be deemed to include any Committee Tuesday, September 22, 2020 at 10.00 a.m. (IST). of the Board constituted to exercise its powers, including the powers conferred by this Resolution), be 2. PURSUANT TO THE PROVISIONS OF THE ACT, and is hereby authorized to do all acts, deeds, matters A MEMBER ENTITLED TO ATTEND AND VOTE AT and things as it may, in its absolute discretion, deem TELESERVICES LIMITED 5

THE AGM IS ENTITLED TO APPOINT A PROXY TO 9. Since the Company is not required to conduct e-voting, ATTEND AND VOTE ON HIS/HER BEHALF AND THE the voting at the meeting shall be conducted through PROXY NEED NOT BE A MEMBER OF THE COMPANY. show of hands, unless demand for a poll is made by any SINCE THIS AGM IS BEING HELD PURSUANT TO member in accordance with Section 109 of the Act. In THE MCA CIRCULARS THROUGH VC OR OAVM, case of a poll on any resolution at the AGM, members THE REQUIREMENT OF PHYSICAL ATTENDANCE are requested to convey their vote by e-mail to rishabh. OF MEMBERS HAS BEEN DISPENSED WITH. [email protected] ACCORDINGLY, IN TERMS OF THE MCA CIRCULARS, THE FACILITY FOR APPOINTMENT OF PROXIES BY 10. As per the provisions of Section 72 of the Act, the facility THE MEMBERS WILL NOT BE AVAILABLE FOR THIS for making nomination is available for the Members AGM AND HENCE THE PROXY FORM, ATTENDANCE in respect of the shares held by them. Members who SLIP AND ROUTE MAP OF AGM ARE NOT ANNEXED have not yet registered their nomination are requested TO THIS NOTICE. to register the same by submitting Form No. SH-13. If a Member desires to cancel the earlier nomination and 3. Institutional Investors, who are Members of the record a fresh nomination, he may submit the same in Company, are encouraged to attend and vote at the 25th Form SH-14. Members are requested to submit the said AGM through VC/OAVM facility. Corporate Members form to their DP in case the shares are held in electronic intending to appoint their authorized representatives form and to the RTA at [email protected] in case the pursuant to Sections 112 and 113 of the Act, as the shares are held in physical form, quoting your folio no. case maybe, to attend the AGM through VC or OAVM are requested to send a certified copy of the Board 11. The format of the Register of Members prescribed by Resolution to the Scrutinizer or Company Secretary by the MCA under the Act requires the Company/Registrars e-mail to [email protected] and Share Transfer Agents to record additional details of Members, including their PAN details, e-mail address, 4. The attendance of the Members attending the AGM bank details for payment of dividend etc. Members through VC/OAVM will be counted for the purpose of holding shares in physical form are requested to submit reckoning the quorum under Section 103 of the Act. the filled in form to the Company to rishabh.aditya@ tatatel.co.in or to the Registrar in physical mode, after 5. As per the provisions of Clause 3.A.III. of the General restoring normalcy or in electronic mode at xlfield@ Circular No. 20/ 2020 dated May 5, 2020, the matters of gmail.com as per instructions mentioned in the form. Special Business as appearing at Item No. 4 and Item Members holding shares in electronic form are requested No. 6 of the accompanying Notice, are considered to be to submit the details to their respective DP only and not unavoidable by the Board and hence, forming part of to the Company or TSR. this Notice. 12. Members holding shares in physical form, in identical 6. The Explanatory Statement pursuant to Section 102 of order of names, in more than one folio are requested to the Act setting out material facts concerning the business send to the Company or RTA, the details of such folios under Item No. 4 to Item No. 7 of the Notice is annexed together with the share certificates for consolidating their hereto. The relevant details, pursuant to Secretarial holdings in one folio. A consolidated share certificate Standards on General Meetings issued by the Institute will be issued to such Members after making requisite of Company Secretaries of India, in respect of Directors changes. seeking appointment/re-appointment at this AGM are also annexed. Requisite declarations have been 13. During the 25th AGM, Members may access the electronic received from Director/s for seeking re-appointment. copy of Register of Directors and Key Managerial Personnel and their shareholding maintained under 7. In line with the MCA Circular dated May 5, 2020, the Section 170 of the Act and the Register of Contracts Notice of the AGM along with the Annual Report 2019- and Arrangements in which Directors are interested 20 is being sent only through electronic mode to those maintained under Section 189 of the Act by writing to Members whose email addresses are registered with the Company on [email protected] the Company / Depositories. 14. Members who wish to inspect the relevant documents 8. Members who need assistance in connection with using referred to in the Notice can send an email to rishabh. the technology before or during the AGM, may reach out [email protected] up to the conclusion of this Meeting. to the Company officials at +91 9223309411. 15. Members who would like to express their views or ask questions during the AGM may raise the same at the 6 25th 2019-20

meeting or send them in advance (mentioning their I. General Information name and folio no.), at least 3 days prior to the date of the AGM to [email protected] 1. Nature of industry: Telecommunication.

16. To prevent fraudulent transactions, Members are advised 2. Date of commencement of commercial production: to exercise due diligence and notify the Company of any March 31, 1999. change in address or demise of any Member as soon as possible. Members are also advised to not leave their 3. Financial Performance based on the given demat account(s) dormant for long. Periodic statement indicators: of holdings should be obtained from the concerned Depository Participant and holdings should be verified Particulars 2019-20 2018-19 from time to time. Total Revenue 1,866 2,995 Expenditure 1,912 3,131 17. To support the ‘Green Initiative’, Members who have not yet registered their email addresses are requested to Earnings before interest, (46) (136) register the same with their DPs in case the shares are tax, depreciation and held by them in electronic form and with the Company in amortisation (‘EBITDA’) case the shares are held by them in physical form. Finance & Treasury charges (1,547) (3,105) including foreign exchange 18. The Members can join the AGM in the VC/OAVM mode impact 15 minutes before and 15 minutes after the scheduled Depreciation/Amortisation (484) (432) time of the commencement of the Meeting by clicking on Profit/(Loss) for the year (2,077) (3,673) the following link: before exceptional items and https://teams.microsoft.com/l/meetup-join/19%3a tax meeting_ZTI2YzZhODctMzQ4MS00OTQzLTg2M Exceptional Items (11,248) (1,556) DItMDJmOWQ2MTBiMTkx%40thread.v2/0?contex Share of profit/(loss) from - - t=%7b%22Tid%22%3a%22c120ec3b-2ab7-478b-8e04- associates 3be3184eaa5f%22%2c%22Oid%22%3a%22f8a110d7- 354d-4a49-8a6e-7f7f64a1bd62%22%7d Profit/(Loss) before tax from (13,326) (5,230) continuing operations EXPLANATORY STATEMENT PURSUANT TO SECTION Profit/(Loss) for the year from - - 102 OF THE COMPANIES ACT, 2013 (“Act”) discontinuing operations Taxes - - Item No. 4 Profit/(Loss) after tax (13,326) (5,230) Minority interest/share of loss - - The term of Mr. Srinath Narasimhan (hereinafter referred to in associate as “Mr. Srinath” or the “Managing Director”) (DIN: 00058133) Profit/(Loss) for the year (13,326) (5,230) as the Managing Director of the Company ended on January Other comprehensive income (20) (7) 31, 2020. The Board of Directors, on recommendation of the Total comprehensive income (13,346) (5,236) Nomination and Remuneration Committee, re-appointed him as the Managing Director of the Company for a period of two 4. Foreign Investments or collaborators, if any: No months with effect from February 1, 2020 till March 31, 2020, collaboration. Foreign Holding 4.46% as per the provisions of the Sections 196, 197, 203, and other applicable provisions, if any, of the Companies Act, 2013 II. Information about the appointee (the ‘Act’) read with Schedule V to the Act and Companies (Appointment and Remuneration of Managerial Personnel) Mr. Srinath, aged 57 years, is a Mechanical Engineer Rules, 2014, including any statutory modifications thereof, from IIT (Chennai) and has a Management Degree from subject to approval of the Members. He is also the Managing IIM (Kolkata), specialized in Marketing and Systems. Director of Tata Teleservices (Maharashtra) Limited and Since joining the Tata Administrative Services in 1986, hence the re-appointment has been made by the Board of Mr. Srinath has held positions in Project Management, Directors in accordance with the provisions of Section 203 Sales & Marketing and Management in different Tata of the Act. companies for more than 34 years. The additional information as required under Schedule V of Mr. Srinath is also Member of Corporate Social Responsibility the Companies Act, 2013 is as below: Committee, Share/Warrant/ Debenture Allotment & Transfer TELESERVICES LIMITED 7

Committee and Finance Committee of the Company. He iv. Contribution to Provident Fund, Superannuation Fund does not hold any equity shares of the Company as on date. (or allowance currently equivalent to 15% of basic salary) or Annuity Fund Gratuity Fund as per Rules of The principal terms and conditions of Mr. Srinath’s the Company. appointment as Managing Director are as follows: v. The Appointee shall be entitled to leave in accordance 1. Term and Termination: with the Rules of the Company. Privilege Leave earned but not availed by the Appointee is encashable in 1.1 2 months commencing from February 1, 2020 till March accordance with the Rules of the Company. 31, 2020. c. Commission 1.2 The appointment may be terminated earlier, without any cause, by either party by giving one month’s notice of Such remuneration by way of commission, in addition such termination. to the salary and perquisites and allowances payable, calculated with reference to the net profits of the Company 2. Remuneration: in a particular financial year, as may be determined by the Board of the Company at the end of each financial a. Basic Salary year, subject to the overall ceilings stipulated in Sections 196, 197, 198, 203 and any other applicable provisions, Rs. 13,26,650 and odd per month in the scale of if any, of the Companies Act 2013 and the rules made Rs. 5,00,000 to Rs. 15,00,000 per month thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force), read b. Benefits, Perquisites, Allowances with Schedule V to the 2013 Act. The specific amount payable to the Appointee will be based on performance In addition to the Basic Salary referred to in 1 (a) above, as evaluated by the Board or a Committee thereof duly Mr. Srinath shall be entitled to the following Benefits, authorized in this behalf and will be payable annually Perquisites and Allowances: after the Annual Accounts have been adopted by the Shareholders at the Annual General Meeting. i. Rent-free residential accommodation OR House Rent Allowance of 60% of basic salary. d. Incentive Remuneration ii. Hospitalisation, Transport, Telecommunication and To be decided by the Nomination and Remuneration other facilities: Committee at the end of each year based on specified performance criteria and the Company’s performance. a) Hospitalisation (coverage under Company Mediclaim Policy) and major medical expenses for For the purpose of calculating the above ceiling, self, spouse and dependent (minor) children; perquisites and allowances shall be evaluated as per b) One Car, with driver provided, maintained by the Income-tax Rules, wherever applicable. In the absence Company for official and personal use. of any such rules, perquisites and allowances shall be c) Telecommunication facilities including telephones, evaluated at actual cost. broadband, internet, mobile and fax. d) Housing Loan/Subsidy as per Rules of the Company’s contribution to Provident Fund and Company. Superannuation or Annuity Fund, to the extent allowed under the Income Tax Act, gratuity payable as per the iii. Other perquisites and allowances given below subject to rules of the Company and encashment of leave at the a maximum of upto 80% of the Basic Salary: end of the tenure, shall not be included in computation of limits for the remuneration or perquisites/allowances a. Compensatory/Composite Allowance 58.34% on the basis aforesaid. b. Leave Travel Concession / Allowance 8.33% 3. Minimum Remuneration c. Medical Allowance 8.33% 75.00% Notwithstanding anything to the contrary herein d. Personal Accident Insurance) at actual ) contained, where in any financial year during the e. Club Membership fees ) 5.00% currency of the tenure of the Managing Director, the 80.00% Company has no profits or its profits are inadequate, 8 25th 2019-20

the Company will pay remuneration by way of Salary, The details including the qualification and the list of Incentive Remuneration, Perquisites and Allowances as companies in which Mr. Srinath serves as Director and may be finalized for each year as mentioned above. Member/Chairman of various committees are stated in the annexure attached to the Notice. 4. Other Terms and Conditions: None of the Directors or Key Managerial Personnel or a) The terms and conditions of this re-appointment their relatives, except Mr. Srinath to the extent of his may be revised, altered and varied from time to appointment, are in any way concerned or interested in time by the Board/ Nomination and Remuneration passing of the resolution mentioned at Item No. 4 of the Committee as it may, in its discretion deem fit, notice. subject to such approvals as may be required. Item No. 5 b) The appointment may be terminated by giving one month’s notice on either side or the Company paying The Board of Directors, on recommendation of the one month’s basic salary in lieu of such notice. Nomination and Remuneration Committee, appointed Mr. Srinath Narasimhan (hereinafter referred to as “Mr. Srinath” If at any time, Mr. Srinath ceases to be a Director of the (DIN:00058133) as an Additional Director of the Company Company for any cause whatsoever, his re-appointment with effect from April 1, 2020 and he holds office up to the date as Managing Director shall stand terminated forthwith of this Annual General Meeting pursuant to the provisions and that if Mr. Srinath ceases to be in the employment of of Section 161 of the Companies Act, 2013 (the “Act”). The the Company for any reason whatsoever, he shall also Company has received a notice pursuant to Section 160 of cease to be a Director of the Company. the Act proposing his candidature for the office of Director of the Company. Mr. Srinath shall be liable to retire by rotation. III. OTHER INFORMATION In compliance with the provisions of Sections 152 and 160 of (i) Reason of Loss or Inadequate Profit: Except the Act, the appointment of Mr. Srinath as a Non-Executive couple of operators in Indian telecom sector all are Director of the Company is now being placed before the making huge losses due to very low revenues per Members at the Annual General Meeting for their approval. user, very high Govt. Levies and frequent changes The brief profile of Mr. Srinath is as under: in regulations and policies. Many operators have left sector while some others are undergoing Mr. Srinath, aged 57 years, is a Mechanical Engineer from IIT bankruptcy process. (Chennai) and has a Management Degree from IIM (Kolkata), specialized in Marketing and Systems. Since joining the Tata (ii) Steps taken or proposed to be taken for Administrative Services in 1986, Mr. Srinath has held positions improvement: The Company demerged its mobile in Project Management, Sales & Marketing and Management business into Bharti and is concentrating on non- in different Tata companies for more than 34 years. wireless enterprise business. Mr. Srinath is also appointed as a Member of Corporate (iii) Increase in productivity and profit in measurable Social Responsibility Committee of the Company. He does terms: Company is in service industry. Provisioning not hold any equity shares of the Company. of service depends on the demand and growth of other businesses. The details including the qualification and the list of companies in which Mr. Srinath serves as Director and In compliance with the provisions of Sections 196, 197, Member/Chairman of committees are stated in the annexure 198 and other applicable provisions of the Act, read with attached to the Notice. Schedule V to the Act, the terms of appointment of Mr. Srinath as specified above are now being placed before The Board commends the Ordinary Resolution set out at Item the Members for their approval. No. 5 of the Notice for approval of the Members.

The Board believed that it was in the interests of the None of the Directors or Key Managerial Personnel or their Company to reappoint Mr. N. Srinath as Managing relatives, except Mr. Srinath to the extent of his appointment, Director for the remaining two months of the financial are in any way concerned or interested in passing of the year.The Board recommends the-ordinary Resolution at resolution mentioned at Item No. 5 of the Notice. Item No. 4 for approval by the Members.

TELESERVICES LIMITED 9

Item No. 6 4. Foreign Investments or collaborators, if any: No collaboration. Foreign Holding 4.46% The Board of Directors, on recommendation of the Nomination and Remuneration Committee, appointed Mr. Harjit Singh as II. Information about the appointee the Manager and Key Managerial Personnel of the Company for a period of 3 (Three) years with effect from August 17, Mr. Harjit Singh joined Tatas as a TAS cadre in the year 2020 under the provisions of the Sections 196, 197, 203 1996. In his two-decade career till date, Mr. Harjit Singh and other applicable provisions, if any, of the Companies has worked in leadership capacities in companies like Act, 2013 (the “Act”) read with Schedule V to the Act and Tata Teleservices, Tata Communications, Tata AutoComp Companies (Appointment and Remuneration of Managerial Systems and Tata Housing. Personnel) Rules, 2014, including any statutory modifications thereof, subject to approval of the Members and such other Mr. Harjit Singh has played a variety of roles ranging approvals as may be required. from corporate strategy & planning, mergers and acquisitions, operationalisation of green field ventures to I. General Information P&L responsibility of large business units. In his current role Mr. Harjit Singh manages the Enterprise business 1. Nature of industry: Telecommunication of Tata Teleservices (Maharashtra) Limited and of the Company. The business delivers voice, data and 2. Date of commencement of commercial production: managed services to the complete spectrum of small, March 31, 1999. medium and large enterprises in India.

3. Financial Performance based on the given His academics include a PGDM in Finance and Operations indicators: from IIM Ahmedabad and a B.E. (Mechanical) from IIT Roorkee. Particulars 2019-20 2018-19 He did not and does not currently hold any equity shares Total Revenue 1,866 2,995 of the Company. Expenditure 1,912 3,131 Earnings before interest, (46) (136) The principal terms and conditions of appointment of Mr. tax, depreciation and Harjit Singh as Manager and Key Managerial Personnel amortisation (‘EBITDA’) of the Company are as below: Finance & Treasury charges (1,547) (3,105) including foreign exchange 1. Remuneration: impact Depreciation/Amortisation (484) (432) Rs. 1,166,667/- fixed compensation, per month. The Profit/(Loss) for the year (2,077) (3,673) Appointee’s compensation shall be reviewed on the basis before exceptional items and of his performance and contributions in the service; and tax the same will be at the sole discretion of the Nomination Exceptional Items (11,248) (1,556) and Remuneration Committee / Board of Directors of the Share of profit/(loss) from - - Company and as per Company’s policies. associates The total fixed remuneration of the Appointee is Profit/(Loss) before tax from (13,326) (5,230) distributed across different monthly allowances and continuing operations retiral benefits; and is paid or accrued as follows:- Profit/(Loss) for the year from - - discontinuing operations Components Details Monthly Annual Taxes - - Basic Salary - 408,333 4,900,000 Profit/(Loss) after tax (13,326) (5,230) Paid monthly Minority interest/share of loss - - House Rent 60% of Basic 245,000 2,940,000 in associate Allowance - Salary Profit/(Loss) for the year (13,326) (5,230) Paid monthly Other comprehensive income (20) (7) Total comprehensive income (13,346) (5,236) 10 25th 2019-20

Components Details Monthly Annual v. Performance Linked Incentive (PLI): To be decided Flexi 23.01% of Total 383,443 4,601,310 by the Nomination and Remuneration Committee at the end of each year based on specified performance Component - CTC, currently. criteria and the Company’s performance. Paid monthly Left over amount from PLI is payable as per the Company Policy and is linked total CTC after to Company and Business performance. distributing the CTC across all The Appointee’s On-Target annual PLI is Rs 6,000,000 components (30% of CTC), currently. The actual payout shall be Retirals 31.81% of based on achieved performance levels on specified Basic Salary performance parameters. Level Benefit - 15% of Basic 61,250 735,000 Paid monthly Salary. Paid vi. Long term incentive plan if introduced by the Company in lieu of in future and if the Appointee is covered by the Company Superannuation under it Provident Fund 12% of Basic 49,000 588,000 - Contributed Salary - For the purpose of calculating the above ceiling, monthly Stautory Benefit perquisites and allowances shall be evaluated as per Gratuity - 4.81% of 19,641 235,690 Income-tax Rules, wherever applicable. In the absence Accured Basic Salary - of any such rules, perquisites and allowances shall be monthly Stautory Benefit evaluated at actual cost. Total Fixed 1,166,667 14,000,000 Company’s contribution to Provident Fund and Remuneration Superannuation or Annuity Fund, to the extent allowed In addition to the fixed remuneration mentioned above, under the Income Tax Act, gratuity payable as per the Mr. Harjit Singh shall be entitled to Telephone Allowance rules of the Company and encashment of leave at the of Rs 204 per month end of the tenure, shall not be included in computation of limits for the remuneration or perquisites/allowances 2. Other Benefits: on the basis aforesaid. i. Medical Insurance: Coverage under Company’s Group 3. Minimum Remuneration Mediclaim Hospitalization Policy for upto 6 members of his family i.e. self, spouse, parents/parent in-laws Notwithstanding anything to the contrary herein and dependent (minor) children, upto 2. The medical contained, where in any financial year during the insurance policy provides floater cover of Rs four lacs currency of the tenure of the Manager, the Company per year for the family. The coverage is as per terms has no profits or its profits are inadequate, the Company of the insurance policy obtained by the company from will pay remuneration by way of Salary, Incentive insurer. Remuneration, Perquisites and Allowances as may be finalized for each year as mentioned above. ii. Group Term Life Insurance Scheme: Life Insurance Cover for the Appointee with insured sum of 72 times 4. Other Terms and Conditions: of monthly basic salary, subject to minimum Rs 10 lacs insurance cover. a) The terms and conditions of this appointment may be revised, altered and varied from time to time by the iii. Group Personal Accident Insurance Scheme: Insurance Board/ Nomination and Remuneration Committee as it against personal accident resulting into total/partial, may, in its discretion deem fit, subject to such approvals temporary/permanent disabilities. Maximum sum as may be required. insured is 72 times of monthly gross salary. b) The appointment may be terminated by giving three iv. The Appointee shall be entitled to leave in accordance month’s notice on either side or the Company paying with the Rules of the Company. Privilege Leave earned three month’s basic salary in lieu of such notice. but not availed by the Appointee, will be carried forward If at any time, Mr. Harjit Singh ceases to be in the /lapse or encashed in accordance with the Rules of the employment of the Company for any reason whatsoever, Company. he shall also cease to be a Manager of the Company. TELESERVICES LIMITED 11

III. Other Information Pursuant to the provisions of Section 148 of the Act, read with Companies (Audit and Auditors) Rules, 2014, remuneration (i) Reason of Loss or Inadequate Profit: Except of Cost Auditor of the Company is required to be ratified and couple of operators in Indian telecom sector all are approved by the shareholders of the Company. Accordingly, making huge losses due to very low revenues per the consent of the Shareholders by way of Ordinary Resolution user, very high Govt. Levies and frequent changes is sought for the ratification of remuneration payable to M/s. in regulations and policies. Many operators have Sanjay Gupta & Associates, Cost Accountants. left sector while some others are undergoing bankruptcy process. M/s. Sanjay Gupta & Associates, Cost Accountants, have certified that they are eligible for appointment as Cost (ii) Steps taken or proposed to be taken for Auditors, free from any disqualifications and are working improvement: The Company demerged its mobile independently and maintain arm’s length relationship with business into Bharti and is concentrating on non- the Company. wireless enterprise business. The Board commends the Resolution set out at Item No. 7 of (iii) Increase in productivity and profit in measurable the Notice for ratification and approval by the Shareholders terms: Company is in service industry. Provisioning as an Ordinary Resolution. of service depends on the demand and growth of other businesses. None of the Directors, Key Managerial Personnel and/or their relatives are in any way concerned or interested, financial or In compliance with the provisions of Sections 196, 197 otherwise, in the proposed Resolution mentioned at Item No. and other applicable provisions of the Act, read with 7 of the Notice. Schedule V to the Act, the terms of appointment of Mr. By order of the Board Harjit Singh as specified above are now being placed For and on behalf of before the Members for their approval. Tata Teleservices Limited

The Board believes that it was necessary to appoint Mr. Harjit Singh as the Manager for the period of 3 (Three) Rishabh Aditya years effective August 17, 2020 till August 16, 2023. Company Secretary (ICSI No. F3598) The Board commends the Special Resolution set out at Registered Office: Item No. 6 of the Notice for approval by the Members. Jeevan Bharati Tower I, 10th Floor, 124, Connaught Circus, New Delhi – 110 001 None of the Directors or Key Managerial Personnel or CIN: U74899DL1995PLC066685 their relatives, except Mr. Harjit Singh to the extent of his Corporate Office: appointment, are in any way concerned or interested in D-26, TTC Industrial Area, MIDC Sanpada, P.O., passing of the Resolution mentioned at Item No. 6 of the Turbhe, Navi Mumbai - 400 703 Notice. Website:www.tatateleservices.com Item No. 7 e-mail: [email protected] Tel: +91 22 6661 5111 The Board of Directors at its meeting held on June 2, 2020, Fax:+91 22 6660 5517 on recommendation of the Audit Committee, has approved appointment of M/s. Sanjay Gupta & Associates as Cost Place: Mumbai Auditors of the Company for the Financial Year 2020-21 at Date: August 17, 2020 a remuneration of Rs. 11,00,000/-, plus applicable tax and plus out of pocket expenses, not exceeding 10% of the remuneration, incurred in connection with the Cost Audit.

Request to the Members

Members are requested to send their question(s), if any, to the Company Secretary by e-mail at [email protected] in advance so that the answers/details can be kept ready at the Annual General Meeting. 12 25th 2019-20

Details of the Director(s) as on the date of this Notice seeking Appointment/Re-appointment at the Annual General Meeting (“AGM”) Particulars Mr. Ankur Verma Mr. Srinath Narasimhan Mr. Srinath Narasimhan (as a Managing Director) (as an Additional Director) Date of Birth March 25, 1976 July 8, 1962 July 8, 1962 Age 44 57 57 Date of first appointment on the June 1, 2018 Appointed first time on January April 1, 2020 Board 17, 2003. Was appointment as Managing Director from February 1, 2011 (Last re-appointed by the Shareholders at the AGM held on September 12, 2017 with effect from February 1, 2017). NRC and Board has re-appointed him for two months effective February 1, 2020. Qualifications B.E. in Mechanical Engineering Mechanical Engineering from IIT Mechanical Engineering from IIT and PGDM from IIM, Calcutta (Chennai) and a Management (Chennai) and a Management degree from IIM (Kolkata) degree from IIM (Kolkata) Experience Senior Vice President, at 34 years of experience within the 34 years of experience within the Chairman’s Office at Tata Sons Tata Group and has held positions Tata Group and has held positions Private Limited. 15 years of in Project Management, Sales & in Project Management, Sales & experience in Investment Banking, Marketing and Management in Marketing and Management in Capital Markets and Corporate various Tata companies in the ICT various Tata companies in the ICT Strategy. Previously, was sector sector Managing Director (Investment Banking Division) in Bank of America Merrill Lynch and prior to that he was Group Manager & Head, Business Planning in Infosys Technologies Limited - Corporate Planning Group Terms and conditions of - Director in Non-executive Refer Item No. 4 of the Explanatory Director in Non-executive appointment capacity and hence he is not Statement capacity and hence he will not be responsible for day to day affairs responsible for day to day affairs of the Company. of the Company. - Liable to retire by rotation Remuneration sought to be paid Nil Refer Item No. 4 of the Explanatory Nil Statement Last remuneration drawn from the Nil Refer to Directors Report 2019-20 Nil Company. Number of board meetings 7 6 NA attended during the year Expertise in Specific functional Investment Banking High-technology areas such as High-technology areas such as area Process Automation and Control, Process Automation and Control, Information Technology and Information Technology and Telecommunications Telecommunications Number of Shares held in the Nil Nil Nil Company (Including held by the dependents) Directorships held in other . Tata AIA Life Insurance . Tata Communications Limited . Tata Communications Limited public companies (excluding Company Ltd. . Tata Industries Limited. . Tata Industries Limited foreign companies and Section 8 . Tata Capital Housing Finance . Tata Teleservices (Maharashtra) . Tata Teleservices (Maharashtra) companies) Ltd. Limited Limited . Tata Teleservices (Maharashtra) Ltd. . Tata Sky Ltd. . Tata Elxsi Ltd. . Tata Autocomp Systems Limited TELESERVICES LIMITED 13

Memberships/Chairmanships Audit Committee: Nomination & Remuneration Nomination & Remuneration of committees of other public . Tata AIA Life Insurance Co. Ltd. Committee: Committee: companies . Tata Capital Housing Finance . Tata Industries Limited . Tata Industries Limited Ltd. . Tata Communications Limited . Tata Communications Limited . Tata Teleservices (Maharashtra) . Tata Teleservices (Maharashtra) . Tata Teleservices (Maharashtra) Ltd. Limited Limited . Tata Sky Ltd. . Tata Elxsi Ltd. Stakeholders Relationship Stakeholders Relationship Committee Committee Nomination & Remuneration . Tata Teleservices (Maharashtra) . Tata Teleservices (Maharashtra) Committee: Limited Limited . Tata AIA Life Insurance Co. Ltd. . Tata Communications Limited . Tata Communications Limited . Tata Teleservices (Maharashtra) Ltd. Corporate Social Responsibility Corporate Social Responsibility Committee Committee Stakeholders Relationship . Tata Communications Limited . Tata Communications Limited Committee (Chairman) (Chairman) . Tata Teleservices (Maharashtra) . Tata Teleservices (Maharashtra) . Tata Teleservices (Maharashtra) Limited Limited Limited

Corporate Social Responsibility Risk Management Committee Risk Management Committee Committee . Tata Communications Limited . Tata Communications Limited . Tata Capital Housing Finance (Chairman) (Chairman) Ltd. . Tata Teleservices (Maharashtra) Approvals Committee Approvals Committee Limited . Tata Industries Limited . Tata Industries Limited

Risk Management Committee Finance Committee Finance Committee . Tata Capital Housing Finance . Tata Teleservices (Maharashtra) Tata Teleservices (Maharashtra) Ltd. Limited Limited

Finance Committee Network Security and . Tata Teleservices (Maharashtra) Technology Committee Network Security and Limited Tata Communications Limited Technology Committee Tata Communications Limited Investment Committee . Tata AIA Life Insurance Co. Ltd.

Asset Liability Committee . Tata Capital Housing Finance Ltd.

Relationship with other Directors None None None 14 25th 2019-20

To, XL Softech Systems Ltd., Unit: Tata Teleservices Limited 3, Sagar Society, Road No.2, Banjara Hills, Hyderabad - 500 034. Phone : 040 23545913/14/15 Fax: 040 23553214 email: [email protected]

Updation of Shareholder Information

I / We request you to record the following information against my / our Folio No.:

General Information:

Folio No.: Name of the first named Shareholder: PAN: * CIN/ Registration No.: * (applicable to Corporate Shareholders) Tel No. with STD Code: Mobile No.: Email Id:

*Self attested copy of the document(s) enclosed

Bank Details:

IFSC: MICR: (11 digit) (9 digit) Bank A/c Type: Bank A/c No.: * Name of the Bank: Bank Branch Address:

* A blank cancelled cheque is enclosed to enable verification of bank details

I/We hereby declare that the particulars given above are correct and complete. If the transaction is delayed because of incomplete or incorrect information, I/We would not hold the Company/RTA responsible. I/We undertake to inform any subsequent changes in the above particulars as and when the changes take place. I/We understand that, the above details shall be maintained by you till I/We hold the securities under the above mentioned Folio No./beneficiary account.

Place: ______Date: ______TELESERVICES LIMITED 15

DIRECTORS’ REPORT

Dear Members,

Your Directors present the 25th Annual Report on the business FINANCIAL RESULTS and operations of Tata Teleservices Limited (“TTSL” / the “Company”), together with the audited financial statements The Company adopted Indian Accounting Standards (“Ind for the year ended March 31, 2020 and other accompanying AS”) from April 1, 2016, with transition date from April 1, 2015. reports, notes and certificates. Accordingly, the financial reports for current financial year FY 2019-20 and previous financial year FY 2018-19 have been COMPANY OVERVIEW prepared as per IND AS reporting framework.

The Company holds Unified License (“UL”) with Authorization The financial highlights of the Company for the year ended for Access Services in Andhra Pradesh circle and Unified March 31, 2020 are as follows: Access Service Licenses (“UASL”) in sixteen circles and a (Rs. in Crores) National Long Distance (“NLD”) license for Pan India service Particulars 2019-20 2018-19 area. Tata Teleservices (Maharashtra) Limited (“TTML”) a Total Revenue 1,866 2,995 subsidiary of the Company holds UL with Authorization for Expenditure 1,912 3,131 Access Services in Mumbai and Maharashtra circles and Earnings before interest, (46) (136) authorization for Category “A” Internet Service Provider All tax, depreciation and India service area. The Company was earlier an integrated amortisation (‘EBITDA’) player providing both wireless (GSM, CDMA and 3G) and wireline services to Retail, Enterprise and Carrier customers Finance & Treasury charges (1,547) (3,105) in its licensed service areas. including foreign exchange impact As described in last year’s report, the transfer, by way of Depreciation/Amortisation (484) (432) demerger of Consumer Mobile Business (“CMB”) of the Profit/ (Loss) for the year (2,077) (3,673) Company to Bharti Airtel Limited and Bharti Hexacom Limited before exceptional items and (“Bharti”) under a Scheme of Arrangement (the “Scheme”), tax became effective from July 1, 2019 after receiving the requisite Exceptional Items (11,248) (1,556) approvals as detailed in the section “Scheme of Arrangement” Share of profit/(loss) from - - below. The Scheme was earlier approved by your Board on associates December 19, 2017 and creditors of the Company on August Profit/ (Loss) before tax from (13,326) (5,230) 21, 2018. DoT vide its letter dated February 6, 2020 conveyed continuing operations its approval to take on record the transfer / merger as above. Profit/(Loss) for the year from - - Details are provided in subsequent sections below. discontinuing operations Taxes - - On completion of the demerger of the CMB as stated above, Profit/ (Loss) after tax (13,326) (5,230) the Company does not have wireless services business Minority interest/share of loss - - since July 1, 2019 and has been focusing on providing in associate various wireline voice, data and managed telecom services to Enterprise customers. The Company may also explore Profit/ (Loss) for the year (13,326) (5,230) opportunities to strategically restructure the business at an Other comprehensive income (20) (7) appropriate time. Total comprehensive income (13,346) (5,236)

The Company currently provides its range of products and (Nos are not comparable as CMB business demerged w.e.f. services to about 0.98 Million subscribers (plus TTML – about 1st July 2019) 0.80 Million subscribers) as of December 2019. Its network consists of optical fibre transmission network in the country . The Company reported total revenue of Rs. 1,866 Crores of about 115,000 Kms. excluding Mumbai and Maharashtra during the year, 37.7% decline over previous year. (TTML – about 17,000 Kms.). . The Company reported a 66.2% increase in EBITDA at Rs. 46 (Negative) Crores as against Rs. 136 (Negative) Crores in the previous year. The EBITDA margin 16 25th 2019-20

improved to 2% (Negative) from 5% (Negative) in the (“TTBS”). It doesn’t require capital outlay for customers previous year. and has low operational expense.

. Based on assessment of its recoverable value, the • SIP Channel on Demand: This product gives flexibility Company has recorded an reversal of impairment of to customers to easily upgrade their channels for running CMB assets Rs. (484) Crores, Derivative Financial their short duration campaigns/projects. Typically, Assets (“DFA”) valuation Rs. (12) Crores, Impairment BFSI, Media, BPO and Voice Aggregators have such in the value of TTML investment/ICD/loan Rs. 2,974 requirements and our product allows them to quickly Crores, Restructuring cost Rs. 526 Crores, Legacy upgrade their channel for a short/ desired duration. Dispute Resolution Scheme (“LDRS”) provision Rs. 37 Crores, Interest on GST liability towards Licence Fees • Smart VPN: This is a solution suite that offers private, (“LF”) / Spectrum Usage Charges (“SUC”) Rs. 2 Crores secure and dedicated connectivity across multiple and additional provision for LF/SUC Rs. 8,205 Crores locations and to the cloud. It empowers enterprises which have been recognized as exceptional items by integrating diverse operations be it large, small, during the year. permanent or project based. Businesses can get enhanced security through VPN solution with protected DIVIDEND AND APPROPRIATIONS internet access for sensitive information. The solution ensures real-time performance reporting and proactive In view of the accumulated losses, the Directors regret their monitoring. This solution combines various WAN inability to recommend any dividend for the year under connectivity solutions (wireless or wireline) to deliver an consideration. No appropriations are proposed to be made all-inclusive network connectivity solution to customers. for the year under consideration. The benefits like QoS (Quality of Service) along with enterprise-level SLAs is what makes Smart VPN more KEY DEVELOPMENTS DURING 2019-20 valuable for businesses.

Company Initiatives • Ultra LOLA 2.0: This is a technologically superior Point- to-Point offering with latency in micro-seconds, which Digital disruption and transformation continued to gain enables Brokerage /Financial institutions to process momentum in FY 2019-20 across Enterprises. Small, market data in real time. Medium and Large Enterprises are going through a phase of digital evolution. To ride the wave of digital transformation, • Collaboration Solutions: In order to address the Enterprises continued to invest in robust telecom continuous shift in modern workplace, where employees infrastructure. expect more openness, collaboration and flexibility in how they stay connected, we launched a host of plug and play During the year, our focus continued to be on: collaboration solutions which allow enterprises to improve their productivity and enables them to grow faster: • Developing deeper understanding of the unique needs of our customers a. Web Conferencing Solutions: Web Conferencing • Delivering pioneering products & services Solution allows businesses with distributed • Delighting our customers with great experience across workforce to conduct/ participate in reviews, touchpoint collaborate effectively and exchange information in a secure data environment. During the year, we strengthened our suite of products and services involving Connectivity, Collaboration, IoT b. Hosted Interactive Voice Response (“HIVR”): It & Marketing Solutions. Some of the prominent products/ is a cloud-based voice application that allows solutions we launched/strengthened during the year were: businesses to efficiently connect with their customers. It offers best-in-class call connectivity, • Managed ILL: This product bundles complete bouquet multiple level IVR facility and wide range of of managed services like proactive monitoring, fault numbers to choose from. Enterprises can quickly management, configuration management, policy set up a distributed call center with our HIVR and management and reporting along with standard internet let agents work from remote locations. lease line. It takes away the worries of ownership, deployment, usage and management from customers c. International Bridging Services (“IBS”): This solution as it is actively managed by Tata Tele Business Services provides bridging facility to organizations so that TELESERVICES LIMITED 17

they can connect to any international location or Some of the other recognitions we have received in the past conference bridge. Our IBS gives customers the include: flexibility of getting your employees connected to international destinations without having ISD facility • CII Customer Obsession Award for customer on their phones. It provides a centralized bridge engagement facility for all conferencing needs in a cost effective • Telecom Lead Innovation Leader Award for SmartOfficeTM and flexible manner. • International Echo Awards for Meet4Solutions (Digital Platform) in 2019 • Global Marketing Excellence Award for Excellence in Content Marketing.

CORPORATE STRUCTURE

Holding Company

Pursuant to the provisions of the Companies Act, 2013 (the “Act”), Tata Sons Private Limited is the Holding Company of We continue to increase our Engagement with Customers your Company. through our Digital and Social Media Platforms. Our on- ground connect events under the umbrella of “Do Big Subsidiary Companies Events” have grown in stature with the introduction of our Thought Leadership series of “Do Big Conclave”. As on March 31, 2020, the Company has four subsidiaries. Our “Do Big Forum” & “Do Big Conclave” formats have received immense appreciation from customers. Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of the Financial Customer-centricity initiatives Statements of the Company’s subsidiaries and associate companies in Form AOC-1 is attached to the financial Customer-centricity is a way of life at TTBS and ‘Customer- statements of the Company. First’ attitude is embedded across our business operations. To us, customer-centricity means offering a great experience The performance and financial position of each of the right from the awareness stage till post purchase stage. For subsidiary companies are as follows: providing best-in-class customer service, we have invested in: MMP Mobi Wallet Payment Systems Limited (“MMP”) – • Enhancing and Expanding our Network and Infrastructure Subsidiary Company • Improvement in Network Resiliency and Uptimes • Tools & Automation to simplify work processes MMP was in the business of providing mobile wallet • Self-Service Proliferation services. MMP applied to RBI for surrender of authorization and stopped the business with effect from November 29, Our customers have rewarded our focus on customer- 2017. Subsequently, RBI issued notification of surrender of centricity by continuing to grow business with us and by authorization on March 27, 2018. MMP has completely closed giving us high customer satisfaction scores. its operations. An amount of Rs.3 Crores approx is unclaimed by customers and retailers even after repeated notifications. Award & Recognition As stipulated by RBI, these amounts can be claimed in two years ending November 13, 2020 and arrangements have The Company continued its journey to win Awards & been made by MMP to receive and process such requests Recognition. for refund.

During the FY 2019-20, we won the Digital Marketing NVS Technologies Limited (“NVS”) – Subsidiary award for “Marketing to Unique Audience” in B2B sector Company at the e4M Indian Marketing Awards 2019. The award is presented to organizations, individuals and teams who have NVS was incorporated as a wholly owned subsidiary of the achieved extraordinary success from innovative and effective Company on September 12, 2014 to carry on the Company’s marketing practices, having regard to the circumstances of non-voice services viz. Mobile Advertising (mAdvertising), different industries and diversity of marketing programs. Mobile Education (mEducation), Mobile Health (mHealth), 18 25th 2019-20

Mobile Tracking (mNavigation), Mobile Digital Properties TTML currently provides its range of products and services to in promising products and services with the developer about 0.8 Million wireline subscribers as of December 2019 community. NVS has not yet commenced any operations. and having optical fibre transmission network of about 17,000 kms in Mumbai and Maharashtra service areas. TTL Mobile Private Limited (formerly Virgin Mobile India Private Limited) (“TTL Mobile”) – Subsidiary Company On October 16, 2016, TTML had issued non-cumulative Redeemable Preference Shares (“RPS”) of Rs. 2,018 Crores TTL Mobile was formed as a Joint venture in 2007 between for a tenure of 23 months to TTSL with dividend of 0.1% per the Company and Virgin Mauritius Investment Ltd. (“VMIL”) annum. The RPS got extended for a further period of 24 to offer Consultancy Services to facilitate the Company and months. No dividend has been paid by TTML to TTSL on TTML in offering certain mobile communications products the RPS. As per provisions of the Companies Act, TTSL is and services to customers under the Virgin Mobile Brand in now entitled to additional voting rights of 26.26% in TTML. India under a Consultancy Services Agreement. With this, TTSL’s voting rights in TTML has increased from 48.30% to 74.56%. Consequently, TTML is considered as a The Company, TTML and TTL Mobile mutually agreed to subsidiary in the consolidated financial statements of TTSL terminate the said Agreement with effect from the close as per Ind AS. Accordingly, Investment in Equity shares of of business hours on March 31, 2014. Accordingly, in the TTML have been reclassified from ‘Investment in Associate’ previous three years, the financial statements of TTL Mobile to ‘Investment in Subsidiary’ in TTSL financials for the period had been prepared on the basis that it was no longer a going ended March 31, 2020. concern and, therefore, assets and liabilities had been stated at their realizable values. Also, the parties entered into Letter In FY 2019-20, TTML reported revenue of Rs. 1,088 Crores, of Agreement dated March 31, 2016 for purchase of Shares. EBITDA of Rs. 432 Crores and Net loss of Rs. 3,714 Crores TTL Mobile has become wholly owned subsidiary of the (after providing LF/SUC Rs. 2,467 Crores). Net impact of Company with effect from November 8, 2017. Rs. 2,430 Crores shown under exceptional items is after accounting for the said LF/SUC provision as against revenue During the current year as well, financial statements have of Rs. 1,322 Crores, EBITDA of Rs. 702 Crores and Net Loss been prepared on the basis that TTL Mobile is no longer of Rs. 668 Crores in the previous year. a going concern. TTL Mobile’s net loss for the year ended March 31, 2020 is Rs. 21.39 Crores as against net loss of Rs. DIRECTORS’ RESPONSIBILITY STATEMENT 21.10 Crores in the previous year. Based on the framework of internal financial controls and Tata Teleservices (Maharashtra) Limited (“TTML”) – compliance systems established and maintained by the Subsidiary Company Company, work performed by the internal, statutory, cost and secretarial auditors and external consultant(s) including audit TTML holds UL with Authorization for access services in of internal financial controls over financial reporting by the Mumbai and Maharashtra circles and category A national statutory auditors and the reviews performed by Management Internet Service Provider authorization. TTML alongwith and the relevant Board Committees, including the Audit the Company is one of the country’s leading enablers of Committee, the Board is of the opinion that the Company’s connectivity and communication solutions for businesses. internal financial controls were adequate and effective during the financial year 2019-20. During the year, TTML has successfully completed demerger of its consumer mobile business (“CMB”) to Bharti Airtel Accordingly, pursuant to the provisions of Section 134 of Limited by way of a Scheme of Arrangement (the “Scheme”) the Companies Act, 2013, your Directors, to the best of with an effective date of July 1, 2019. their knowledge and belief and according to information and explanation obtained by them, confirm that: After completion of the demerger, TTML is now largely focusing on providing various wireline voice, data and 1. in the preparation of the annual financial statements managed telecom services to Retail, Enterprise and for the year ended March 31, 2020, the applicable Carrier customers. TTML may also explore opportunities to accounting standards have been followed and there are strategically restructure these residual business lines at an no material departures; appropriate time. 2. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and TELESERVICES LIMITED 19

fair view of the state of affairs of the Company at the end the Equity Shareholders of the Company whose names of the financial year ended March 31, 2020 and of the appeared in the Register of Members as on March 15, loss for the Company for that period; 2019 vide Letter of Offer dated March 19, 2019. The offer opened on March 25, 2019 and closed on April 9, 3. they have taken proper and sufficient care for the 2019. The Company received 5 (Five) valid applications maintenance of adequate accounting records in from Tata Sons Private Limited for 9,29,47,500 CCPS accordance with the provisions of the Act for safeguarding of Rs. 100/- each and received the share application the assets of the Company and for preventing and money aggregating to Rs. 929,47,50,000/- towards detecting fraud and other irregularities; subscription. The said CCPS were allotted to Tata Sons Private Limited on May 18, 2019. 4. they have prepared the annual financial statements on a going concern basis; II. The Company had received intimation from Tata Sons Private Limited, OCD holder, to convert a total of 5. they have laid down internal financial controls to be 86,96,28,020 OCD (i.e. 61,84,80,030 OCD of Series II – followed by the Company and that such internal financial Tranche 4 part 1 remaining, 5,89,43,996 OCD of Series controls are adequate and are operating effectively; II – Tranche 4, part 2, 17,10,00,005 OCD of Series II – Tranche 5 and 2,12,03,989 OCD being a partial 6. they have devised systems to ensure compliance with conversion from OCD Series II – Tranche 6) held by them the provisions of all applicable laws and that such into 0.1% Compulsorily Convertible Non-Cumulative systems are adequate and operating effectively. Preference Shares (“CCPS”). The Company allotted 86,96,28,020 CCPS on conversion of 86,96,28,020 SHARE CAPITAL OCD to Tata Sons Private Limited on June 30, 2019 for a tenure of 36 months from the date of allotment. During the financial year, the Company increased its Authorised Share Capital from Rs. 90150,00,00,000/- III. The Company offered 40,70,52,004 0.1% CCPS, (Rupees Ninety Thousand One Hundred & Fifty Crores only) Series VIII – Tranche 2 of face value of Rs. 100/- each divided into 3763,00,00,000 (Three Thousand Seven Hundred aggregating Rs. 4070,52,00,400/- on Rights basis to Sixty-Three Crores) Equity Shares of Rs. 10/- (Rupees Ten the Equity Shareholders of the Company whose names only) each, 63,00,00,000 (Sixty-Three Crores) Compulsorily appeared in the Register of Members as on June 7, Convertible Non-Cumulative Preference Shares of Rs. 2019 vide Letter of Offer dated June 13, 2019. The 100/- (Rupees One Hundred only) each, 462,20,00,000 offer opened on June 18, 2019 and closed on July 3, (Four Hundred Sixty-Two Crores Twenty Lakhs) Preference 2019. The Company received 5 (Five) valid applications Shares of Rs.100/- (Rupees One Hundred only) each to Rs. from Tata Sons Private Limited for 40,70,52,004 CCPS 105150,00,00,000/- (Rupees One Lakh Five Thousand One of Rs. 100/- each and received the share application Hundred Fifty Crores only) divided into 5263,00,00,000 (Five money aggregating to Rs. 4070,52,00,400/- towards Thousand Two Hundred Sixty-Three Crores) Equity Shares subscription. The said CCPS were allotted to Tata Sons of Rs. 10/- (Rupees Ten only) each 63,00,00,000 (Sixty- Private Limited on August 7, 2019. Three Crores) Compulsorily Convertible Non-Cumulative Preference Shares of Rs. 100/- (Rupees One Hundred only) IV. The Company offered 20,00,00,026 OCD - Series III - each, 462,20,00,000 (Four Hundred Sixty-Two Crores Twenty Tranche - 1 of face value of Rs. 100/- each aggregating Lakhs) Preference Shares of Rs.100/- (Rupees One Hundred Rs. 2000,00,02,600/- on Rights basis to the Equity only) each by creating additional 1500,00,00,000 (One Shareholders of the Company whose names appeared Thousand Five Hundred Crores) Equity Shares of Rs. 10/- in the Register of Members as on June 7, 2019 vide (Rupees Ten only) each aggregating Rs. 15000,00,00,000/- Letter of Offer dated June 13, 2019. The offer opened (Rupees Fifteen Thousand Crores only). on June 18, 2019 and closed on July 3, 2019. The Company received 5 (Five) valid applications from Tata Issue of Shares, Debentures and other Convertible Sons Private Limited for 20,00,00,026 OCD of Rs. 100/- securities each. The said OCD were allotted to Tata Sons Private Limited on August 7, 2019. During the financial year: V. The Company offered 100,00,00,023 Equity Shares I. The Company offered 10,00,00,017 0.1% CCPS, of face value of Rs. 10/- each aggregating Rs. Series VIII – Tranche 1 of face value of Rs. 100/- each 1000,00,00,230/- on Rights basis to the Equity aggregating Rs. 1000,00,01,700/- on Rights basis to Shareholders of the Company whose names appeared 20 25th 2019-20

in the Register of Members as on June 14, 2019 vide 2017 to January 31, 2020 at the AGM of the Company held Letter of Offer dated June 19, 2019. The offer opened on September 12, 2017. on June 24, 2019 and closed on July 9, 2019. The Company received 5 (Five) valid applications from Tata The Board, on recommendation of the Nomination and Sons Private Limited for 92,94,79,960 Equity Shares of Remuneration Committee, reappointed, subject to the Rs. 10/- each. The said Equity Shares were allotted to approval of the shareholders, Mr. N. Srinath as Managing Tata Sons Private Limited on August 7, 2019. Director for a period of two months till March 31, 2020. Accordingly, a resolution has been proposed in the ensuing CORPORATE STRUCTURE – DIRECTORS AND KEY Annual General Meeting seeking approval of the Members to MANAGERIAL PERSONNEL this re-appointment.

BOARD OF DIRECTORS, MEETINGS AND ITS The relevant details of Mr. N. Srinath form part of the Notice COMMITTEES convening 25th AGM.

As on March 31, 2020, the Board of Directors of the APPOINTMENT OF DIRECTOR Company (Board) comprised of 5 (Five) Directors. Of these, 4 (Four) (i.e. 80%) were Non-Executive Directors and 1 The Board, on recommendation of Nomination and (One) Managing Director. The term of Managing Director Remuneration Committee, appointed Mr. N. Srinath (DIN - which ended on January 31, 2020 was extended by the 00058133) as an Additional Director in the category of Non- Board, subject to approval of shareholders, by a period of Independent Non-Executive Director with effect from April 1, two months upto March 31, 2020. On completion of term as 2020. Mr. Srinath holds the office as an Additional Director Managing Director on March 31, 2020, the incumbent has till the ensuing AGM. The Company has received a notice been appointed as Additional Director effective April 1, 2020. in writing from a Member under Section 160(1) of the Act The Non-executive Directors include 2 (Two) Independent proposing candidature of Mr. Srinath for the office of Director. Directors. The composition of the Board is in conformity with the provisions of the Act. The relevant details of Mr. N. Srinath form part of the Notice convening 25th AGM. RESIGNATION OF DIRECTOR APPOINTMENT OF ‘MANAGER & KEY MANAGERIAL Ms. Vibha Paul Rishi an Independent Non-Executive Director PERSONNEL’ of the Company resigned from the Board with effect from July 18, 2019 due to other preoccupations. The Board, on recommendation of the Nomination and Remuneration Committee, appointed, subject to the approval The Board places on record its sincere appreciation for the of the Members, Mr. Harjit Singh, President Enterprise valuable contribution, support and guidance provided by Ms. Business as the Manager and Key Managerial Personnel Vibha Paul Rishi during her tenure as an Independent Non- under Section 203 of the Companies Act, 2013 for a period Executive Director of the Company. of three years with effect from August 17, 2020 till August 16, 2023. CESSATION OF MANAGING DIRECTOR Accordingly, a resolution has been proposed in the Notice Mr. N. Srinath, Managing Director of the Company, due convening 25th AGM seeking approval of the Members to to completion of his term as Managing Director and Key this appointment. Managerial Person on March 31, 2020, ceased to be Managing Director and Director of the Company with effect The relevant details of Mr. Harjit Singh form part of the Notice from close of business hours on March 31, 2020. convening 25th AGM.

The Board places on record its sincere appreciation for the DIRECTORS RETIRING BY ROTATION valuable contribution, support and guidance provided by Mr. Srinath during his tenure as the Managing Director of the In accordance with the relevant provisions of the Act and Company. in terms of the Articles of Association of the Company, Mr. Ankur Verma retires by rotation at the ensuing AGM and RE-APPOINTMENT OF DIRECTOR being eligible offers himself for re-appointment.

Mr. N. Srinath was appointed as Managing Director of the Company for a period of 3 years with effect from February 1, TELESERVICES LIMITED 21

The relevant details of Mr. Ankur Verma form part of the Details of all the Committees along with their terms of Notice convening 25th AGM. reference, composition and meetings of each Committee held during the financial year, are provided hereunder: INDEPENDENT DIRECTORS Audit Committee The Independent Directors of the Company have given declarations and confirmed that they meet the criteria of The composition of Audit Committee of the Board is in ‘Independence’ as stipulated under the Act. conformity with the provisions of Section 177 of the Act. As on March 31, 2020, the Audit Committee comprised of 3 KEY MANAGERIAL PERSONNEL (Three) Members, all of them are Non-Executive Directors and 2 (Two) of whom are Independent Directors. The Audit Mr. Rishabh Nath Aditya has been appointed as Company Committee meetings were also attended by the Managing Secretary of the Company with effect from December 1, 2019 Director, Chief Financial Officer, Statutory Auditors and in place of Mr. Pravin Jogani who ceased to be Assistant Internal Auditors. The functional heads are also invited as Company Secretary effective November 29, 2019. and when required. The Company Secretary acts as the Secretary to the Committee. Meetings of the Board of Directors The Audit Committee met at least once in each quarter. A calendar of Board and Committee meetings to be held during During the Financial Year 2019-20, 4 (Four) Audit Committee the financial year is circulated in advance to the Directors. Meetings were held on June 11, 2019, August 21, 2019, November 27, 2019 and February 19, 2020. During the financial year, 7 (Seven) Board meetings were held on June 11, 2019, August 21, 2019, November 27, 2019, The composition of the Committee during the Financial Year January 17, 2020, January 30, 2020, February 19, 2020 and 2019-20 was as follows: March 24, 2020. The intervening gap between the meetings was within the period prescribed under the Act. Name of the Member Category Dr. Narendra Damodar Independent, Non-Executive Committees of the Board Jadhav There are 3 (Three) Statutory Committees of the Board, as Ms. Bharati Rao Independent, Non-Executive follows: Mr. Ankur Verma Non-Executive Mr. Saurabh Agrawal Non-Executive (i) Audit Committee (Composition: Dr. Narendra Damodar (upto August 20, 2019) Jadhav, Independent Director, Ms. Bharati Rao, Ms. Vibha Paul Rishi Independent, Non-Executive Independent Director and Mr. Ankur Verma, Non- (upto July 18, 2019) Executive Director);

The key terms of reference of Audit Committee include (ii) Corporate Social Responsibility Committee appointment of Statutory and Internal Auditors, review of (Composition: Dr. Narendra Damodar Jadhav, financial statements, review of quarterly/half yearly, annual Independent Director, Ms. Bharati Rao, Independent results, review of internal audit plans and reports, review of Director and Mr. N. Srinath, Non-Executive Director); internal controls, review of related party transactions, among and others. (iii) Nomination and Remuneration Committee (Composition: Financial Results, internal audit reports, fraud-related reports, Mr. Saurabh Agrawal, Chairman [Non-Executive half yearly results, management letters from Auditors, proposals Director], Dr. Narendra Damodar Jadhav, Independent and terms of appointment of Internal Auditors have been Director, Ms. Bharati Rao, Independent Director and Mr. regularly placed before the Audit Committee for review during N. Srinath, Non-Executive Director). the Financial Year 2019-20. During the year, with effect from June 11, 2019, the Board on During the financial year, there were no reportable suggestion of the management dissolved Network & Technical recommendations of Audit Committee which were not accepted Committee, Appointments Committee and Executive by the Board of Directors. Committee as these committees were non-operational. 22 25th 2019-20

Nomination and Remuneration Committee The terms of reference of CSR Committee are as follows:

The Composition of Nomination and Remuneration i) To frame the CSR Policy, subject to the approval by the Committee (“NRC”) of the Board is in conformity with the Board. provisions of Section 178 of the Act. As on March 31, 2020, NRC comprised of 3 (Three) Members, all of them were Non- ii) To make the necessary and required modifications and executive Directors with 2 (Two) of them being Independent variations in the CSR Policy, subject to the approval by Directors. During the financial year 2019-20, the Committee the Board. met on June 11, 2019, January 30, 2020 and March 24, 2020. iii) To determine the amount to be expended towards the The composition of the Committee during the Financial Year CSR activities, if any, subject to the minimum limits 2019-20 was as follows: prescribed by the Act.

Name of the Member Category iv) To perform such other functions as may be necessary under any statutory or other regulatory requirements to Mr. Saurabh Agrawal, Non-Executive be performed by the Committee and as delegated by the Chairman Board from time to time. Dr. Narendra Damodar Independent, Non-Executive Jadhav In addition to the above, some other Committees of the Board Ms. Bharati Rao Independent, Non-Executive functioning during the year were as follows: Mr. N. Srinath, (with effect Non-Executive from June 2, 2020) i) Finance Committee for inter alia considering and approval of the proposal for availing various loan / credit The key terms of reference of Nomination and Remuneration facilities and other treasury related matters within the Committee, inter alia, include identification of persons powers delegated by the Board; qualified to be appointed as Directors, Key Managerial Personnel and who may be appointed in Senior Management, ii) Share/Warrant/ Debenture Allotment and Transfer recommending remuneration policy for them, evaluation of Committee inter alia to issue and allot shares / performance of Directors, etc. debentures and transfer of shares / debentures.

Corporate Social Responsibility Committee Board Evaluation

The Composition of Corporate Social Responsibility (“CSR”) The Board of Directors carried out an annual evaluation Committee of the Board is in conformity with the provisions pursuant to the provisions of the Act. of Section 135 of the Act. As on March 31, 2020, CSR Committee comprised of 3 (Three) Members. The Company The performance of the Board, the Committees and individual did not make profits in FY 2019-20 and hence it does not have Directors was evaluated by the Board after seeking inputs any budgeted CSR expenditure and therefore the Committee from all the Directors through a questionnaire wherein the did not meet during the Financial Year 2019-20. Directors were required to evaluate the performance on scale of one to five based on the following criteria: The composition of the Committee during FY 2019-20 was as follows: a) Criteria for Board Performance Evaluation: Degree of fulfillment of key responsibilities, Board structure and composition, establishment and delineation of Name of the Member Category responsibilities to Committees, effectiveness of Board Dr. Narendra Damodar Independent, Non-Executive processes, information and functioning, Board culture Jadhav, and dynamics, quality of relationship between the Board Ms. Bharati Rao Independent, Non-Executive and the Management. Mr. N. Srinath Managing Director (upto March 31, 2020) b) Criteria for Committee Performance Evaluation: Degree of fulfillment of key responsibilities, adequacy Mr. N. Srinath Non-Executive of Committee composition, effectiveness of meetings, (with effect from June 2, Committee dynamics, quality of relationship of the 2020) Committee with the Board and the Management. TELESERVICES LIMITED 23 c) Criteria for Performance Evaluation of Individual with the interim orders and requested TDSAT to finally hear Directors: Attendance, contribution at meetings, the matter by February 2020. BAL and BHL filed contempt guidance, support to Management outside Board/ applications against DoT for not implementing TDSAT interim Committee meetings. orders. DoT vide its letter dated February 6, 2020 conveyed its approval to take on record the transfer / merger of consumer Mr. Saurabh Agrawal, Chairman of the Nomination and mobile business in BAL and BHL. Remuneration Committee (“NRC”), was nominated for conducting one-on-one discussions with Directors to seek Upon the Scheme becoming effective and in consideration their feedback on the Board and other Directors. of the demerger, BAL issued and allotted (A) 500 (Five Hundred) BAL RPS to all (and not each) TTSL Equity Holders The NRC also reviewed the performance of the individual in proportion to their holding of TTSL Equity Shares on the Directors. In addition, the Managing Director was evaluated relevant Record Date; (B) 10 (Ten) BAL RPS to all (and not on the key aspects of his role. each) TTSL CCPS Holders in proportion to their holding of TTSL CCPS on the relevant Record Date and (C) 10 In separate meeting of Independent Directors, performance (Ten) BAL RPS to all (and not each) TTSL OCPS Holders of Non-Independent Directors and performance of the Board in proportion to their holding of TTSL OCPS on the relevant as-a-whole was evaluated, taking into account the views of Record Date AND Upon the Scheme becoming effective and Executive Director and Non-Executive Directors. The Board in consideration of the demerger, BHL issued and allotted also reviewed the performance of the Board as a whole, its (A) 500 (Five Hundred) BHL RPS to all (and not each) TTSL Committees and individual Directors. Equity Holders in proportion to their holding of TTSL Equity Shares on the relevant Record Date; (B) 10 (Ten) BHL RPS SCHEME OF ARRANGEMENT to all (and not each) TTSL CCPS Holders in proportion to their holding of TTSL CCPS on the relevant Record Date; As reported last year, the Board at its meeting held and (C) 10 (Ten) BHL RPS to all (and not each) TTSL OCPS on December 19, 2017 had approved the Scheme of Holders in proportion to their holding of TTSL OCPS on the Arrangement (“Scheme”) between the Company and Bharti relevant Record Date. The Record Date was fixed as July Airtel Limited (“Bharti” or “BAL”) and with Bharti Hexacom 12, 2019. Limited (“BHL”) to transfer by way of demerger of the Consumer Mobile Business (“CMB”) of the Company, subject DoT vide Show Cause Notice dated April 28, 2020 asked the to requisite regulatory approvals and approval of BAL, BHL Company and TTML to show cause why financial penalty and their respective shareholders and creditors and creditors of Rs. 50 Crores per circle should not be levied on them of the Company under Sections 230-232 of the Companies for alleged violation of Clause 6.1 of the Unified License Act, 2013. (with Access Service Authorization) Agreement by them for transferring licensed resources with effect from July 1, 2019 The Scheme was approved by NCLT vide its order dated without DoT taking on record the demerger. January 21, 2019 (modified vide order dated January 30, 2019). The Company challenged the notice before the TDSAT which directed the Company to file its response with DoT and the Department of Telecommunications (“DoT”) vide its letter decision to be taken by DoT on merit within a reasonable time dated April 10, 2019 approved the Scheme subject to in accordance with law without being prejudiced by the tone fulfillment of some conditions. On petitions by the Company, and tenor of the show cause notice and also without being BAL and BHL, the Hon’ble Telecom Disputes Settlement and influenced by the filing of this petition. The matter has been Appellate Tribunal (“TDSAT”) modified some conditions vide adjourned sine die. The Company filed it’s detailed response interim order issued in May 2019 upon which the Company, on June 9, 2020 and a personal hearing was granted by DoT BAL and BHL wrote to DoT reporting compliance with on July 3, 2020. DoT’s decision is awaited. modified conditions and requesting DoT to take the transfer / merger on record expeditiously. The Company, BAL and BHL DoT has also filed application petition before NCLT, Delhi in again wrote in last week of June 2019 to DoT informing that the matter related to merger of TTML CMB with Bharti Airtel July 1, 2019 had been fixed as the Appointed Date and the Limited wherein DoT has alleged that both the parties have Scheme will become effective from that date. violated the provisions of Scheme as sanctioned by Hon’ble Tribunal and that they should be punished and penalized as The Scheme became effective from July 1, 2019, and was per the provisions of the Section 232 (8) of the Companies communicated to DoT. DoT challenged the TDSAT interim Act, 2013. The Company would defend itself under legal orders in Hon’ble Supreme Court which declined to interfere advice. 24 25th 2019-20

Network Internal Financial Control and their Adequacy The Company has established and maintained adequate Post demerger, the wireless network was dismantled and internal financial controls with respect to financial statements. network is being aligned on serving Enterprise Business. The Such controls have been designed to provide reasonable focus would be optimization/consolidation of locations as per assurance with regard to providing reliable financial and business requirements. operational information. During the year, such controls were operating effectively and no material weaknesses were Safety observed. The Company has a well-defined and practiced Employee Vigil Mechanism/Whistle Blower Policy Safety and Well-being Policy. The Company’s Safety Policy comprises guidelines and standardized practices, based The Company has established the vigil mechanism in the on robust processes. It advocates proactively improving its form of Whistle Blower Policy for Directors and employees management systems, to minimize health and safety hazards, to report their genuine concerns about unethical behaviour, thereby ensuring compliance in all operational activities. actual or suspected fraud or violation of the Company’s Code of Conduct or ethics policy. As a requirement of Tata Code To minimize and mitigate risks related to Fire Safety and of Conduct, all stakeholders are also provided access to Physical Security, the Company has taken up various safety Whistle Blower mechanism. initiatives that includes: The Policy provides for adequate safeguards against . First Aid and Fire Safety trainings for all employees; victimization of Directors/employees who avail of the . Emergency Mock fire drills (day/night) every six months; mechanism and also provides for direct access to the . Dissemination of Safety Guidelines, through Safety Chairman of the Audit Committee. Awareness mailers and videos / Safety SMS’s (covering Do’s & Don’ts during emergency). The Whistle Blower Policy has been placed on the website of the Company i.e., https://corporate.tatateleservices.com/ Consolidated Financial Statement en-in/whistle-blower-policy

In accordance with the Act and Indian Accounting Standard Corporate Social Responsibility (Ind AS) - 110 on Consolidated Financial Statements read with Ind AS - 28 on Investments in Associates and Joint The Company has constituted a Corporate Social Venture, the audited Consolidated Financial Statement is Responsibility (“CSR”) Committee in accordance with Section provided in the Annual Report in addition to the Standalone 135 of the Act. The composition of CSR Committee, the Financial Statement. details of CSR Policy and initiatives taken by the Company on CSR activities during the year have been provided in the POLICIES AND PROCEDURES Annexure – II to this Report.

Company’s Policies on Appointment and Remuneration OTHER STATUTORY DISCLOSURES of Directors Contracts or arrangements with related parties The Policy of the Company on Directors’ appointment including criteria for determining qualifications, positive All contracts / arrangements / transactions entered by the attributes, independence of a Director and the Policy on Company during the financial year with related parties were remuneration of Directors, Key Managerial Personnel in the ordinary course of business and on arm’s length basis. and other employees are annexed as Annexure – IA and Your Directors draw attention of the members to Note 38 to the Annexure – IB to this Report. financial statement which sets out related party disclosures.

Risk Management Policy Particulars of Loans, Guarantees and Investments

The Company has Risk Management Policy and the Risk Your Company being in business of providing infrastructural Management Framework which ensures that the Company facilities, provisions of Section 186 of the Act, do not apply to is able to carry out identification of elements of risk, if any, the Company in respect of loans made, guarantees given or which in the opinion of the Board may threaten the existence security provided by the Company during the financial year of the Company. 2019-20. TELESERVICES LIMITED 25

Dividend & Appropriations Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo In view of the accumulated losses, the Directors regret their inability to recommend any dividend for the year under Pursuant to Section 134(3)(m) of the Act read with Rule consideration. No appropriations are proposed to be made 8(3) of Companies (Accounts) Rules, 2014, the details of for the year under consideration. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are as under: Deposits (A) Conservation of Energy: The Company has not accepted any public deposits, during the financial year 2019-20, within the meaning of Section 73 (i) Steps Taken or Impact on Conservation of Energy: of the Act read with the Companies (Acceptance of Deposit) Rules, 2014. No amount on account of principal or interest a. Electricity and Diesel Generators are used for the on deposits from public was outstanding as on the date of the powering of the Company’s telephone exchanges and balance sheet. other network infrastructure equipment. The Company regularly reviews power consumption patterns across Disclosures as per the Sexual Harassment of Women at its network and has implemented various innovative Workplace (Prevention, Prohibition and Redressal) Act, projects including green initiatives in order to optimize 2013 power consumption which resulted into substantive cost savings and reduction of carbon foot-print. Some of the The Company has zero tolerance for sexual harassment major projects undertaken during the year are: at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of sexual harassment at workplace . Network Optimization – 288 Tx locations switched in line with the provisions of the Sexual Harassment of off post Network optimization. Women at Workplace (Prevention, Prohibition and Redressal) . 8 MSC locations full surrender and 07 MSC Act, 2013 and the Rules there under for prevention and locations Space and Power optimisation redressal of complaints of sexual harassment at workplace. . Total space surrendered – 2.70 L Sq. ft The objective of this policy is to lay clear guidelines and provide right direction in case of any reported incidence of sexual harassment across the Company’s offices and take b. The initiative on energy conservation has resulted into appropriate decision in resolving such issues. reduction of 2.37 Million units of energy consumption, carbon foot-print reduction of 1,26,188 TCO2 for the During the financial year 2019-20, the Company has received financial year 2019-20. 0 (zero) complaints on sexual harassment. (ii) Steps taken by the Company for utilizing alternate Particulars of Employees sources of Energy:

Disclosures pertaining to remuneration and other details as TN: Sembcorp - Windmill Energy – Total 40 lac Units required under Section 197(12) of the Act, read with Rule KTK: Renew Power – Windmill Energy – Total 75 Lac 5(1) of the Companies (Appointment and Remuneration of Units Managerial Personnel) Rules, 2014 is annexed as Annexure – III to this Report. (iii) Capital Investment on Energy Conservation Equipment The statement containing particulars of employees as required under Section 197(12) of the Act, read with Rules 5(2) and Nil. 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. (B) Technology Absorption: The Company has not Pursuant to Section 136(1) of the Act, this report is being imported any new technology. sent to the Members of the Company excluding the aforesaid information. However, the same is open for inspection at the Registered Office of the Company. Copies of this statement may be obtained by the members by writing to the Company Secretary of the Company. 26 25th 2019-20

(C) Foreign Exchange Earnings and Outgo: On February 17, 2020, TTSL and TTML (jointly “TTL”) made (Rs. in Crores) a payment of Rs. 2,197 Crores based on self-assessment. Particulars 2019 – 20 2018 – 19 TTL in good faith and by way of abundant caution also made additional ad-hoc payment of Rs. 2,000 Crores on March 2, Earnings 0.33 1.29 2020 to cover reconciliation and verification differences with Outgo 11.24 24.96 DoT, if any. Capital Goods 104.50 117.69 DoT on March 16, 2020 filed an application (Modification Significant and Material Orders Passed by the Regulators Application) for grant of a 20 year period for recovery of Rs. or Courts or Tribunals Impacting the Going Concern 16,798/- Crores as the demand towards LF, Spectrum Usage Status and Company’s Operation’s in Future Charges (“SUC”), Interest, penalty and interest on penalty, against Tata Group of companies and showed an amount The Hon’ble Supreme Court (“SC”) pronounced its Judgment of Rs. 12,601/- Crores as outstanding after deducting an dated October 24, 2019 (“Judgement”), dismissing the appeals amount of Rs. 4,197/- Crores, which was paid subsequent of operators and allowing Department of Telecommunication’s to Supreme Court judgement and to cease the interest (“DoT”) appeal in respect of the definition of Gross Revenue applicable under the relevant licenses after a particular date. (“GR”) and Adjusted Gross Revenue (“AGR”) as defined in the Unified Access Service License Agreement. The SC also Post March 31, 2020, SC has passed three (3) orders as directed all telecom licensees to pay amounts due within below. three months of the date of the order. • On June 11, 2020, SC directed the operators to file DoT vide letter dated November 13, 2019 directed all the joint affidavit with respect to proposal to secure the telecom licensees to undertake self-assessment and make outstanding LF amount. The aforesaid order was passed payment of Licence Fee (“LF”) and other dues within three on the Modification Application, filed by DoT in March months in accordance with the Judgment. 2020, seeking to recover the balance outstanding over 20 years. It is noteworthy that in the said application, The Company and other operators filed review petitions in DoT had claimed an amount of Rs. 16,798/- Crores as SC challenging inter alia imposition of penalty and interest the demand towards LF, SUC, Interest, penalty and thereon. These petitions were dismissed on January 16, interest on penalty, against Tata Group of companies 2020. and had shown an amount of Rs. 12,601/- Crores as outstanding after deducting an amount of Rs. 4,197/- The Company and other operators filed modification Crores, which was paid subsequent to Supreme Court applications in the SC seeking modification of Supplementary judgement. Order dated October 24, 2019 to allow the Company and DoT to conduct the exercise for ascertaining and payment of • On June 18, 2020, SC directed that operators to file the amounts due under the Judgment. audited Balance Sheets, for the last 10 years including for the Calendar year ending March 31, 2020 as well as TTSL and TTML also submitted various representations the Income Tax Returns and the particulars of AGR (LF) and submitted documentary evidence to claim permissible deposited during the last 10 Years. SC also requested deductions. telecom operators to make payment of reasonable amount to show their bonafide, before the next date of On February 14, 2020, the SC heard abovementioned hearing. TTSL and TTML filed the required documents in modification applications of operators and passed an order compliance with the order. which noted that despite the dismissal of Review Petitions, the Companies had not paid any amount. SC directed the • On July 20, 2020, SC passed an order agreeing with the MD/Directors of the Companies to show cause as to why statement relating to recoverable amount, filed by DoT SC should not initiate Contempt Proceedings against them as part of Modification Application and further ordered for not complying with the orders passed by the court by not that there cannot be any re-assessment or recalculation depositing the amount. of this amount. The order on time frame during which the payment is to be made and the how to securitize the Mr. N. Srinath, then Managing Director filed an affidavit on outstanding dues, is reserved. The Company is awaiting behalf of himself and other directors as also the Company. clarity with the Judgement and the orders and will then decide on the future course TELESERVICES LIMITED 27

Further details and details of the provisions made are given The Company paid remuneration by way of salary, in the Notes to accounts. allowances, retiral benefits, perquisites, and performance pay to its Managing Director. Annual Increments and Performance While there are other critical litigations including litigations Linked Incentives were decided by the Nomination and relating to various demands made by DoT, except on the Remuneration Committee within the salary scale approved AGR issue, there are no significant material orders passed, by the Members of the Company. as of date, by the Regulators / Courts or the Company has interim protection from courts against enforcement of such None of the Directors have been issued any stock options by demands or notices, which would impact the going concern the Company during the year or anytime in the past. status of the Company and its future operations. However, there is always a chance that any order passed in critical The details of remuneration/sitting fees paid by the Company litigations in future may have an impact on the going concern to its Directors during the Financial Year 2019-20 are as or future operations of the Company. follows:

Extract of Annual Return A) Non - Executive Directors

Pursuant to the provisions of Section 92(3) of the Act and Rule Name of the Director Sitting Fees 12 (1) of the Companies (Management and Administration) (Amount in Rules, 2014, the extract of Annual Return in Form - MGT - 9 Rs.) is annexed as Annexure – IV to this Report. Dr. Narendra Damodar Jadhav 7,00,000 Disclosure under Part II, Section II of Schedule V of the Ms. Bharati Rao 6,50,000 Companies Act, 2013: Ms. Vibha Paul Rishi # 1,00,000 Mr. Saurabh Agrawal 0 The Company has adopted the Remuneration Policy for its Mr. Ankur Verma 0 Directors, Key Managerial Personnel and other employees of the Company, which has been annexed to the Directors’ # Resigned as Director w.e.f. July 18, 2019 Report which forms part of this Annual Report. Given the provisions of the Companies Act, 2013 and the None of the Non-Executive Directors have any material Remuneration policy for Directors, Key Managerial Personnel pecuniary relationship or transaction with the Company. and other employees as adopted by the Board and in order to remunerate the Non-Executive Directors adequately, the Sitting fees of Rs. 50,000/- per director per meeting were Board at its meeting held on August 17, 2020 increased the paid to the Non-Executive Directors for attending meetings sitting fees from Rs. 50,000/- to Rs. 1,00,000/- per Director of the Board and Committees thereof. However, some per meeting of the Board or any Committee thereof payable Non-Executive Directors did not receive sitting fees during to Non-Executive Directors. The Company would pay sitting the year. The Company also reimburses the out-of-pocket fee to the Non-Executive Directors who are employees in any expenses incurred by the Directors for attending Meetings Tata company at Rs. 20,000/- per meeting. and for the business of the Company.

B) Managing Director (Amount in Rs.) Name of the Director Salary Allowances Retirals & Performance Total Perquisites* Pay Mr. N. Srinath 11,281,700 17,426,678 1,896,194 130,000,000 160,604,572

*Retirals include Rs. 542,389/- towards Gratuity. **Performance Pay includes one-time payment of Rupees Ten Crores, paid to Mr. Srinath Narasimhan as a special cumulated award for three years (FY18 to FY20), as approved by the Board on March 24, 2020.

Disclosure under Secretarial Standards

The Company is in compliance with the applicable Secretarial Standards. 28 25th 2019-20

Credit Rating of Securities

The List of all credit ratings obtained by the Company along with any revisions thereto during the year, for all Debt instruments are given hereunder: Bank Facilities Commercial Papers Rating Agency Long Term Rating Short Term Rating CRISIL AA- (Stable) A1+ A1+ CARE A+ (Stable) A1+(Stable) A1+(Stable)

Further, there is no change in the credit rating as compared to the last financial year. Affirmations requested to consider, approve and ratify the remuneration payable to M/s. Sanjay Gupta & Associates for financial year All the Directors and senior management personnel have 2020-21. affirmed compliance with the Code of Conduct for the Financial Year ended March 31, 2020. Internal Auditors

Reporting of Frauds by the Auditor: The Board has appointed Ernst & Young LLP and ANB Solutions Pvt. Ltd. as Internal Auditors of the Company for The Company’s Statutory Auditors, Internal Auditors, Cost conducting internal audit of the Company for the Financial Auditors and Secretarial Auditors have not reported any Year 2020-21. instance of fraud during the period under review. Secretarial Auditors and Secretarial Audit Report AUDITORS Pursuant to the provisions of Section 204 of the Act and the Statutory Auditors Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the The Shareholders of the Company at the AGM held on Company had appointed M/s. Mehta & Mehta, Practicing September, 12, 2017, on the recommendation of Board of Company Secretaries, to undertake the Secretarial Audit Directors of the Company appointed M/s. Price Waterhouse of the Company for the year ending March 31, 2020. The Chartered Accountants LLP (“PWC”) (FRN 012754N/ Secretarial Audit Report in Form MR-3 is annexed as N500016) as statutory auditors of the Company for a period Annexure – V to this Report. of 5 years from conclusion of 22nd AGM till the conclusion of 27th AGM to be held in the year 2022. AUDITORS’ OBSERVATIONS AND DIRECTORS’ COMMENTS Cost Auditors The Auditors’ Report for the financial year ended March 31, Section 148 of the Act read with Companies (Cost Record 2020 does not contain any qualification, reservation, adverse and Audit) Rules, 2014 (the “Rules”), requires every remark or disclaimer. Telecommunication company to get its Cost Records audited by the Cost Accountants in Practice and file the Cost Audit ACKNOWLEDGEMENTS Report with the Central Government within 180 days of closure of the financial year. Accordingly, the Company is Your Directors wish to place on record their sincere required to maintain cost records. appreciation of the assistance and support extended by the employees, shareholders, customers, financial institutions, The Board of Directors of your Company has on the banks, vendors, dealers, Department of Telecommunications, recommendation of Audit Committee, approved the re- the Central and State Governments and others associated appointment and remuneration of M/s. Sanjay Gupta & with the activities of the Company. We look forward to their Associates, Cost Accountants, as Cost Auditors of the continued support in future. Company for the Financial Year 2020-21. Members are

For and on behalf of the Board of Directors Saurabh Agrawal N. Srinath Place : Mumbai Director Director Date : August 17, 2020 (DIN:02144558) (DIN: 00058133) TELESERVICES LIMITED 29

ANNEXURE – IA TO THE DIRECTORS’ REPORT Company’s Policy on Directors Appointment and Remuneration

The Company has formulated the criteria determining the financial year in which he is proposed to qualifications, positive attributes and independence of be appointed; Director. The details of the same are as under: (ii) is or has been an employee or proprietor or 1. Definition of Independence a partner, in any of the three financial years immediately preceding the financial year in • A Director will be considered as an “Independent which he is proposed to be appointed, of— Director” if the person meets with the criteria for ‘Independent Director’ as laid down in the Act. (A) a firm of auditors or company secretaries in practice or cost auditors of the company • The definition of Independence as provided in the Act is or its holding, subsidiary or associate as follows: company; or

An Independent Director in relation to a company, (B) any legal or a consulting firm that has or means a Director other than a Managing Director or a had any transaction with the company, its Whole-Time Director or a Nominee Director,— holding, subsidiary or associate company amounting to ten percent. or more of the (a) who, in the opinion of the Board, is a person of gross turnover of such firm; integrity and possesses relevant expertise and experience; (iii) holds together with his relatives two percent. or more of the total voting power of the company; (b) (i) who is or was not a promoter of the company or or its holding, subsidiary or associate company; (iv) is a Chief Executive or Director, by whatever (ii) who is not related to Promoters or Directors name called, of any nonprofit organisation in the company, its holding, subsidiary or that receives twenty-five percent or more associate company; of its receipts from the company, any of its promoters, Directors or its holding, subsidiary (c) who has or had no pecuniary relationship with or associate company or that holds two the company, its holding subsidiary or associate percent. or more of the total voting power of company, or their promoters, or Directors, during the company; the two immediately preceding financial years or during the current financial year; (f) who is not less than 21 years of age (additional provision as per Clause 49).” (d) none of whose relatives has or had pecuniary relationship or transaction with the company, its • Current and ex-employees of a Tata company may be holding, subsidiary or associate company, or their considered as independent only if he/ she has or had Promoters, or Directors, amounting to two percent. no pecuniary relationship with any Tata company (due or more of its gross turnover or total income or to employment/ receipt of monthly pension by way of fifty lakh rupees or such higher amount as may Special Retirement Benefits/ holding consultant or be prescribed, whichever is lower, during the two advisor positions) during the two immediately preceding immediately preceding financial years or during the financial years or during the current financial year. current financial year; 2. Qualifications of Directors (e) who, neither himself nor any of his relatives— • Board will ensure that a transparent Board nomination (i) holds or has held the position of a key process is in place that encourages diversity of thought, managerial personnel or is or has been experience, knowledge, perspective, age and gender. employee of the company or its holding, subsidiary or associate company in any of the • It is expected that Board have an appropriate blend of three financial years immediately preceding functional and industry expertise. 30 25th 2019-20

• While recommending appointment of a Director, it to Section 149(8) of the Act. The Code specifies the is expected that the Nomination and Remuneration guidelines of professional conduct, role and function Committee (“NRC”) consider the manner in which and duties of Independent Directors. The guidelines the function and domain expertise of the individual of professional conduct specified in the Code are as contributes to the overall skill-domain mix of the Board. follows:

• Independent Directors (“ID”) ideally should be thought/ “An Independent Director shall: practice leaders in their respective functions/ domains. 1) uphold ethical standards of integrity and probity; 3. Positive Attributes of Directors 2) act objectively and constructively while exercising Directors are expected to comply with duties as provided his duties; in the Act. For reference, the duties of the Directors as provided by the Act are as follows: 3) exercise his responsibilities in a bonafide manner in the interest of the company; 1) “Act in accordance with the articles of the company. 4) devote sufficient time and attention to his 2) Act in good faith in order to promote the objects of the professional obligations for informed and balanced company for the benefit of its members as a whole, and decision making; in the best interests of the company, its employees, the shareholders, the community and for the protection of 5) not allow any extraneous considerations that environment. will vitiate his exercise of objective independent judgment in the paramount interest of the company 3) Exercise duties with due and reasonable care, skill and as a whole, while concurring in or dissenting from diligence and exercise independent judgment. the collective judgment of the Board in its decision making; 4) Not be involved in a situation in which he may have a direct or indirect interest that conflicts, or possibly may 6) not abuse his position to the detriment of the conflict, with the interest of the company. company or its shareholders or for the purpose of gaining direct or indirect personal advantage or 5) Not achieve or attempt to achieve any undue gain or advantage for any associated person; advantage either to himself or to his relatives, partners, or associates. 7) refrain from any action that would lead to loss of his independence; 6) Not assign his office.” 8) where circumstances arise which make an Additionally, the Directors on the Board of a Tata Independent Director lose his independence, the Company are also expected to demonstrate high Independent Director must immediately inform the standards of ethical behavior, strong interpersonal and Board accordingly; communication skills and soundness of judgment. 9) assist the company in implementing the best IDs are also expected to abide by the ‘Code for corporate governance practices.” Independent Directors’ as outlined in Schedule IV

For and on behalf of the Board of Directors

Saurabh Agrawal N. Srinath Place : Mumbai Director Director Date : August 17, 2020 (DIN:02144558) (DIN: 00058133) TELESERVICES LIMITED 31

ANNEXURE – IB TO THE DIRECTORS’ REPORT Remuneration Policy

Further, the Company has also formulated a Remuneration motivate Directors aligned to the requirements of the Policy for the Directors, Key Managerial Personnel (“KMP”) Company (taking into consideration the challenges faced and other employees and the same is given hereunder: by the Company and its future growth imperatives).

The philosophy for remuneration of Directors, KMP and o Overall remuneration should be reflective of size of the all other employees of Tata Teleservices Limited (the Company, complexity of the sector/ industry/ company’s “Company”) is based on the commitment of fostering a operations and the Company’s capacity to pay the culture of leadership with trust. The remuneration policy is remuneration. aligned to this philosophy. o Overall remuneration practices should be consistent This remuneration policy has been prepared pursuant to with recognized best practices. the provisions of Section 178(3) of the Companies Act, 2013 (the “Act”). In case of any inconsistency between the o Quantum of sitting fees may be subject to review on a provisions of law and this remuneration policy, the provisions periodic basis, as required. of the law shall prevail and the Company shall abide by the applicable law. While formulating this policy, the Nomination o The aggregate commission payable to all the NEDs and and Remuneration Committee (“NRC”) has considered the IDs will be recommended by the NRC to the Board based factors laid down under Section 178(4) of the Act, which are on Company performance, profits, return to investors, as under: shareholder value creation and any other significant qualitative parameters as may be decided by the Board. “(a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of o The NRC will recommend to the Board the quantum of the quality required to run the company successfully; commission for each Director based upon the outcome of the evaluation process which is driven by various (b) relationship of remuneration to performance is clear and factors including attendance and time spent in the Board meets appropriate performance benchmarks; and and Committee meetings, individual contributions at the meetings and contributions made by Directors other (c) remuneration to Directors, Key Managerial Personnel than in meetings. and senior management involves a balance between fixed and incentive pay reflecting short and long-term o In addition to the sitting fees and commission, the performance objectives appropriate to the working of the Company may pay to any Director such fair and company and its goals.” reasonable expenditure, as may have been incurred by the Director while performing his/ her role as a Key principles governing this remuneration policy are as Director of the Company. This could include reasonable follows: expenditure incurred by the Director for attending Board/ Board Committee meetings, general meetings, • Remuneration for Independent Directors and Non- court convened meetings, meetings with shareholders/ Independent Non-Executive Directors creditors/ management, site visits, induction and training (organized by the company for Directors) and in obtaining o Independent Directors (“ID”) and Non-Independent Non- professional advice from independent advisors in the Executive Directors (“NED”) may be paid sitting fees (for furtherance of his/ her duties as a Director. attending the meetings of the Board and Committees of which they may be members) and commission within • Remuneration for Managing Director (“MD”)/ regulatory limits. Executive Directors (“ED”)/ KMP/ rest of the employees o Within the parameters prescribed by law, the payment of sitting fees and commission will be recommended by the o The extent of overall remuneration should be sufficient NRC and approved by the Board. to attract and retain talented and qualified individuals suitable for every role. Hence remuneration should be o Overall remuneration (sitting fees and commission) should be reasonable and sufficient to attract, retain and 32 25th 2019-20

. Market competitive (market for every role is defined . In addition to the basic/ fixed salary, benefits, as companies from which the company attracts talent perquisites and allowances as provided above, the or companies to which the company loses talent) company provides MD/ EDs such remuneration . Driven by the role played by the individual, by way of an annual incentive remuneration/ . Reflective of size of the company, complexity of performance linked bonus subject to the the sector/ industry/ company’s operations and the achievement of certain performance criteria and company’s capacity to pay, such other parameters as may be considered . Consistent with recognized best practices and appropriate from time to time by the Board. An . Aligned to any regulatory requirements. indicative list of factors that may be considered for determination of the extent of this component are: o In terms of remuneration mix or composition, o Company performance on certain defined qualitative . The remuneration mix for the MD/ EDs is as per the and quantitative parameters as may be decided by the contract approved by the shareholders. In case of Board from time to time, any change, the same would require the approval of the shareholders. o Industry benchmarks of remuneration,

. Basic/ fixed salary is provided to all employees to o Performance of the individual. ensure that there is a steady income in line with their skills and experience. . The Company provides the rest of the employees a performance linked bonus. The performance . In addition to the basic/ fixed salary, the Company linked bonus would be driven by the outcome provides employees with certain perquisites, of the performance appraisal process and the allowances and benefits to enable a certain level performance of the Company. of lifestyle and to offer scope for savings and tax optimization, where possible. The Company also • Remuneration payable to Director for services provides all employees with a social security net rendered in other capacity (subject to limits) by covering medical expenses and hospitalization through re-imbursements The remuneration payable to the Directors shall be or insurance cover and accidental death and inclusive of any remuneration payable for services dismemberment through personal accident rendered by such Director in any other capacity unless: insurance. a) The services rendered are of a professional nature; . The Company provides retirement benefits as and applicable. b) The NRC is of the opinion that the Director . In addition to the basic/ fixed salary, benefits, possesses requisite qualification for the practice of perquisites and allowances as provided above, the the profession. Company provides MD/ EDs such remuneration by way of commission, calculated with reference to the • Policy implementation net profits of the company in a particular financial year, as may be determined by the Board, subject The NRC is responsible for recommending the to the overall ceilings stipulated in Section 197 of remuneration policy to the Board. The Board is the Act. The specific amount payable to the MD/ responsible for approving and overseeing implementation EDs would be based on performance as evaluated of the remuneration policy. by the Board or the NRC and approved by the Board.

For and on behalf of the Board of Directors

Saurabh Agrawal N. Srinath Place : Mumbai Director Director Date : August 17, 2020 (DIN:02144558) (DIN: 00058133) TELESERVICES LIMITED 33

ANNEXURE – II TO THE DIRECTORS’ REPORT Annual Report on Corporate Social Responsibility (“CSR”) Brief outline of the Company’s CSR Policy, including overview of projects or programmes proposed to be undertaken

As a member of the Tata Group, CSR is at the core of the 1. Composition of CSR Committee Company. The Company’s CSR policy upholds the ethos of the Tata Group’s Sustainability (including CSR) Policy. The CSR Committee for the Company comprises of the The Company has designed its CSR policy based on Tata following Members: Group’s focus areas. Sr. Name Designation No. Given the financial position of the Company, most of the 1 Mr. N. Srinath Non-Executive Director activities were by way of volunteering by the employees of TTL and it tended to be mostly in locations where there was 2 Dr. Narendra Non-Executive a critical mass of employees. Few volunteering activities Damodar Jadhav Independent Director undertake are as under: 3 Ms. Bharati Rao Non-Executive Independent Director Volunteering - Volunteers from Hyderabad office organized Diwali Mela – Diya sale stall by an NGO which supports 2. Average net profit of the Company for last 3 financial under privileged children. Plantation drive by the employees years, prescribed CSR expenditure and details of and planted around 100 plants. Volunteers from Bhopal CSR spent during the financial year office employees donated clothes, plastic food containers, water bottles to Seva Bhartia (NGO) working amongst the The Company did not make profits in the past 3 financial economically weaker sections of the society, including the years; hence it does not have any budgeted CSR tribal belts. Online pledge was undertaken by the employees expenditure. However, in keeping with the Tata Group’s by saying “No” to single use plastic. philosophy of giving back to the society, all the above initiatives are managed with internal resources. The web link to the Company’s CSR Policy is – https://corporate.tatateleservices.com/downloads/Policy-on- Corporate-Social.pdf

For and on behalf of the Board of Directors

Saurabh Agrawal N. Srinath Place : Mumbai Director Director Date : August 17, 2020 (DIN:02144558) (DIN: 00058133) 34 25th 2019-20

ANNEXURE – III TO THE DIRECTORS’ REPORT The information required under Section 197 of the Act On an average, employees received an annual increase read with Rule 5(1) of the Companies (Appointment and of 6%. Increments given were based on individual Remuneration of Managerial Personnel) Rules, 2014 are performance. The increase in remuneration was in line given below: with the market median trends at various employee levels and roles. However, Performance Pay paid a. The ratio of the remuneration of each Director to the to employees included the factor of the Company median remuneration of the employees of the Company performance. for the financial year: f. Comparison of the remuneration of the Key Managerial Non-Executive Directors* Ratio to median Personnel against the performance of the Company: remuneration Dr. Narendra Damodar Jadhav 0.69 Aggregate remuneration of Key 18.493@ Managerial Personnel (“KMP”) Ms. Bharati Rao 0.64 in FY 2019-20 (Rs. in Crores) – Ms. Vibha Paul Rishi* 0.10 including MD Revenue (Rs. in Crores) 1,874.37 * Resigned as Director w.e.f. July 18, 2019 * Apart from the above named Directors, no other non- Remuneration of KMPs (as % of 0.9866% executive Director got any remuneration during the year. Revenue) Profit before Tax (PBT) (Rs. in (12,207.30) b. The percentage increase in remuneration of each Crores) Director, Chief Executive Officer, Chief Financial Officer, Remuneration of KMP (as % of NA* Company Secretary in the financial year: PBT)

Directors, Chief Executive % increase in @ Includes one-time payment of Rupees Ten Crores, Officer, Chief Financial Officer remuneration in paid to Mr. Srinath Narasimhan as a special cumulated and Company Secretary the financial year award for three years (FY18 to FY20), as approved by Mr. N. Srinath - Managing 214.53% the Board on March 24, 2020. Director* Mr. Ilangovan G – Chief 5% g. Variations in the market capitalisation of the Company, Financial Officer price earnings ratio as at the closing date of the current Mr. Pravin Jogani – Assistant 6% financial year and previous financial year: Company Secretary** Particulars March March % * Includes one-time payment of Rupees Ten Crores, 31, 2020 31, 2019 Change paid to Mr. Srinath Narasimhan as a special cumulated Market capitalization# NA NA NA award for three years (FY18 to FY20), as approved by (Rs. in Crores) the Board on March 24, 2020. ** Pravin Jogani left the organization effective November Price Earning Ratio* NA NA NA 29, 2019 # Paid up Equity share capital (market capitalization is c. The percentage increase in the median remuneration of not applicable since the shares of the Company are not employees in the financial year: 11% listed on any Stock Exchange). *Earning Per Share is negative for the current financial d. The number of permanent employees on the rolls of year and previous financial year. Company as on March 31, 2020: 1214. h. Percentage increase over decrease in the market e. The explanation on the relationship between average quotations of the shares of the Company in comparison increase in remuneration and Company performance: to the rate at which the Company came out with the last public offer: TELESERVICES LIMITED 35

N.A. (since the shares of the Company are not listed on any Stock Exchange). i. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average annual increase during the year was 3% in case of employees other than managerial personnel. j. Comparison of each remuneration of the key managerial personnel against the performance of the Company:

Mr. N Srinath - Rishabh Aditya - Mr. Ilangovan G Mr. Pravin Jogani – Managing Director@ Company Secretary - Chief Financial Assistant Company from 01.12.2019 officer Secretary till 29.11.2019 Remuneration in FY 2019-20 16.06@ 0.34 1.99 0.103 (Rs. in Crores) Revenue (Rs. in Crores) 1,874.37 Remuneration as % of revenue 0.8568% 0.0181% 0.1062% 0.0055% Profit before Tax (PBT) (12,207.30) (Rs. in Crores) Remuneration* (as % of PBT) NA NA NA NA

@ 1. Includes one-time payment of Rupees Ten Crores, paid to Mr. Srinath Narasimhan as a special cumulated award for three years (FY18 to FY20) as approved by the Board on March 24, 2020

@ 2. In accordance with the Guidelines for payment of Special Retirement Benefits to Managing / Executive Directors of Tata Companies on their retirement as Whole time Directors (Guidelines) approved and adopted by the Board on June 19, 2001 and by the shareholders at the Annual General Meeting held on September 22, 2001, the Board in view of his significant contribution as Managing Director of the Company since February 1, 2011, approved coverage of Mr. Srinath Narasimhan from the Company under the Guidelines. Benefits will be payable on him attaining the age of 65 years. * Since PBT is negative for the year. k. The key parameters for any variable component of remuneration availed by the Directors: None l. The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year: None. m. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms that the remuneration paid is as per the remuneration policy of the Company

For and on behalf of the Board of Directors

Saurabh Agrawal N. Srinath Place : Mumbai Director Director Date : August 17, 2020 (DIN:02144558) (DIN: 00058133) 36 25th 2019-20

ANNEXURE – IV TO THE DIRECTORS’ REPORT Form No. MGT-9 EXTRACT OF ANNUAL RETURN As on the financial year ended on March 31, 2020 [Pursuant to Section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS: i) CIN U74899DL1995PLC066685 ii) Registration Date March 23, 1995 iii) Name of the Company Tata Teleservices Limited iv) Category / Sub-Category of the Company limited by Shares/Indian Non Government Company Company v) Address of the registered office and Jeevan Bharati Tower I, 10th Floor, 124, Connaught Circus, contact details New Delhi, 110001, Contact Nos. 011-23327072 / 022-66615111 vi) Whether listed company: Yes / No No vii) Name, Address and Contact details of XL Softech Systems Ltd., Registrar and Transfer Agent, if any 3, Sagar Society, Road No.2, Banjara Hills, Hyderabad - 500 034 Phone no.: 040-23545913

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10 % or more of the total turnover of the company shall be stated:- Sr. Name and Description of main products / NIC Code of the Product/ % to total turnover of the No. services service Company 1 Wired telecommunications activities 611 90 2 Wireless telecommunications activities 612 10

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sr. Name and Address of the Company CIN/GLN Holding/ % of Applicable No. Subsidiary/ shares Section Associate held 1 Tata Sons Private Limited Bombay House, U99999MH1917PTC000478 Holding 96.19% Section 2(46) read 24 Homi Mody Street, Mumbai – 400001 Company with Section 2(87) (ii) 2 MMP Mobi Wallet Payment Systems U64201DL2010PLC205811 Subsidiary 100% Section 2(46) read Limited Jeevan Bharati Tower 1, 10th Company with Section 2(87) Floor, 124, Connaught Circus, New Delhi (ii) - 110001 3 NVS Technologies Limited Jeevan Bharati U74140DL2014PLC271505 Subsidiary 100% Section 2(46) read Tower 1, 10th Floor, 124, Connaught Company with Section 2(87) Circus, New Delhi - 110001 (ii) 4 TTL Mobile Private Limited (formerly U64201MH2007PTC169408 Subsidiary 100% Section 2(46) read known as Virgin Mobile India Pvt. Ltd.) A Company with Section 2(87) & E Blocks, Voltas Premises, T.B. Kadam (ii) Marg, Chinchpokli, Mumbai – 400 033 5 Tata Teleservices (Maharashtra) Limited L64200MH1995PLC086354 Subsidiary 74.56% Section 2(46) read Voltas Premises, T.B. Kadam Marg, Company with Section 2(87) Chinchpokli, Mumbai – 400033 (ii) TELESERVICES LIMITED 37

IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) i) Category-wise Share Holding

Category of Shareholders No. of Shares held at the beginning of the year No. of Shares held at the end of the year % Change (as on April 1, 2019) (as on March 31, 2020) during the year Demat Physical Total % of Total Demat Physical Total % of Total Shares Shares (A) Promoters 1) Indian a. Individual / HUF ------b. Central Govt. ------c. State Govt.(s) ------d. Bodies Corporate 4065387349 - 4065387349 70.40 4994867309 - 4994867309 74.50 4.10 e. Banks / FIs ------f. Any Other ------Sub - Total (A) (1) 4065387349 - 4065387349 70.40 4994867309 - 4994867309 74.50 4.10 2) Foreign a. NRIs / Individuals ------b. Other – Individuals ------c. Bodies Corporate ------d. Banks / FIs ------e. Any Other ------Sub - Total (A) (2) ------Total Shareholding of 4065387349 - 4065387349 70.40 4994867309 - 4994867309 74.50 4.10 Promoters (A) = (A) (1) + (A) (2) (B) Public Shareholding 1) Institutions a. Mutual Funds ------b. Banks / FIs 55000000 - 55000000 0.95 55000000 - 55000000 0.82 (0.13) c. Central Govt. ------d. State Govt. ------e. Venture Capital Funds ------f. Insurance Companies ------g. FIIs 316043561 - 316043561 5.47 316043561 - 316043561 4.71 (0.76) h. Foreign Venture Capital 48000000 - 48000000 0.83 48000000 - 48000000 0.72 (0.11) Funds i. Others (please specify) ------Sub – total (B) (1) 419043561 - 419043561 7.25 419043561 - 419043561 6.25 (1.00) 2) Non – Institutions a. Bodies Corporate i. Indian 1243651222 49576 1243700798 21.54 1243651222 49576 1243700798 18.55 (2.99) ii. Overseas 24000000 - 24000000 0.42 24000000 - 24000000 0.36 (0.06) b. Individuals ------i. Individual shareholders ------having nominal share capital upto Rs. 1 Lakh ii. Individual shareholders 22901526 - 22901526 0.40 22901526 - 22901526 0.34 (0.06) having nominal share capital in excess of Rs. 1 Lakh 38 25th 2019-20

Category of Shareholders No. of Shares held at the beginning of the year No. of Shares held at the end of the year % Change (as on April 1, 2019) (as on March 31, 2020) during the year Demat Physical Total % of Total Demat Physical Total % of Total Shares Shares c. Others (please specify) ------Sub – total (B) (2) 1290552748 49576 1290602324 22.36 1290552748 49576 1290602324 19.25 (3.11) Total Public Shareholding 1709596309 49576 1709645885 29.60 1709596309 49576 1709645885 25.50 (4.10) (B) = (B) (1) + (B) (2) (C) Shares held by ------Custodian for GDRs & ADRs Grand Total (A + B + C) 5774983658 49576 5775033234 100 6704463618 49576 6704513194 100 - ii) Shareholding of Promoters

Sr. Shareholder’s Name Shareholding at the beginning of the year Shareholding at the end of the year % change in No. (as on April 1, 2019) (as on March 31, 2020) share holding No. of Shares % of total % of Shares No. of Shares % of total % of Shares during the Shares of the Pledged / Shares of the Pledged / year Company encumbered Company encumbered to total shares to total shares 1 TATA SONS PRIVATE 4065387349 70.40 - 4994867309 74.50 - 4.10 LIMITED Total 4065387349 70.40 - 4994867309 74.50 - 4.10

(iii) Change in Promoters’ Shareholding (please specify, if there is no change)

Sr. Name of the Promoter Shareholding at the beginning of Cumulative Shareholding during No. the year (as on April 1, 2019) the year No. of shares % of total No. of shares % of total shares of the shares of the company company 1 Tata Sons Private Limited At the beginning of the year 4065387349 70.40 - - Increase in Shareholding post allotment 929479960 4.10 4994867309 74.50 of Equity Shares on Rights basis At the End of the year 4994867309 74.50 - -

(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

Sr. Name of the shareholder Shareholding at the beginning of Cumulative Shareholding during No. the year (as on April 1, 2019) the year No. of shares % of total shares No. of shares % of total shares of the company of the company 1 Tata Communications Limited At the beginning of the year 598213926 10.36 - - Increase/decrease in shareholding No change during the year At the End of the year 598213926 8.92 - - 2 Tata Industries Limited At the beginning of the year 338511112 5.86 - - Increase/decrease in shareholding No change during the year At the End of the year 338511112 5.05 - - TELESERVICES LIMITED 39

Sr. Name of the shareholder Shareholding at the beginning of Cumulative Shareholding during No. the year (as on April 1, 2019) the year No. of shares % of total shares No. of shares % of total shares of the company of the company 3 Aranda Investments (Mauritius) Pte. Ltd At the beginning of the year 303888039 5.26 - - Increase/decrease in shareholding No change during the year At the End of the year 303888039 4.53 - - 4 Tata Steel Limited At the beginning of the year 87427533 1.51 - - Increase/decrease in shareholding No change during the year At the End of the year 87427533 1.30 - 5 IL & FS Trust Company Limited At the beginning of the year 78500000 1.36 - - Increase/decrease in shareholding No change during the year At the End of the year 78500000 1.17 - - 6 Tata Capital Financial Services Limited At the beginning of the year 62250000 1.08 - - Increase/decrease in shareholding No change during the year At the End of the year 62250000 0.93 - - 7 IDBI Bank Limited At the beginning of the year 55000000 0.95 - - Increase/decrease in shareholding No change during the year At the End of the year 55000000 0.82 - - 8 2i Capital PCC At the beginning of the year 48000000 0.83 - - Increase/decrease in shareholding No change during the year At the End of the year 48000000 0.72 - - 9 Siva Industries and Holdings Limited At the beginning of the year 29909158 0.52 - - Increase/decrease in shareholding No change during the year At the End of the year 29909158 0.45 - - 10 Goldman Dealer Private Limited At the beginning of the year 25000000 0.43 - - Increase/decrease in shareholding No change during the year At the End of the year 25000000 0.37 - -

40 25th 2019-20

(v) Shareholding of Directors and Key Managerial Personnel:

Sr. Name of the Director/KMP Shareholding at the beginning of Cumulative Shareholding during No. the year (as on April 1, 2019) the year No. of shares % of total No. of shares % of total shares of the shares of the company company 1 Mr. Srinath Narasimhan @ At the beginning of the year - - - - Increase/decrease in shareholding No changes during the year At the End of the year - - - - 2 Mr. Saurabh Agrawal At the beginning of the year - - - - Increase/decrease in shareholding No changes during the year At the End of the year - - - - 3 Dr. Narendra Damodar Jadhav At the beginning of the year - - - - Increase/decrease in shareholding No changes during the year At the End of the year - - - - 4 Ms. Bharati Rao At the beginning of the year - - - - Increase/decrease in shareholding No changes during the year At the End of the year - - - - 5 Ms. Vibha Paul Rishi # At the beginning of the year - - - - Increase/decrease in shareholding No changes during the year At the End of the year - - - - 6 Mr. Ankur Verma At the beginning of the year - - - - Increase/decrease in shareholding No changes during the year At the End of the year - - - -

# Resigned as Director w.e.f. July 18, 2019 @ Ceased to be Director and Managing Director w.e.f March 31, 2020 on completion of term as a Managing Director TELESERVICES LIMITED 41

V. INDEBTEDNESS Indebtedness of the Company including interest outstanding/accrued but not due for payment (Rs. in Crs.) Secured Unsecured Deposits Total Loans Loans Indebtedness excluding Deposits Indebtedness at the beginning of the financial year (i) Principal Amount 464.19 27,034.04 - 27,498.23 (ii) Interest due but not paid - 0.13 - 0.13 (iii) Interest accrued but not due - - - - Total (i+ii+iii) 464.19 27,034.17 - 27,498.36 Change in Indebtedness during the financial year Loan Addition 2,294.05 18,552.99 - 20,847.04 Loan Reduction (204.49) (28,802.66) - (29,007.15) Net change 2,089.56 (10,249.67) - (8,160.11) Indebtedness at the end of the financial year (i) Principal Amount 2,553.75 16,784.50 - 19,338.26 (ii) Interest due but not paid - - - - (iii) Interest accrued but not due - 0.53 - 0.53 Total (i+ii+iii) 2,553.75 16,785.04 - 19,338.79

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and/or Manager (Amount in Rs.) Sr. Particulars of Remuneration Name of MD/WTD/ Total No. Manager Mr. Srinath Narasimhan, Managing Director 1 (a) Salary as per provisions contained in Section 17(1) of the Income- 159,250,767.00 159,250,767.00 Tax Act, 1961 (b) Value of perquisites u/s 17(2) Income-Tax Act, 1961 NIL NIL (c) Profits in lieu of salary under Section 17(3) Income-Tax Act, 1961 NIL NIL Gross Salary (a+b+c) 159,250,767.00 159,250,767.00 2. Stock Option NIL NIL 3. Sweat Equity NIL NIL 4. Commission - as % of profit NIL NIL - Others, specify… 5. Others, please specify – Company’s Contribution. to Provident Fund 13,53,804.00 13,53,804.00 Total (A) 160,604,572.00 160,604,572.00 Ceiling as per the Act* *Note: Ceiling limit for the remuneration of Managing Director is not applicable in view of the exemption under Schedule V to the Companies Act, 2013. 42 25th 2019-20

B. Remuneration to other directors:

Sr. Particulars of Remuneration Name of Directors Total No. Dr. Narendra Ms. Bharati Ms. Vibha Damodar Rao Paul Rishi# Jadhav 1. Independent Directors a. Fee for attending board / committee meetings 7,00,000 6,50,000 1,00,000 14,50,000 b. Commission - - - - c. Others, please specify - - - - Total (1) 7,00,000 6,50,000 1,00,000 14,50,000 Particulars of Remuneration Name of Directors Total 2. Other Non - Executive Directors a. Fee for attending board / committee meetings - - - - b. Commission - - - - c. Others, please specify - - - - Total (2) - - - - Total (B) = (1+2) 7,00,000 6,50,000 1,00,000 14,50,000 Total Managerial Remuneration - Overall Ceiling as per the Act Not applicable as only sitting fees paid

# Resigned as Director w.e.f. July 18, 2019

C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD – FY 2019-20: (Amount in Rs.) Sr. Particulars of Remuneration Key Managerial Personnel Total No. Mr. Ilangovan Mr. Rishabh Mr. Pravin G – CFO Aditya – Jogani Company (Asst. Secretary w.e.f Company 01.12.2019 Secretary) upto 29.11.2019 1 a. Salary as per provisions contained in 19,855,842.00 3,198,295.00 967,900.00 24,022,037.00 section 17(1) of the Income-tax Act, 1961 b. Value of perquisites u/s 17(2) Income-tax NIL NIL NIL NIL Act, 1961 c. Profits in lieu of salary under section 17(3) NIL NIL NIL NIL Income-tax Act, 1961 Gross Salary (a+b+c) 19,855,842.00 3,198,295.00 967,900.00 24,022,037.00 2 Stock Option NIL NIL NIL NIL 3 Sweat Equity NIL NIL NIL NIL 4 Commission a. as % of profit NIL NIL NIL NIL b. Others, specify 5 Others, please specify a. Co’s Contribution. to PF 136,386.00 29,299.00 165,685.00 b. Flexi Reimbursement 131,800.00 32,958.00 164,758.00 Total 19,855,842.00 34,66,481.00 10,30,157.00 24,352,480.00 TELESERVICES LIMITED 43

VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

Type Section of the Brief Description Details of Penalty Authority [RD / Appeal made, if Companies Act / Punishment / NCLT / COURT] any (give Details) Compounding fees imposed A. COMPANY Penalty Nil Nil Nil Nil Nil Punishment Nil Nil Nil Nil Nil Compounding Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable B. DIRECTORS Penalty Nil Nil Nil Nil Nil Punishment Nil Nil Nil Nil Nil Compounding Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable C. OTHER OFFICERS IN DEFAULT Penalty Nil Nil Nil Nil Nil Punishment Nil Nil Nil Nil Nil Compounding Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable

For and on behalf of the Board of Directors

Saurabh Agrawal N. Srinath Place : Mumbai Director Director Date : August 17, 2020 (DIN:02144558) (DIN: 00058133) 44 25th 2019-20

Annexure V Form No. MR-3 SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2020 {Pursuant to Section 204(1) of the Companies Act, 2013 and rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014}

To, (iv) Foreign Exchange Management Act, 1999 and the The Members, rules and regulations made there under to the extent of Tata Teleservices Limited, Foreign Direct Investment, Overseas Direct Investment 10th Floor, Tower I, Jeevan Bharati, and External Commercial Borrowings (during the year 124, Connaught Circus, New Delhi - 110001. under review not applicable to the Company);

We have conducted the secretarial audit of the compliance (v) The following Regulations and Guidelines prescribed of applicable statutory provisions and the adherence to under the Securities and Exchange Board of India Act, good corporate practices by Tata Teleservices Limited 1992 (‘SEBI Act’):- (hereinafter called “the Company”). Secretarial audit was conducted in a manner that provided us a reasonable basis (a) The Securities and Exchange Board of India for evaluating the corporate conducts I statutory compliance (Substantial Acquisition of Shares and Takeovers) and expressing our opinion thereon. Regulations, 2011 (during the period under review not applicable to the Company); Based on our verification of the Company’s books, papers, minutes books, forms and returns filed and other records (b) The Securities and Exchange Board of India maintained by the Company and also the information (Prohibition of Insider Trading) Regulations, 2015 provided by the Company, its officers, agents and authorized (during the period under review not applicable to representatives during the conduct of secretarial audit, we the Company); hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on March 31, (c) The Securities and Exchange Board of India 2020, complied with the statutory provisions listed hereunder (Issue of Capital and Disclosure Requirements) and also that the Company has proper Board processes and Regulations, 2018 (during the period under review compliance mechanism in place to the extent, in the manner not applicable to the Company); and subject to the reporting made hereinafter: (d) The Securities and Exchange Board of India (Share We have examined the books, papers, minute books, Based Employee Benefits) Regulations, 2014 forms and returns filed and other records maintained by the (during the period under review not applicable to Company for the financial year ended on March 31, 2020 the Company); according to the provisions of: (e) The Securities and Exchange Board of India (Issue (i) The Companies Act, 2013 (‘the Act’) and the rules made and Listing of Debt Securities) Regulations, 2008 thereunder; (during the period under review not applicable to the Company); (ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder (during the period under (f) The Securities and Exchange Board of India review not applicable to the Company); (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act (iii) The Depositories Act, 1996 and the Regulations and and dealing with client (during the period under Bye-laws framed thereunder (during the period under review not applicable to the Company); review not applicable to the Company); TELESERVICES LIMITED 45

(g) The Securities and Exchange Board of India Majority decision is carried through while the dissenting (Delisting of Equity Shares) Regulations, 2009 members’ view, if any are captured and recorded as part of (during the period under review not applicable to the Minutes. the Company);and We further report that there are adequate systems and (h) The Securities and Exchange Board of India processes in the Company commensurate with the size and (Buyback of Securities) Regulations, 2018 (during operations of the Company to monitor and ensure compliance the period under review not applicable to the with applicable laws, rules, regulations and guidelines. Company); We further report that during the audit period the Company (vi) Telecom Regulatory Authority of India Act, 1997 had the following specific events / actions having a major bearing on the Company’s affairs in pursuance of the above (vii) The Indian Telegraph Act, 1885 referred laws, rules, regulations, guidelines, standards, etc.

(viii) The Indian Wireless Telegraphy Act, 1993 a) Department of Telecommunication (DoT) issued approval on the Scheme of Arrangement between the Company, We have examined compliance with the applicable clauses Bharti Airtel Limited (BAL) and Bharti Hexacom Limited of the following: (BHL) subject to certain conditions on April 10, 2019 to the Company, some of which were subsequently been (i) Secretarial Standards issued by the Institute of Company stayed/modified by Telecom Disputes Settlement and Secretaries of India; Appellate Tribunal (TDSAT) vide its order dated April 24, May 02 and May 6, 2019. (ii) Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, b) TDSAT directed DoT to take on record the demerger 2015 (applicable to the extent of Listed Commercial subject to fulfilment of conditions. The Company has Papers on the National Stock Exchange and the reported compliance with such conditions to DoT vide compliances as mentioned in circular issued by SEBI letter dated May 22, 2019. i.e. SEBI/HO/DDHS/DDHS/CIR/P/2019/115 dated 22nd October, 2019); c) National Company Law Tribunal, vide its order dated June 12, 2019, approved July 1, 2019 as the Appointed During the period under review the Company has complied Date under the Tata Teleservices Limited Scheme. On with the provisions of Act, Rules, Regulations, Guidelines etc. June 24, 2019 the Company filed NCLT orders with the mentioned above. Registrar of Companies Delhi with the Appointed Date of July 1, 2019. The Company informed DoT vide letter We further report that: dated June 26, 2019 of NCLT orders and filing of those with Registrar of Companies (RoC) Delhi and further The Board of Directors of the Company is duly constituted with informed that the merger of Consumer Mobile business proper balance of the Executive Directors, Non-Executive of the Company to BAL & BHL has been completed with Directors and Independent Directors. The changes in the an Appointed and Effective Date of 1st July 2019. composition of the Board of Directors that took place during the period under review were carried out in compliance with d) However, DoT wrote on July 5th, 2019 to RoC Delhi with the provisions of the Act. a copy to the Company, BAL and BHL and requested RoC not to take any further action in the matter as DoT Adequate notice is given to all Directors to schedule the had not issued final approval. The Companies in a Joint Board Meetings, agenda and detailed notes on agenda were letter to RoC pointed out that the forms filed had been sent at least seven days in advance, and a system exists for approved by ROC office and thus all actions related to seeking and obtaining further information and clarifications the Schemes that are relevant for ROC office had already on the agenda items before the meeting and for meaningful been completed in accordance with applicable laws and participation at the meeting. therefore there were no further actions required from 46 25th 2019-20

them. RoC’s reply to the abovementioned joint letter is (Four Hundred Sixty Two Crores Twenty Lakhs) awaited. Preference Shares of Rs.100/- (Rupees One Hundred only) each TO Rs. 10,5150,00,00,000/- (Rupees One e) The members at their Annual General Meeting held Lakh Five Thousand One Hundred Fifty Crores only) on September 27, 2019 increased the Authorised divided into 52,63,00,00,000 (Five Thousand Two Share Capital of the Company from existing Rs. Hundred Sixty Three Crores) Equity Shares of Rs. 10/- 9,01,50,00,00,000/- (Rupees Ninety Thousand One (Rupees Ten only) each, 63,00,00,000 (Sixty Three Hundred Fifty Crores only) divided into 37,63,00,00,000 Crores) Compulsorily Convertible Non- Cumulative (Three Thousand Seven Hundred Sixty Three Crores) Preference Shares of Rs. 100/- (Rupees One Hundred Equity Shares of Rs. 10/- (Rupees Ten only) each, only) each, 4,62,20,00,000 (Four Hundred Sixty Two 63,00,00,000 (Sixty Three Crores) Compulsorily Crores Twenty Lakhs) Preference Shares of Rs.100/- Convertible Non-Cumulative Preference Shares of Rs. (Rupees One Hundred only) each. 100/- (Rupees One Hundred only) each, 4,62,20,00,000 f) The share/warrant/debenture Allotment Committee allotted the following Securities:

S. Particulars of Allotment Date of Allotment NO. 1 9,29,47,500 0.1% Compulsorily Convertible Non-Cumulative Preference Share (‘CCPS’) May 18, 2019 – Series -VIII- Tranche 1 2 86,96,28,020 Compulsorily Convertible Non-Cumulative Preference Shares – Series – IX June 30, 2019 – Tranche 3 3 40,70,52,004 Compulsorily Convertible Non-Cumulative Preference Shares – Series VIII August 07, 2019 Tranche 2 4 20,00,00,026 0.1% Unsecured Optionally Convertible Debentures – Series III – Tranche 1 August 07, 2019 5 92,94,79,960 Equity Shares of Rs. 10/- each August 07, 2019 g) The Finance Committee of the Company vide Circular Resolutions approved the following:

S. Date Particulars NO. 1. April 03, 2019 Approval for availing a Medium Term Loan (MTL) upto Rs. 20,50,00,00,000 (Rupees Two Thousand and Fifty crores) from ICICI Bank Ltd. 2. May 10, 2019 Approval for Issuance of Commercial Papers (“CPs”) for an amount upto Rs. 17,95,00,00,000 (Rupees One Thousand Seven Hundred and Ninety Five crores) 3. June 18, 2019 (a) Approval for Rollover/Fresh Issuance of Commercial Papers (“CPs”) for an amount upto Rs. 25,00,00,00,000 (Rupees Two Thousand Five Hundred crores) (b) Approval for a Short Term Loan of Rs. 2,00,00,00,000 (Rupees Two Hundred crores) from Axis Bank Limited. 4. June 25, 2019 Approval for a Short Term Loan of Rs. 2,00,00,00,000 (Rupees Two Hundred Crore) from Axis Bank Limited. 5. July 18, 2019 Approval for Issuance of Fresh Commercial Papers (“CPs”) for an amount upto Rs. 7,15,00,00,000 (Rupees Seven Hundred & Fifteen crores). 6. August 19, 2019 Approval for Issuance of Fresh Commercial Papers (“CPs”) for an amount upto Rs. 10,20,00,00,000 (One Thousand and Twenty crores) 7. August 27, 2019 Approval for change in the list of Authorized signatories for approving Investments 8. September 19, 2019 Approval for Issuance of Fresh Commercial Papers for an amount upto Rs. 10,50,00,00,000 (One Thousand and Fifty crores) TELESERVICES LIMITED 47

S. Date Particulars NO. 9. December 16, 2019 Approval of Issuance, Allotment & listing of Fresh Commercial papers & obtaining term loan for an aggregate amount of Rs. 11,20,00,00,000 (Rupees One Thousand One Hundred & Twenty crores) 10. January 16, 2020 1. Approval for availing term loan upto Rs. 20,00,00,00,000 (Rupees Two Thousand crores) from Standard Chartered Bank 2. Fresh Issuance of Commercial papers for an amount upto Rs. 15,00,00,00,000 (Rupees One Thousand five Hundred crores) 11. February 16, 2020 Approval for availing additional Term Loan upto Rs 4,00,00,00,000 (Rupees Four Hundred crores) from Standard Chartered Bank. 12. February 29, 2020 Approval for Fresh Issuance of Commercial Papers for an amount upto Rs 15,00,00,00,000 (One Thousand Five Hundred crores)

Note: Due to lockdown under COVID-19, Certification on this Form MR-3 is done on the basis of few documents are made available to us in electronic form (i.e. share drive on internet) by the Secretarial Team of the Company and such documents will be verified physically after the lockdown is lifted.

For Mehta & Mehta, Company Secretaries (ICSI Unique Code P1996MH007500)

Atul Mehta Partner PCS No: 5782 CP No: 2486

Place : Mumbai Date : June 2, 2020

UDIN : F005782B000309107

Note: This report is to be read with our letter of even date which is annexed as ‘ANNEXURE A’ and forms an integral part of this report.

48 25th 2019-20

Annexure A

To, The Members, Tata Teleservices Limited, 10th Floor, Tower I, Jeevan Bharati, 124, Connaught Circus, New Delhi - 110001.

Our report of even date is to be read along with this letter.

1) Maintenance of secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit.

2) We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices we followed provide a reasonable basis for our opinion.

3) We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

4) Wherever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.

5) The compliance of the provisions of corporate laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedures on test basis.

6) As regard the books, papers, forms, reports and returns filed by the Company under the provisions referred to in points vi, vii and viii of our Secretarial Audit Report in Form No. MR-3 the adherence and compliance to the requirements of the said regulations is the responsibility of management. Our examination was limited to checking the execution and timeliness of the filing of various forms, reports, returns and documents that need to be filed by the Company with various authorities under the said regulations. We have not verified the correctness and coverage of the contents of such forms, reports, returns and documents.

7) The secretarial audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

For Mehta &Mehta, Company Secretaries (ICSI Unique Code P1996MH007500)

Atul Mehta Partner PCS No: 5782 CP No: 2486

Place : Mumbai Date : June 2, 2020

UDIN : F005782B000309107 TELESERVICES LIMITED 49

Independent auditor’s report

To the Members of Tata Teleservices Limited and we have fulfilled our other ethical responsibilities Report on the audit of the standalone financial statements in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have Opinion obtained is sufficient and appropriate to provide a basis for our opinion. 1. We have audited the accompanying standalone financial statements of Tata Teleservices Limited (“the Company”), Emphasis of Matter which comprise the balance sheet as at March 31, 2020, and the statement of Profit and Loss (including Other 4. We draw your attention to Note 1.4 to the standalone Comprehensive loss), statement of changes in equity financial statements, which describes the management’s and statement of cash flows for the year then ended, and assessment of the impact of the outbreak of Coronavirus notes to the standalone financial statements, including (Covid-19) on the business operations of the Company. a summary of significant accounting policies and other The management believes that no adjustments are explanatory information. required in the standalone financial statements as it does not impact the current financial year, however, in 2. In our opinion and to the best of our information and view of the various preventive measures taken (such according to the explanations given to us, the aforesaid as complete lock-down restrictions by the Government standalone financial statements give the information of India, travel restrictions etc.) and highly uncertain required by the Companies Act, 2013 (“the Act”) in economic environment, a definitive assessment of the the manner so required and give a true and fair view impact on the subsequent periods is highly dependent in conformity with the accounting principles generally upon circumstances as they evolve. accepted in India, of the state of affairs of the Company as at March 31, 2020, and total comprehensive loss 5. We draw your attention to Note 1.5 to the standalone (comprising of loss and other comprehensive loss), financial statements which states that the Company changes in equity and its cash flows for the year then had received an anonymous letter alleging irregularities ended. in procurement of certain materials for which the investigation by the Company is yet to be concluded. Basis for opinion Our opinion is not modified in respect of these matters. 3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section Key audit matters 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor’s 6. Key audit matters are those matters that, in our Responsibilities for the Audit of the standalone financial professional judgment, were of most significance in our statements section of our report. We are independent audit of the standalone financial statements of the current of the Company in accordance with the Code of Ethics period. These matters were addressed in the context of issued by the Institute of Chartered Accountants of India our audit of the standalone financial statements as a together with the ethical requirements that are relevant whole, and in forming our opinion thereon, and we do to our audit of the standalone financial statements under not provide a separate opinion on these matters. the provisions of the Act and the Rules thereunder,

Key audit matter How our audit addressed the key audit matter 1. Accuracy of revenue recorded for Our audit procedures included control testing and substantive telecommunication services given the procedures covering, in particular: complexity of the related IT systems (Refer notes 2.2 (d) and 23 to the standalone • Understanding and evaluating the relevant IT systems and financial statements) design of key controls including procedures on testing of IT general controls.

• Testing operating effectiveness of key controls over:

a) Capturing and recording of revenue transactions; 50 25th 2019-20

Key audit matter How our audit addressed the key audit matter The Company’s revenue from telecommunication b) Authorization of rate changes and the input of this information services is recorded through complex automated to the billing systems; (IT) structure wherein the data is processed c) Accuracy of calculation of amounts billed to customers; through multiple systems, which requires periodic reconciliation controls to ensure completeness and • Testing the end-to-end reconciliation from billing and rating accuracy. systems to the general ledger. The testing included validating material journals processed between the billing & rating system There is an inherent risk around the accuracy of and general ledger; revenue recorded given the complexity of billing, rating and other relevant support systems and the impact of • Performing tests on the accuracy of customer bill generation changing pricing models to revenue recognition (tariff on a sample basis and testing of a sample of the credit notes structures, discounts, etc.). issued;

• Testing cash receipts for a sample of customers back to the customer invoice.

Based on the procedures performed above, we did not find any material exceptions in the accuracy of telecommunication services revenue recognized during the year. 2. Assessment of contingent liabilities and Our procedures included the following: provisions for litigations • Testing design and implementation of key controls surrounding (Refer note 20 – “Provisions” and note 36 – litigation, regulatory and tax procedures and assessment of “Contingent Liabilities” and note 2.2 (r), 2.2 (aa) probable outflow; and 2.3 on Companies accounting policies with regard to provision and contingent liabilities.) • Discussing with the management and tax and regulatory department heads to understand significant matters under There are a number of material regulatory and litigation; tax cases against the Company. Significant judgement is required in estimating / reassessing • Obtaining and substantively testing evidences to support the the level of provisioning and/or disclosures. The management’s assessment and rationale for provision made or management’s assessment is supported by advice the decision not to record provisions, including correspondence from independent legal/ tax consultants obtained with external legal counsel; by them. • Reviewing the minutes of board of directors’ meetings in respect We considered this as a Key Audit Matter as the of discussions relating to litigations/legal matters; eventual outcome of litigations is uncertain and the positions taken by the Management are based on the • Reading external legal opinions obtained by management, application of significant judgement and estimation. where available; Any unexpected adverse outcomes could significantly impact the Company’s results and financial position. • Evaluating independence, objectivity and competence of the management’s tax/legal consultants;

• Monitoring and considering external information sources such as media reports to identify potential legal actions;

• Obtaining confirmations, where appropriate, of relevant third party legal representatives and discussing with them certain material litigation, if required; TELESERVICES LIMITED 51

Key audit matter How our audit addressed the key audit matter • Testing that the adjustments arising on account of reassessment in estimates during the year are either due to changes occurred in the circumstances on which estimate was based or as a result of more information or more experience gained during the current year.

• Assessing management’s conclusions through understanding precedents in similar cases;

• For Direct and Indirect tax litigations, involving auditors’ tax experts to understand the current status of tax cases and monitoring changes in the disputes by reading external advice received by the Company;

• Performing detailed procedures on the underlying calculations supporting the provisions recorded and ensuring adequacy of disclosures made.

• Assessing the appropriateness of the disclosures made in standalone financial statements.

Based on the above procedures performed, we have not identified any significant exceptions relating to disclosure of contingent liabilities and accounting for provisions for litigations. 3. Accounting for demerger of Consumer Mobile Our audit procedures included: Business (Refer Note 1.2 and 30 to the standalone financial • Understanding the management’s basis of identifying the assets statements) and liabilities related to Consumer Mobile Business.

During the year, the Company received all the • Reading the scheme related documents and agreements requisite regulatory approvals in respect of executed between the company and Bharti for appropriate the Scheme of Arrangement for transfer of its identification of the assets and liabilities transferred to Bharti and Consumer Mobile Business (CMB) to Bharti Airtel focusing on accounting for non-routine transaction, estimates Limited (“Bharti”). Accordingly the scheme was and judgements in respect of the derecognition of the assets given effect to in the books of accounts with effect and liabilities. from the appointed and effective date of July 1, 2019, as approved by the National Company Law • Verifying the approvals received from regulatory authorities and Tribunal (NCLT). assessing the compliance with the conditions specified therein.

This has been considered as a key audit matter in view • Verifying the underlying agreements to assess the of magnitude of the transaction, complexity involved appropriateness of restructuring costs recognised by the in ensuring accuracy and completeness of the assets Company. and liabilities transferred for CMB, estimates and significant management judgements in respect of the • Verifying correct identification of assets and liabilities relating derecognition of the same. to the CMB and ensuring accuracy and completeness of the balances transferred to Bharti;

• Assessing the appropriateness of the disclosures made in standalone financial statements.

Based on the above procedures performed, we noted that the demerger of CMB has been accounted appropriately. 52 25th 2019-20

Key audit matter How our audit addressed the key audit matter 4. Assessment of Going Concern as a basis of Our procedures included the following : accounting: (Refer note 1.3 to the standalone financial • Obtained the management assessment of appropriateness of statements) Going Concern basis of accounting.

The Company has significant accumulated losses • Discussed with the management on future business and their and has incurred loss during the current and earlier plans to ensure that the company is able to meet its financial years. Its net worth is eroded and the current obligations in the foreseeable future. liabilities exceed its current assets as at that March 31, 2020. This may create a doubt regarding the • Read the minutes of board of directors meeting for discussion on Company’s ability to continue as a going concern. future business plans and on liquidating certain assets to ensure availability of liquid funds. However, the standalone financial statements have been prepared on a going concern basis in • Verified the support letter obtained by the Company from its view of the financial support from the promoter Promoter indicating that Promoter will take necessary actions to company and the management’s plan to generate organize for any shortfall in liquidity in Company that may arise cash flows through monetisation of certain assets to meets its financial obligations and timely repayment of debt and operations which would enable the Company during the period of 12 months from the balance sheet date. to meet its financial obligations as and when they fall due. • Verified the financial ability of the Promoter Company to support the Company from the latest audited standalone financial We considered this to be a key audit matter because statements of the Promoter Company. management’s assessment is largely dependent on the support letter obtained from its Promoter Company. • Verified that the promoter company has supported the Company in the past when the need arose.

Based on the above procedures, we noted the management assessment of going concern basis of accounting as appropriate.

Other Information Responsibilities of management and those charged with governance for the standalone financial statements 7. The Company’s Board of Directors is responsible for the other information. The other information comprises the 8. The Company’s Board of Directors is responsible for the information included in the Directors’ Report and other matters stated in section 134(5) of the Act with respect to information in Annual Report, but does not include the the preparation of these standalone financial statements standalone financial statements and our auditor’s report that give a true and fair view of the financial position, thereon. financial performance, changes in equity and cash flows of the Company in accordance with the accounting Our opinion on the standalone financial statements does principles generally accepted in India, including the not cover the other information and we do not express Accounting Standards specified under section 133 of any form of assurance conclusion thereon. the Act This responsibility also includes maintenance of adequate accounting records in accordance with the In connection with our audit of the standalone financial provisions of the Act for safeguarding of the assets of statements, our responsibility is to read the other the Company and for preventing and detecting frauds information and, in doing so, consider whether the other and other irregularities; selection and application of information is materially inconsistent with the standalone appropriate accounting policies; making judgments financial statements or our knowledge obtained in the and estimates that are reasonable and prudent; and audit or otherwise appears to be materially misstated. If, design, implementation and maintenance of adequate based on the work we have performed, we conclude that internal financial controls, that were operating effectively there is a material misstatement of this other information, for ensuring the accuracy and completeness of the we are required to report that fact. accounting records, relevant to the preparation and presentation of the standalone financial statements We have nothing to report in this regard. that give a true and fair view and are free from material misstatement, whether due to fraud or error. TELESERVICES LIMITED 53

9. In preparing the standalone financial statements, • Evaluate the appropriateness of accounting policies management is responsible for assessing the Company’s used and the reasonableness of accounting ability to continue as a going concern, disclosing, estimates and related disclosures made by as applicable, matters related to going concern and management. using the going concern basis of accounting unless management either intends to liquidate the Company or • Conclude on the appropriateness of management’s to cease operations, or has no realistic alternative but to use of the going concern basis of accounting and, do so. Those Board of Directors are also responsible for based on the audit evidence obtained, whether overseeing the Company’s financial reporting process. a material uncertainty exists related to events or conditions that may cast significant doubt on the Auditor’s responsibilities for the audit of the standalone Company’s ability to continue as a going concern. financial statements If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s 10. Our objectives are to obtain reasonable assurance report to the related disclosures in the standalone about whether the standalone financial statements as financial statements or, if such disclosures are a whole are free from material misstatement, whether inadequate, to modify our opinion. Our conclusions due to fraud or error, and to issue an auditor’s report that are based on the audit evidence obtained up to the includes our opinion. Reasonable assurance is a high date of our auditor’s report. However, future events level of assurance, but is not a guarantee that an audit or conditions may cause the Company to cease to conducted in accordance with SAs will always detect a continue as a going concern. material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, • Evaluate the overall presentation, structure and individually or in the aggregate, they could reasonably content of the standalone financial statements, be expected to influence the economic decisions of including the disclosures, and whether the users taken on the basis of these standalone financial standalone financial statements represent the statements. underlying transactions and events in a manner that achieves fair presentation. 11. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional 12. We communicate with those charged with governance scepticism throughout the audit. We also: regarding, among other matters, the planned scope and timing of the audit and significant audit findings, • Identify and assess the risks of material including any significant deficiencies in internal control misstatement of the standalone financial that we identify during our audit. statements, whether due to fraud or error, design and perform audit procedures responsive to those 13. We also provide those charged with governance risks, and obtain audit evidence that is sufficient with a statement that we have complied with relevant and appropriate to provide a basis for our opinion. ethical requirements regarding independence, and The risk of not detecting a material misstatement to communicate with them all relationships and other resulting from fraud is higher than for one resulting matters that may reasonably be thought to bear on from error, as fraud may involve collusion, forgery, our independence, and where applicable, related intentional omissions, misrepresentations, or the safeguards. override of internal control. 14. From the matters communicated with those charged with • Obtain an understanding of internal control relevant governance, we determine those matters that were of to the audit in order to design audit procedures most significance in the audit of the standalone financial that are appropriate in the circumstances; Under statements of the current period and are therefore the key Section 143(3)(i) of the Act, we are also responsible audit matters. We describe these matters in our auditor’s for expressing our opinion on whether the company report unless law or regulation precludes public disclosure has adequate internal financial controls with about the matter or when, in extremely rare circumstances, reference to standalone financial statements in we determine that a matter should not be communicated place and the operating effectiveness of such in our report because the adverse consequences of doing controls. so would reasonably be expected to outweigh the public interest benefits of such communication. 54 25th 2019-20

Report on other legal and regulatory requirements g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of 15. As required by the Companies (Auditor’s Report) Order, the Companies (Audit and Auditors) Rules, 2014, in 2016 (“the Order”), issued by the Central Government our opinion and to the best of our information and of India in terms of sub-section (11) of section 143 of according to the explanations given to us: the Act, we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order, to i. The Company has disclosed the impact of pending the extent applicable. litigations on its financial position in its standalone financial statements – Refer Note 36 to the 16. As required by Section 143(3) of the Act, we report that: standalone financial statements;

a) We have sought and obtained all the information ii. The Company has made provision, as required and explanations which to the best of our knowledge under the applicable law or accounting standards, and belief were necessary for the purposes of our for material foreseeable losses, if any, on long-term audit. contracts including derivative contracts – Refer Note 20 to the standalone financial statements; b) In our opinion, proper books of account as required by law have been kept by the Company so far as it iii. There were no amounts which were required to be appears from our examination of those books. transferred to the Investor Education and Protection Fund by the Company during the year ended March c) The Balance Sheet, the Statement of Profit and Loss 31, 2020. including other comprehensive loss, the Statement of Changes in Equity and Cash Flow Statement iv. The reporting on disclosures relating to Specified dealt with by this Report are in agreement with the Bank Notes is not applicable to the Company for books of account. the year ended March 31, 2020.

d) In our opinion, the aforesaid standalone financial 17. The Company has paid/ provided for managerial statements comply with the Accounting Standards remuneration in accordance with the requisite approvals specified under Section 133 of the Act. mandated by the provisions of Section 197 read with Schedule V to the Act. e) On the basis of the written representations received from the directors as on March 31, 2020 taken on record by the Board of Directors, none of the For Price Waterhouse Chartered Accountants LLP directors is disqualified as on March 31, 2020 from Firm Registration Number: 012754N/N500016 being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the adequacy of the internal financial Nitin Khatri controls with reference to standalone financial Partner statements of the Company and the operating Place : Mumbai Membership Number. 110282 effectiveness of such controls, refer to our separate Date : June 2, 2020 UDIN: 20110282AAAABC6078 Report in “Annexure A”. TELESERVICES LIMITED 55

Annexure A to Independent Auditors’ Report

Referred to in paragraph 16(f) of the Independent Auditors’ about whether adequate internal financial controls Report of even date to the members of Tata Teleservices with reference to standalone financial statements Limited on the standalone financial statements for the year was established and maintained and if such controls ended March 31, 2020 operated effectively in all material respects.

Report on the Internal Financial Controls with reference 4. Our audit involves performing procedures to obtain audit to standalone financial statements under Clause (i) of evidence about the adequacy of the internal financial Sub-section 3 of Section 143 of the Act controls system with reference to standalone financial statements and their operating effectiveness. Our audit 1. We have audited the internal financial controls with of internal financial controls with reference to standalone reference to standalone financial statements of Tata financial statements included obtaining an understanding Teleservices Limited (“the Company”) as of March 31, of internal financial controls with reference to standalone 2020 in conjunction with our audit of the standalone financial statements, assessing the risk that a material financial statements of the Company for the year ended weakness exists, and testing and evaluating the design on that date. and operating effectiveness of internal control based on the assessed risk. The procedures selected depend Management’s Responsibility for Internal Financial on the auditor’s judgement, including the assessment Controls of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. 2. The Company’s management is responsible for establishing and maintaining internal financial controls 5. We believe that the audit evidence we have obtained based on the internal control over financial reporting is sufficient and appropriate to provide a basis for criteria established by the Company considering the our audit opinion on the Company’s internal financial essential components of internal control stated in the controls system with reference to standalone financial Guidance Note on Audit of Internal Financial Controls statements. Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These Meaning of Internal Financial Controls with reference to responsibilities include the design, implementation and standalone financial statements maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and 6. A company’s internal financial controls with reference to efficient conduct of its business, including adherence standalone financial statements is a process designed to company’s policies, the safeguarding of its assets, to provide reasonable assurance regarding the reliability the prevention and detection of frauds and errors, of financial reporting and the preparation of standalone the accuracy and completeness of the accounting financial statements for external purposes in accordance records, and the timely preparation of reliable financial with generally accepted accounting principles. A information, as required under the Act. company’s internal financial controls with reference to standalone financial statements includes those policies Auditors’ Responsibility and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly 3. Our responsibility is to express an opinion on the reflect the transactions and dispositions of the assets Company’s internal financial controls with reference of the company; (2) provide reasonable assurance to standalone financial statements based on our that transactions are recorded as necessary to permit audit. We conducted our audit in accordance with the preparation of standalone financial statements in Guidance Note on Audit of Internal Financial Controls accordance with generally accepted accounting Over Financial Reporting (the “Guidance Note”) and the principles, and that receipts and expenditures of the Standards on Auditing deemed to be prescribed under company are being made only in accordance with section 143(10) of the Act to the extent applicable to an authorisations of management and directors of the audit of internal financial controls, both applicable to an company; and (3) provide reasonable assurance audit of internal financial controls and both issued by the regarding prevention or timely detection of unauthorised ICAI. Those Standards and the Guidance Note require acquisition, use, or disposition of the company’s assets that we comply with ethical requirements and plan that could have a material effect on the standalone and perform the audit to obtain reasonable assurance financial statements. 56 25th 2019-20

Inherent Limitations of Internal Financial Controls with reference to standalone financial statements and such reference to standalone financial statements internal financial controls with reference to standalone financial statements were operating effectively as at 7. Because of the inherent limitations of internal financial March 31, 2020, based on the internal control over controls with reference to standalone financial financial reporting criteria established by the Company statements, including the possibility of collusion or considering the essential components of internal control improper management override of controls, material stated in the Guidance Note on Audit of Internal Financial misstatements due to error or fraud may occur and not Controls Over Financial Reporting issued by the Institute be detected. Also, projections of any evaluation of the of Chartered Accountants of India. Also refer paragraph internal financial controls with reference to standalone 4 and 5 of main audit report. financial statements to future periods are subject to the risk that the internal financial control with reference For Price Waterhouse Chartered Accountants LLP to standalone financial statements may become Firm Registration Number: 012754N/N500016 inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Nitin Khatri Opinion Partner Place : Mumbai Membership Number. 110282 8. In our opinion, the Company has, in all material respects, Date : June 2, 2020 UDIN: 20110282AAAABC6078 an adequate internal financial controls system with

Annexure B to Independent Auditors’ Report

Referred to in paragraph 15 of the Independent Auditors’ iii. The Company has not granted any loans, secured Report of even date to the members of Tata Teleservices or unsecured, to companies, firms, Limited Liability Limited on the standalone financial statements for the year Partnerships or other parties covered in the register ended March 31, 2020 maintained under Section 189 of the Act. Therefore, the provisions of Clause 3(iii), (iii)(a), (iii)(b) and (iii)(c) of the i. (a) The Company is maintaining proper records said Order are not applicable to the Company. showing full particulars, including quantitative details and situation, of fixed assets. iv. In our opinion, and according to the information and explanations given to us, the Company has complied with (b) The fixed assets are physically verified by the the provisions of Section 185 and 186 of the Companies Management according to a phased programme Act, 2013 in respect of the loans and investments made, designed to cover all the items over a period of and guarantees and security provided by it. three years which, in our opinion, is reasonable having regard to the size of the Company and the v. The Company has not accepted any deposits from the nature of its assets. Pursuant to the programme, public within the meaning of Sections 73, 74, 75 and 76 a portion of the fixed assets has been physically of the Act and the Rules framed there under to the extent verified by the Management during the year and no notified. material discrepancies have been noticed on such verification. vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost (c) The title deeds of immovable properties, as records as specified under Section 148(1) of the Act in disclosed in Note 3 on Property, plant and respect of its products. equipment and Note 6 on Investment property to the standalone financial statements, are held in the We have broadly reviewed the same, and are of the name of the Company. opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, ii. The Company does not hold any inventory as at March however, made a detailed examination of the records 31, 2020. Therefore, the provisions of Clause 3(ii) of the with a view to determine whether they are accurate or said Order are not applicable to the Company. complete. TELESERVICES LIMITED 57 vii. (a) According to the information and explanations given (b) According to the information and explanations given to us and the records of the Company examined to us and the records of the Company examined by by us, in our opinion, the Company is regular in us, there are no dues of value added tax, duty of depositing the undisputed statutory dues, including customs and duty of excise which have not been provident fund, employees’ state insurance, income deposited on account of any dispute. The particulars tax, sales tax, service tax, duty of customs, duty of of dues of Income tax, Sales tax, Service-tax and excise, value added tax, goods and service tax, cess goods and service tax as at March 31, 2020, which and other material statutory dues, as applicable, have not been deposited on account of a dispute, with the appropriate authorities. Also refer note 36(i) are as follows: to the standalone financial statements regarding management’s assessment on certain matters relating to provident fund.

Name of the statute Nature of dues Amount # Period to which Forum where the dispute (Rs. In crores) the amount relates is pending The Income Tax Act, 1961 Income tax including 72.02 2004-05 to 2015-16 Commissioner of Income tax interest and penalty, as appeals (CIT) applicable 27.02 2004-05 to 2010-11 High Court 0.89 2006-07 Assessing Officer (AO) Central sales Tax, Local Sales Tax including 6.25 2004-05 to 2015-16 Appellate Authority-Up Sales Tax acts interest and penalty as to commissioner level of applicable various states 0.42 2004-05 to 2011-12 Tribunals of various states Service Tax under finance Service Tax including 3.28 2004-05 to 2010-11 Supreme Court Act, 1994 interest and penalty as 61.22 2002-03 to 2016-17 Appellate Authority- Up to applicable Commissioner’s level of various states Goods and service Tax Goods and Service Tax 11.48 2017-18 to 2018-19 GST Appeals up to High (GST) Act including interest as court applicable #Net of amounts paid under protest. viii. According to the records of the Company examined year, nor have we been informed of any such case by by us and the information and explanation given to the Management. Also refer note 1.5 to the financial us, the Company has not defaulted in repayment of statements and paragraph 5 of our main audit report. loans or borrowings to any financial institution or bank or Government or dues to debenture holders as at the xi. The Company has paid/ provided for managerial balance sheet date. remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with ix. The Company has not raised any moneys by way of Schedule V to the Act. Also refer paragraph 17 of our initial public offer, further public offer (including debt main audit report. instruments) and term loans. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the xii. As the Company is not a Nidhi Company and the Nidhi Company. Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the x. During the course of our examination of the books and Company. records of the Company, carried out in accordance with the generally accepted auditing practices in India, and xiii. The Company has entered into transactions with related according to the information and explanations given parties in compliance with the provisions of Sections to us, we have neither come across any instance of 177 and 188 of the Act. The details of such related party material fraud by the Company or on the Company by transactions have been disclosed in the standalone its officers or employees, noticed or reported during the financial statements as required under Indian Accounting 58 25th 2019-20

Standard (Ind AS) 24, Related Party Disclosures xvi. The Company is not required to be registered under specified under Section 133 of the Act. Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order xiv. The Company has not made any preferential allotment or are not applicable to the Company. private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, For Price Waterhouse Chartered Accountants LLP the provisions of Clause 3(xiv) of the Order are not Firm Registration Number: 012754N/N500016 applicable to the Company. xv. The Company has not entered into any non cash transactions with its directors or persons connected with Nitin Khatri him. Accordingly, the provisions of Clause 3(xv) of the Partner Order are not applicable to the Company. Place : Mumbai Membership Number. 110282 Date : June 2, 2020 UDIN: 20110282AAAABC6078 TELESERVICES LIMITED 59

STANDALONE BALANCE SHEET AS AT MARCH 31, 2020 (All amount in Rupees Crores unless stated otherwise) As at As at Notes March 31, 2020 March 31, 2019 ASSETS Non-current assets Property, plant and equipment 3 1,456.78 1,547.01 Right of Use assets 4 527.15 - Capital work-in-progress 5 51.66 68.09 Investment Property 6 126.08 129.13 Intangible assets 7 5.68 127.59 Investment in subsidiaries 8 170.05 288.08 Financial Assets Investments 9 20.41 4.14 Loans and other financial assets 13 31.03 32.60 Derivative financial assets 3,994.20 1,868.40 Income tax assets (net) 172.51 - Other non-current assets 14 706.18 523.51 Total non-current assets 7,261.73 4,588.55 Current assets Financial Assets Investments 9 - 594.82 Trade receivables 10 252.22 178.65 Cash and cash equivalents 11 190.86 538.60 Bank balances other than above 12 32.08 30.12 Loans and other financial assets 13 990.61 209.20 Derivative financial assets 1,997.67 4,072.19 Income tax assets (net) - 212.19 Other current assets 14 370.93 149.74 3,834.37 5,985.51 Assets classified as held for sale 22 2,137.62 7,644.59 Total current assets 5,971.99 13,630.10 Total Assets 13,233.72 18,218.65 EQUITY AND LIABILITIES Equity Share capital 15 6,704.51 5,775.03 Instruments entirely equity in nature 16 29,616.28 15,920.00 Other equity 17 (48,907.10) (34,072.84) Total equity (12,586.31) (12,377.81) Non-current liabilities Financial liabilities Borrowings 18 9,704.28 15,754.67 Lease Liabilities 35 382.43 - Provisions 20 8.49 7.76 60 25th 2019-20

As at As at Notes March 31, 2020 March 31, 2019 Other non-current liabilities 21 132.30 138.73 Total non-current liabilities 10,227.50 15,901.16 Current liabilities Financial Liabilities Borrowings 18 4,734.56 3,566.95 Lease Liabilities 35 101.42 - Trade and other payables - Total outstanding dues of micro enterprise and small enterprises 33 4.99 3.84 - Total outstanding dues of creditors other than micro enterprises 749.26 571.33 and small enterprises Other financial liabilities 19 4,940.62 4,614.58 Derivative financial liabilities - 1.65 Provisions 20 4,903.16 261.14 Other current liabilities 21 158.52 866.33 15,592.53 9,885.82 Liabilities directly associated with assets classified as held for sale 22 - 4,809.48 Total current liabilities 15,592.53 14,695.30 Total equity and liabilities 13,233.72 18,218.65

The accompanying notes form an integral part of these standalone financial statements

In terms of our report attached

For Price Waterhouse Chartered Accountants LLP For and on Behalf of the Board of Directors Firm Registration No.: 012754N/N500016

Nitin Khatri Ankur Verma N Srinath Partner (Director) (Director) Membership Number: 110282 (DIN No: 07972892) (DIN No: 00058133)

Ilangovan G Rishabh Aditya (Chief Financial Officer) (Company Secretary) Place : Mumbai Place : Mumbai Date : June 2, 2020 Date : June 2, 2020 TELESERVICES LIMITED 61

STANDALONE STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2020 (All amount in Rupees Crores unless stated otherwise) For the year ended For the year ended Notes March 31, 2020 March 31, 2019 INCOME Revenue from operations 23 1,850.54 2,836.79 Other income 24 15.54 159.83

Total Income 1,866.08 2,996.62 EXPENSES Employee benefit expenses 25 247.24 306.63 Provision for contingencies - (557.04) Operating and other expenses 26 1,664.83 3,383.44

Total expenses 1,912.07 3,133.03 Loss before interest, tax, depreciation and amortisation (45.99) (136.41) (LBITDA) Depreciation and amortisation expense 27 (484.28) (431.70) Finance cost 28 (1,646.82) (3,183.13) Finance income 29 74.81 15.83 Profit on sale of current investments 25.51 62.31

Loss before exceptional items and tax (2,076.77) (3,673.10) Exceptional items (net) 30 (11,248.49) (1,556.44)

Loss before tax (13,325.26) (5,229.54) Tax expense Current tax - - Deferred tax - - Loss after tax (13,325.26) (5,229.54) Other Comprehensive Loss A) Items that will be reclassified to profit or loss Effective portion of loss on designated portion of hedging (16.38) (0.98) instruments in cash flow hedge B) Items that will be reclassified to profit or loss Remeasurements of defined benefit plans (3.99) (5.79)

Total other comprehensive Loss (20.37) (6.77) Total Comprehensive loss for the year (13,345.63) (5,236.31) 62 25th 2019-20

For the year ended For the year ended Notes March 31, 2020 March 31, 2019 Loss per Equity share (Face value of Rs. 10 each) Basic (in Rs) 31 (20.90) (9.06) Diluted (in Rs) 31 (20.90) (9.06)

The accompanying notes form an integral part of these standalone financial statements

In terms of our report attached

For Price Waterhouse Chartered Accountants LLP For and on Behalf of the Board of Directors Firm Registration No.: 012754N/N500016

Nitin Khatri Ankur Verma N Srinath Partner (Director) (Director) Membership Number: 110282 (DIN No: 07972892) (DIN No: 00058133)

Ilangovan G Rishabh Aditya (Chief Financial Officer) (Company Secretary) Place : Mumbai Place : Mumbai Date : June 2, 2020 Date : June 2, 2020 TELESERVICES LIMITED 63

STANDALONE CASH FLOW STATEMENT AS AT AND FOR THE YEAR ENDED March 31, 2020 (All amount in Rupees Crores unless stated otherwise)

For the year ended For the year ended March 31, 2020 March 31, 2019 CASH FLOW FROM OPERATING ACTIVITIES Loss before tax (13,325.26) (5,229.54) Adjustments for : Depreciation and amortisation expense 484.28 431.70 Exceptional items (net) 7,433.51 1,556.44 Finance cost 1,646.82 3,183.13 Finance Income (74.81) (15.83) Profit on sale of current investments (25.51) (62.31) (Gain)/ Loss on financial assets mandatorily measured at FVTPL 1.98 (16.66) (Gain)/ loss on disposal of property, plant and equipment / written off (net) 0.52 6.40 Provision/Liability no longer required written back (0.32) (123.55) Bad debts written off 0.10 57.91 Impairment loss/(reversal) on financial assets 1.99 (56.69) Gain on discontinuation of lease as per IND AS 116 (6.73) - Foreign Exchange loss (net) 1.09 - Provision for contingencies - (557.04) (3,862.34) (826.04) Movement in working capital: (Increase) / Decrease in Inventories - 1.40 (Increase) / Decrease in Trade receivables (2.44) (52.78) (Increase) / Decrease in Financial assets 24.05 64.93 (Increase) / Decrease in Other assets (107.96) (916.62) Increase / (Decrease) in Trade payables (139.38) (882.31) Increase / (Decrease) in Financial liabilities (128.75) (12.69) Increase / (Decrease) in Other liabilities (9.52) (14.56) Increase / (Decrease) in Provisions 41.85 (2,217.15) Cash (used in) operations (4,184.49) (4,855.82) Taxes paid (net of refunds) 39.68 (33.37) NET CASH (USED IN) OPERATING ACTIVITIES (A) (4,144.81) (4,889.19) CASH FLOW FROM INVESTING ACTIVITIES Payments for property, plant and equipment (including capital advances) (127.75) (351.57) Proceeds from disposal of property, plant and equipment (0.03) 6.03 Finance Income 12.79 0.98 Payments for purchase of current investments (15,020.53) (17,227.30) Proceeds from sale of current investments 15,636.96 16,947.01 Loan given to related parties (824.40) 1.59 64 25th 2019-20

For the year ended For the year ended March 31, 2020 March 31, 2019 Inter corporate deposits given to related parties (2,790.15) (3,644.00) Investment in bank deposits (having original maturity of more than three (1.96) (12.69) months) Proceeds from Sale of Investment in Associate - 2,480.03 Advance received pursuant to the Scheme and related agreements 65.74 697.50 (Refer Note 1.2) NET CASH (USED IN) INVESTING ACTIVITIES (B) (3,049.33) (1,102.42) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of Equity shares 929.48 - Proceeds from issue of Compulsorily convertible preference shares 4,070.52 - Proceeds from borrowings 20,723.65 43,225.75 Repayment of borrowings (18,039.00) (36,568.54) Payments of Lease liabilities - Principal (96.08) - CCPS application money pending allotment - 929.48 Finance cost paid (742.17) (1,093.83) NET CASH GENERATED FROM FINANCING ACTIVITIES (C) 6,846.40 6,492.86 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A + (347.74) 501.25 B + C) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 538.60 37.35 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR (Refer 190.86 538.60 note 11)

Non-cash investing and financing activities: Pursuant to the Scheme and related agreements entered between the Company and Bharti, assets and liabilities pertaining to CMB undertaking have been transferred to Bharti. (Refer note 1.2).

The accompanying notes form an integral part of these standalone financial statements

In terms of our report attached

For Price Waterhouse Chartered Accountants LLP For and on Behalf of the Board of Directors Firm Registration No.: 012754N/N500016

Nitin Khatri Ankur Verma N Srinath Partner (Director) (Director) Membership Number: 110282 (DIN No: 07972892) (DIN No: 00058133)

Ilangovan G Rishabh Aditya (Chief Financial Officer) (Company Secretary) Place : Mumbai Place : Mumbai Date : June 2, 2020 Date : June 2, 2020

TELESERVICES LIMITED 65

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED March 31, 2020 (All amount in Rupees Crores unless stated otherwise)

Equity Share Capital

As at As at March 31, 2020 March 31, 2019 No. crores Rs in crores No. crores Rs in crores Equity Shares At the beginning of the year 577.50 5,775.03 577.50 5,775.03 Issued during the year (refer note 15) 92.95 929.48 - - Outstanding at the end of the year 670.45 6,704.51 577.50 5,775.03

Instruments entirely equity in nature

As at As at March 31, 2020 March 31, 2019 No. crores Rs in crores No. crores Rs in crores Compulsory Convertible Non Cumulative Preference Shares At the beginning of the year 159.20 15,920.00 - - Issued during the year (refer note 16) 136.96 13,696.28 159.20 15,920.00 Outstanding at the end of the year 296.16 29,616.28 159.20 15,920.00

Other Equity

Equity Reserves & surplus CCPS component Cash flow application of Securities /Cost of Total Other Capital Retained money compound premium Hedge Equity reserve earnings pending financial account Reserve allottment instruments As at April 1, 2018 5,023.48 12,112.48 9.22 (47,943.44) - - (30,798.26) Change in accounting policy (Refer - - - (8.69) - - (8.69) note 2.2(d)) Restated balance as at April 1, 5,023.48 12,112.48 9.22 (47,952.13) - - (30,806.95) 2018 Loss for the year - - - (5,229.54) - - (5,229.54) Other comprehensive income loss - - - (5.79) (0.98) - (6.77) for the year Total comprehensive loss - - - (5,235.33) (0.98) - (5,236.31) Transactions with owners with their capacity as owners: Issue of Optionally convertible 3,945.26 - - - - - 3,945.26 debentures (OCD) (Refer note 17) OCD converted during the year (2,904.32) - - - - - (2,904.32) (Refer note 17) 66 25th 2019-20

Equity Reserves & surplus CCPS component Cash flow application of Securities /Cost of Total Other Capital Retained money compound premium Hedge Equity reserve earnings pending financial account Reserve allottment instruments Compulsory convertible preference - - - - - 929.48 929.48 shares(CCPS) application money received during the year As at March 31, 2019 6,064.42 12,112.48 9.22 (53,187.46) (0.98) 929.48 (34,072.84) Change in accounting policy (Refer - - - (91.43) - - (91.43) note 2.2 (n) and note 35) Restated balance as at 1st April 6,064.42 12,112.48 9.22 (53,278.89) (0.98) 929.48 (34,164.27) 2019 Loss for the year - - - (13,325.26) - - (13,325.26) Other comprehensive loss for the - - - (3.99) (16.38) - (20.37) year Total comprehensive loss for - - - (13,329.25) (16.38) - (13,345.63) the year Transactions with owners with their capacity as owners: Issue of OCD during the year 489.77 - - - - - 489.77 (Refer note 17) Issue of CCPS during the year 732.74 732.74 (Refer note 17) OCD converted during the year (1,690.23) - - - - - (1,690.23) (Refer note 17) CCPS application money received - - - - - 4,070.52 4,070.52 during the year CCPS alloted during the year - - - - - (5,000.00) (5,000.00) Balance as at March 31, 2020 5,596.70 12,112.48 9.22 (66,608.14) (17.36) - (48,907.10)

The accompanying notes form an integral part of these standalone financial statements

In terms of our report attached

For Price Waterhouse Chartered Accountants LLP For and on Behalf of the Board of Directors Firm Registration No.: 012754N/N500016

Nitin Khatri Ankur Verma N Srinath Partner (Director) (Director) Membership Number: 110282 (DIN No: 07972892) (DIN No: 00058133)

Ilangovan G Rishabh Aditya (Chief Financial Officer) (Company Secretary) Place : Mumbai Place : Mumbai Date : June 2, 2020 Date : June 2, 2020 TELESERVICES LIMITED 67

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

1. Background Date under the Tata Teleservices (Maharashtra) Limited (‘TTML’) Scheme. As per TTSL Scheme both TTSL and 1.1 Nature of business TTML Schemes would become effective on the same day. On June 24 and 25, 2019, Bharti and TTSL filed Tata Teleservices Limited (the ‘Company’ or ‘TTSL’), NCLT orders with RoC Delhi with the Appointed Date part of the Tata Group, alongwith TTML, its subsidiary of July 1, 2019. TTSL and Bharti informed DoT vide company, became a pan-India telecom operator in letter dated June 26, 2019 of NCLT orders and filing January 2005. The Company has Access Service of those with RoC Delhi and further informed that the License to operate in 17 circles and National Long merger of CMB of TTSL to Bharti has been completed Distance (‘NLD’) license to provide the NLD services with an Appointed and Effective Date of July 1, 2019 within India. The Company is focused on providing and all statutory formalities towards operationalizing the various wireline voice, data and managed telecom demerger of the CMB of TTSL and consequent merger/ services. The Company is a public company domiciled transfer of the said Consumer Mobile Business of TTSL in India and is incorporated under the provisions of the into Bharti have been completed with an Appointed and Companies Act applicable in India. The registered office Effective Date of July 1, 2019. DoT appealed against of the Company is located at Jeevan Bharti, 10th floor, TDSAT orders in Hon’ble Supreme Court which did 124 Connaught Circus, New Delhi – 110 001. not interfere in the interim orders and directed TDSAT to finally hear the matter by end of February 2020. As at March 31, 2020, Tata Sons Private Limited, the Subsequently, on February 6, 2020, DoT subject to holding company owned 74.50% of the Company’s outcome of the pending Bharti petitions in TDSAT equity share capital. These financial statements have and any appeal against the judgements has taken the been approved by the Company’s Board of Directors on demerger on record. June 2, 2020. Both the TTSL and TTML Schemes became effective on The Commercial Papers of the Company are listed on July 1, 2019. NSE in India. Pursuant to the Scheme and related agreements entered 1.2 Demerger of Consumer Mobile Business between the Company and Bharti, assets and liabilities pertaining to CMB undertaking has been transferred to The Scheme of Arrangement amongst TTSL, Bharti Airtel Bharti. Limited (‘BAL’) and Bharti Hexacom Limited (‘BHL’), (BAL and BHL together referred to as ‘Bharti’) and their As per Scheme: respective shareholders and creditors (‘Scheme’) for transfer of the Consumer Mobile Business (‘CMB’) of • All (and not each) Equity Shareholders of the TTSL to Bharti was sanctioned by National Company Law Company have received 500 Redeemable Tribunal (‘NCLT’), New Delhi by an order dated January Preference Shares (RPS) of BAL of face value 30, 2019. Period of 30 days allowed to file the Scheme Rs.100 each and 500 RPS of BHL of face value with Registrar of Companies (RoC) has been extended Rs.100 each in proportion to their shareholding on from time to time till June 25, 2019. DoT issued approval the effective date. subject to certain conditions on April 10, 2019 to TTSL and Bharti, some of which were subsequently stayed/ • All (and not each) CCPS Holders of the Company modified by Telecom Disputes Settlement and Appellate have received 10 RPS of BAL of face value Rs.100 Tribunal (‘TDSAT’) vide its interim orders dated April 24, each and 10 RPS of BHL of face value Rs.100 each May 2 and May 6, 2019. TDSAT pending final hearing of in proportion to their shareholding on the effective the petitions filed by Bharti directed DoT to take on record date. the demerger subject to fulfilment of modified conditions and also allowed Bharti to operationalize spectrum and • All (and not each) OCPS Holders of the Company to take consequential actions. TTSL and Bharti have have received 10 RPS of BAL of face value Rs.100 reported compliance with such conditions to DoT vide each and 10 RPS of BHL of face value Rs.100 each letter dated May 22, 2019. NCLT, vide its order dated in proportion to their shareholding on the effective June 12, 2019, approved July 1, 2019 as the Appointed date. 68 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Considering the significant operational and financial No.40-3/2020 dated March 24, 2020), the Company has interdependencies of different business units, been providing services to its customers during the lock management continues to identify the Cash Generating down period without any major disruptions. With most, Unit (CGU) at the Company level. Accordingly, the if not all, of our customers across industries shifting to disclosures in relation to discontinued operations are not a work-from-home model, we have provided them with applicable. collaboration and remote working solutions to ensure their business continuity. However, since our voice and Indemnification: data connectivity solutions and the underlying physical circuits typically terminate at customer office locations, Pursuant to the Scheme and other related agreements we have seen relatively low usage of voice and data on executed between the Company and Bharti, the these circuits. Company has transferred certain assets and liabilities, including contingent liabilities, which are under The Company has performed assessment and believes indemnification. As agreed between the Company and that there is no material impact of COVID-19 situation in Bharti, all indemnified liabilities and obligations shall be these financial results. The Company has also made a deemed to have been borne entirely by the Company detailed assessment of its liquidity position for the next and not by Bharti, and any payment default in relation 12 months from the balance sheet date. Further, there to such obligation by the Company shall be governed is no material impact foreseen on revenue and operating by the relevant agreements. In relations to assets, cashflow of the Company. The Company will continue Bharti shall promptly on receipt of any payments in to monitor any material changes to future economic relation to the indemnified assets (including any interest conditions. payments received thereof) from the third parties pay to the Company such amounts (net of any cost and taxes The Company believes that it has taken into account incurred in relation to such indemnified assets). all the possible impact of known events arising from COVID-19 pandemic in the preparation of these financial 1.3 Going concern results. However, the impact assessment of COVID-19 is a continuing process given the uncertainties associated The accumulated losses of the Company as of March with its nature and duration. 31, 2020, have exceeded its paid-up capital and reserves. The Company has incurred net loss for 1.5 During the month of March, 2020, the Company has the year ended March 31, 2020 and the Company’s received an anonymous letter alleging irregularities current liabilities exceeded its current assets as at that in procurement of some materials. The Company date. The Company is in the process of monetization immediately appointed an external agency to conduct of certain residual assets, proceeds of which will be forensic investigation, which is in progress. Based on primarily utilised towards reduction of residual debt and the current status of the ongoing investigation, robust other financial obligations. The Company has obtained procurement processes and robust internal control a support letter from its Promoter indicating that the procedures, the Company believes that it is unlikely Promoter will take necessary actions to organize for any that there is a material misstatement in the standalone shortfall in liquidity during the period of 12 months from financial statements. the balance sheet date. 2. Significant accounting policies Based on the above, the Company is confident of its ability to meet the funds requirement and to continue 2.1 Basis of preparation of Standalone financial its business as a going concern and accordingly, the statements standalone financial statements have been prepared on that basis. These standalone financial statement comply in all material aspects with Indian Accounting Standards 1.4 COVID-19 pandemic (Ind AS) notified under section 133 of the Companies Act, 2013 (the ‘Act’) [Companies (Indian Accounting Since telecommunication services were identified as an Standards) Rules, 2015 (as amended)] and other essential service (vide the Ministry of Home Affairs order relevant provisions of the Act. TELESERVICES LIMITED 69

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

These standalone financial statements have been prepared (iv) Cash or cash equivalent unless restricted from on the historical cost basis, except for certain assets and being exchanged or used to settle a liability for at liabilities which are measured at fair values at the end of least twelve months after the reporting period each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of All other assets are classified as non-current. the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset When a liability meets any of the following criteria it is or paid to transfer a liability in an orderly transaction between treated as current: market participants at the measurement date. (i) It is expected to be settled in normal operating These standalone financial statements are presented in cycle Indian Rupees (“INR”) and all values are rounded to the (ii) It is held primarily for the purpose of trading nearest crores, except when otherwise indicated. (iii) It is due to be settled within twelve months after the reporting period, or 2.2 Summary of significant accounting policies (iv) There is no unconditional right to defer the settlement of the liability for at least twelve months a. Investments in subsidiaries and associates after the reporting period

An entity is termed as a subsidiary if the company All other liabilities are classified as non-current. controls the entity. Control is achieved when the Company is exposed, or has rights, to variable returns The operating cycle is the time between the acquisition from its involvement with the investee and has the of assets for processing and their realisation in cash and ability to affect those returns through its power over the cash equivalents. The Company has identified twelve investee. months as its operating cycle.

An associate is an entity over which the Company has c. Foreign Currencies significant influence. Significant influence is the power to participate in the financial and operating policy decisions Functional and Presentation Currency: of the investee, but is not control or joint control over those policies. Items included in the financial statements of the Company are measured using the currency of the The Company has accounted for its investment in primary economic environment in which the entity subsidiaries and associates at cost less, impairment, if operates (‘the functional currency’). The Company’s any as per Ind AS 36. Refer note 2.2(l) for further details financial statements are presented in INR, which is also on impairment of non-financial assets. the Company’s functional and presentation currency. b. Current vs Non-Current Classification Initial Measurement:

The Company presents assets and liabilities in Transactions in foreign currencies on initial recognition the balance sheet based on current/non-current are recorded at the spot exchange rate between classification. the functional currency and the foreign currency on the date of the transaction. However, for practical When an asset meets any of the following criteria it is reasons, the Company uses an average rate if the treated as current: average approximates the actual rate at the date of the transaction. (i) Expected to be realised or intended to be sold or consumed in normal operating cycle Subsequent Measurement: (ii) Held primarily for the purpose of trading (iii) Expected to be realised within twelve months after At each balance sheet date, foreign currency monetary the reporting period, or items are reported using the closing exchange rate. 70 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Exchange differences that arise on settlement of whereas invoicing/collection in excess of revenue are monetary items or on restatement at each balance sheet classified as Unearned revenue which is grouped under date of the company’s monetary items at the closing rate other current and non-current liabilities. are recognised as income or expenses in the period in which they arise. Service revenue from activation and installation for certain customers, and associated acquisition costs are Non-monetary items which are carried at historical cost amortised over the period of agreement/ lock in period denominated in a foreign currency are reported using since the date of activation of service. the exchange rate at the date of the transaction. Non- monetary items measured at fair value in a foreign The Company has entered into certain multiple-element currency are translated using the exchange rates at revenue arrangements which involve the delivery or the date when the fair value was determined. The gain performance of multiple products, services or rights to or loss arising on translation of non-monetary items use assets. At the inception of the arrangement, all the is recognised in line with the gain or loss of the item deliverables therein are evaluated to determine whether that gave rise to the translation difference (translation they represent distinct performance obligations, and if differences on items whose gain or loss is recognised in so, they are accounted for separately. Total consideration other comprehensive income or the statement of profit related to the multiple element arrangements is and loss is also recognised in other comprehensive allocated to each performance obligation based on their income or the statement of profit and loss respectively). standalone selling prices. d. Revenue For accounting policy of interconnect revenues, refer note 2.2(f). Effective April 1, 2018, the Company adopted Ind AS 115, ‘Revenue from Contracts with Customers’ basis the e. Other Income cumulative effect method applied retrospectively to the contracts that were not completed as of April 1, 2018 (i) Interest income (being date of initial application). The effect on adoption of the said standard was insignificant on these financial The interest income is recognised using the statements. Effective Interest Rate (EIR) method. For further details, refer note 2.2(u) on financial instruments. Revenue is recognised upon transfer of control of promised products or services to customer at the (i) Dividend income consideration which the Company has received or expects to receive in exchange of those products Dividend income is recognised when the Company’s or services, net of any taxes / duties, discounts and right to receive the payment is established. process waivers. Revenue is recognised as and when each distinct performance obligation is satisfied. f. Interconnect revenues and costs (Access charges)

Service revenues mainly pertain to usage, subscription The Telecom Regulatory Authority of India (TRAI) and activation charges for voice, data, messaging and issued Interconnection Usage Charges Regulation 2003 value added services. It also includes revenue from (‘IUC regime’) effective May 1, 2003 and subsequently interconnection / roaming charges for usage of the amended the same from time to time. Under the IUC Company’s network by other operators for voice, data, regime, with the objective of sharing of call/Short messaging and signalling services. The Company Message Services (‘SMS’) revenues across different recognises revenue from these services as they are operators involved in origination, transit and termination provided. Usage charges are recognised based on actual of every call/SMS, the Company pays interconnection usage. Subscription charges are recognised over the charges (prescribed as rate per minute of call time) and estimated customer relationship period or subscription per SMS for all outgoing calls and SMS originating in pack validity period, whichever is lower. Revenues in its network to other operators. The Company receives excess of invoicing are classified as unbilled revenue certain interconnection charges from other operators for which is grouped under other current financial assets all calls and SMS terminating in its network. TELESERVICES LIMITED 71

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Accordingly, interconnect revenues are recognized as defined in the License Agreement, earned from the as those on calls/SMS originating in another telecom customers. These costs are expensed in the statement operator network and terminating in the Company’s of Profit and Loss in the year in which the related network. These are recognised upon transfer of control revenues are recognized. of services being transferred over time. Interconnect cost is recognized as charges incurred on termination of h. Taxes calls/SMS originating from the Company’s network and terminating on the network of other telecom operators. Current income tax The interconnect revenue and costs are recognized in the standalone financial statements on a gross basis Current income tax assets and liabilities are measured and included in service revenue and access charges in at the amount expected to be recovered from or paid the statement of profit and loss, respectively. to the taxation authorities. Current tax is based on the taxable profit for the year which may differ from ‘profit g. License entry fee and spectrum fees before tax’ as reported in the statement of profit and loss because of items of income or expense that are The license entry fee/spectrum fees has been taxable or deductible in other years and items that are recognized as an intangible asset and is amortized on never taxable or deductible. The tax rates and tax laws straight line basis over the remaining license period from used to compute the amount are those that are enacted the date when it is available for use in the respective or substantively enacted, at the reporting date. Current circles/spectrum blocks. License entry fee/spectrum income tax relating to items recognised outside profit fees includes interest on funding of license entry fee/ or loss is recognised outside profit or loss (either in spectrum fees and bank guarantee commission up to other comprehensive income or in equity). Current tax the date of spectrum available for use in the respective items are recognised in correlation to the underlying circles. Fees paid for migration of the original licenses transaction either in Other Comprehensive Income to the Unified license fees for National Long Distance (OCI) or directly in equity. (NLD) services is amortized over the remaining period of the license of 20 years for the respective circles from The Company offsets tax assets and liabilities if and the date of migration to Unified licenses/ payment of the only if it has a legally enforceable right to set off current license fees on straight line basis. Fees paid for obtaining tax assets and current tax liabilities and the current tax in-principle approval to use alternate technology under assets and current tax liabilities relate to income taxes the existing Unified licenses has been recognized as levied by the same tax authority. an intangible asset and is amortized from the date of approval over the balance remaining period of the Deferred tax Unified licenses on straight line basis for the respective circles. Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities Revenue sharing fee in the standalone financial statements and the corresponding tax bases used in the computation Revenue sharing fee on license and spectrum is of taxable profit. Deferred tax assets are generally computed as per the licensing agreement at the recognised for all deductible temporary differences, the prescribed rate and expensed as license fees and carry forward of any unused tax losses, to the extent that Spectrum charges in the statement of profit and loss it is probable that taxable profits will be available against in the year in which the related revenue from providing which those deductible temporary differences can be unified access services and national long-distance utilised. Such deferred tax assets and liabilities are not services are recognized. recognised if the temporary difference arises from the initial recognition (other than in a business combination) An additional revenue share towards spectrum charges of assets and liabilities in a transaction that affects is computed at the rate specified by the Department of neither the taxable profit nor the accounting profit. Telecom (DoT) of the Adjusted Gross Revenue (‘AGR’), 72 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Deferred tax liabilities are recognised for all taxable i. Property, plant and equipment (‘PP&E’) temporary differences, except: Property, plant and equipment and capital work in • When the deferred tax liability arises from the initial progress is stated at cost of acquisition or construction, recognition of goodwill or an asset or liability in a net of accumulated depreciation and accumulated transaction that is not a business combination and, impairment losses, if any. Such cost includes purchase at the time of the transaction, affects neither the price, the cost of replacing part of the plant and accounting profit nor taxable profit or loss. equipment and directly attributable cost of bringing the asset to its working condition for the intended use. When • In respect of taxable temporary differences significant parts of plant and equipment are required to associated with investments in subsidiaries, be replaced at intervals, the Company depreciates them associates and interests in joint ventures, when separately based on their specific useful lives. the timing of the reversal of the temporary differences can be controlled and it is probable that Subsequent costs are included in the assets carrying the temporary differences will not reverse in the amount or recognised as a separate asset, as appropriate, foreseeable future. only when it is probable that future economic benefits associated with the item will flow to the Company and The carrying amount of deferred tax assets is reviewed the cost can be measured reliably. All other repair and at each reporting date and reduced to the extent that maintenance costs are recognised in the statement of it is no longer probable that sufficient taxable profit will profit and loss account as incurred. The present value of be available to allow all or part of the deferred tax asset the expected cost for the decommissioning of an asset to be utilised. Unrecognised deferred tax assets are re- after its use is included in the cost of the respective assessed at each reporting date and are recognised to asset if the recognition criteria for a provision are met. the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Gains and losses arising from retirement or disposal of property, plant and equipment are determined as Deferred tax assets and liabilities are measured at the the difference between the net disposal proceeds and tax rates that are expected to apply in the year when the carrying amount of the asset and are recognised the asset is realised or the liability is settled, based in the statement of profit and loss account on the date on tax rates (and tax laws) that have been enacted or of retirement or disposal. Assets are depreciated to substantively enacted at the reporting date. the residual values on a straight-line basis over the estimated useful lives. The assets’ residual values and Current and deferred tax are recognised in profit or loss, useful lives are reviewed at each financial year end or except when they relate to items that are recognised whenever there are indicators for review, and adjusted in other comprehensive income or directly in equity, prospectively. in which case, the current and deferred tax are also recognised in other comprehensive income or directly in Freehold land is not depreciated. equity respectively. Buildings constructed on leasehold land are depreciated Deferred tax assets and deferred tax liabilities are offset based on the useful life specified in Schedule II to the if a legally enforceable right exists to set off current tax Companies Act, 2013, where the lease period of land is assets against current tax liabilities and the deferred beyond the life of the building. In other cases, buildings taxes relate to the same taxable entity and the same constructed on leasehold lands are amortised over the taxation authority. primary lease period of the lands.

Deferred tax relating to items recognised outside profit or The useful lives of the assets are based on technical loss is recognised outside profit or loss in correlation to estimates approved by the Management, and are lower the underlying transaction either in other comprehensive than or same as the useful lives prescribed under income or directly in equity. schedule II to the Companies Act, 2013 in order to reflect the period over which depreciable assets are expected TELESERVICES LIMITED 73

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

to be used by the Company. Estimated useful lives of Intangible assets with finite lives are amortised over assets are as follows: the useful economic life and assessed for impairment whenever there is an indication that the intangible asset Useful life may be impaired. Particulars (in years) Indefeasible Right to Use (‘IRU’) taken for optical fiber As per company and ducts, by the Company are capitalized as intangible Plant and Equipment assets at the amounts paid for acquiring the right and Network Equipment 12 are amortized on straight line basis, over the period of Air Conditioning Equipment 6 lease term. Generators 6 The amortisation period and the amortisation method for Electrical Equipments 4-6 an intangible asset with a finite useful life are reviewed Office Equipments 3-5 at least at the end of each year. Changes in the expected Buildings 60 useful life are considered to modify the amortisation period or method, and are treated as changes in Furniture and Fixtures 3-6 accounting estimates. The amortisation expense on Vehicles 5 intangible assets with finite lives is recognised in the Leasehold Improvements 9 statement of profit and loss. j. Investment property For accounting policy related to license entry fees/ spectrum fees, refer note 2.2(g). Property that is held for long term rental yields or for capital appreciation or both, and that is not occupied Gains or losses arising from de-recognition of an by the company is classified as investment property. intangible asset are measured as the difference between Investment property is measured initially at it’s cost, the net disposal proceeds and the carrying amount of including related transaction cost and where applicable the asset and are recognised in the statement of profit borrowing cost. Subsequent expenditure is capitalised or loss when the asset is derecognised. to the assets carrying value only when it is probable that future economic benefits associated with the l. Impairment of non-financial assets expenditure will flow to the company and the cost of the item can be measured reliably. All other repairs and Non-financial assets which are subject to depreciation maintenance cost are expensed when incurred. When or amortization are reviewed for impairment, whenever part of an investment property is replaced, the carrying events or changes in circumstances indicate that the amount of the replaced part is derecognised. Investment carrying amount of such assets may not be recoverable. properties are depreciated using the straight line method If any such indication exists, the recoverable amount of over the estimated useful lives. Investment properties the asset is estimated in order to determine the extent generally have a useful life of 60 years. of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, k. Intangible assets the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Intangible assets acquired separately are measured on initial recognition at cost. Subsequently, intangible assets Recoverable amount is the higher of fair value less costs are carried at cost less any accumulated amortisation of disposal and value in use. In assessing value in use, and accumulated impairment losses. the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects The useful lives of intangible assets are assessed as current market assessments of the time value of money either finite or indefinite. There are no intangible assets and the risks specific to the asset. In determining fair assessed with indefinite useful life. value less costs of disposal, recent market transactions are taken into account. If the recoverable amount of an asset is estimated to be less than its carrying amount, an 74 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

impairment loss is recognised by reducing the carrying applying this standard has been recognised as an amount of the asset to its recoverable amount. adjustment to the opening balance of retained earnings as on April 1, 2019. When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised Lease Policy followed by the Company till estimate of its recoverable amount, but so that the March 31, 2019 (Ind AS 17) increased carrying amount does not exceed the carrying amount that would have been determined had no Company as a lessee impairment loss been recognised for the asset (or cash- generating unit) in prior years. A reversal of an impairment Leases of assets under which the lessor effectively loss is recognised immediately in profit or loss. retains all the risks and rewards of ownership are classified as operating leases. Operating lease payments m. Borrowing Cost are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term Borrowing costs directly attributable to the acquisition except where escalation in payments are structured to or construction of a qualifying asset, including interest increase in line with expected general inflation. attributable to the funding of license fees/spectrum fees up to the date the asset is available for use, are IRU taken for dark fiber, duct and embedded electronics capitalised as a part of the cost of that asset. are treated as finance lease (purchase of intangible assets), where the IRU term substantially covers the All other borrowing costs are expensed in the period in estimated economic useful life of the asset and the which they occur. Borrowing costs consist of interest routes are explicitly identified in the agreement. The and other costs that an entity incurs in connection with cases where the estimated economic useful life does the borrowing of funds. Interest income earned on the not significantly represent the life of the asset, the IRU temporary investment of specific borrowings pending is treated as operating lease provided the routes are their expenditure on qualifying assets is deducted from explicitly identified. the borrowing costs eligible for capitalisation. Lease Policy followed by the Company from n. Leases April 1, 2019 (Ind AS 116)

Transition to Ind AS 116 Ministry of Corporate Affairs Company as a lessee (“MCA”) through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies The Company evaluates if an arrangement qualifies (Indian Accounting Standards) Second Amendment to be a lease as per the requirements of Ind AS 116. Rules, has notified Ind AS 116 Leases which replaces Identification of a lease requires significant judgment. the existing lease standard, Ind AS 17 Leases and other The Company uses significant judgement in assessing interpretations. Ind AS 116 sets out the principles for the the lease term (including anticipated renewals) and the recognition, measurement, presentation and disclosure applicable discount rate. of leases for both lessees and lessors. It introduces a single, on-balance sheet lease accounting model for The Company determines the lease term as the lessees. non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the The Company has adopted Ind AS 116, effective Company is reasonably certain to exercise that option; annual reporting period beginning April 1, 2019 and and periods covered by an option to terminate the lease applied the standard to its leases, retrospectively, if the Company is reasonably certain not to exercise that with the cumulative effect of initially applying the option. In assessing whether the Company is reasonably standard, recognised on the date of initial application certain to exercise an option to extend a lease, or not to (April 1, 2019) (modified retrospective approach). exercise an option to terminate a lease, it considers all Accordingly, the Company has not restated comparative relevant facts and circumstances that create an economic information, instead, the cumulative effect of initially incentive for the Company to exercise the option to extend TELESERVICES LIMITED 75

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

the lease, or not to exercise the option to terminate the d) The exercise price of a purchase option if the lease. The Company revises the lease term if there is a company is reasonably certain to exercise that change in the non-cancellable period of a lease. option, and i) Right-of-use assets e) Payment of penalties for terminating the lease, if the company is reasonably certain to exercise that The Company recognises a right-of-use asset and a option. lease liability at the lease commencement date except for short term leases which are less than 12 months and The lease liability is initially measured at the present low value leases. value of the lease payments that are not paid at the commencement date, the lease payment are discounted The right-of-use asset is initially measured at cost using the interest rate implicit in the lease. If the rate comprises the following - cannot be readily determined, which is generally the case for lease in the company, the lessee’s incremental a) the initial amount of the lease liability borrowing rate is used, being the rate that the individual b) any initial direct costs incurred less any lease lessees would have to pay to borrow fund necessary to incentives received. obtain an asset on similar value to the right-of-use asset in a similar economic environment with similar terms, The right-of-use assets is subsequently measured at security and condition. cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any Generally, the Company uses its incremental borrowing remeasurement of the lease liability. The right-of-use rate as the discount rate. assets are depreciated using the straight-line method from the commencement date over the shorter of lease Lease payments also include an extension, purchase term or useful life of right-of-use asset. The estimated and termination option payments, if the Company is useful lives of right-of-use assets are determined on the reasonably certain to exercise such options. same basis as those of property, plant and equipment. Right of-use assets are tested for impairment whenever Lease liability and ROU asset have been separately there is any indication that their carrying amounts may presented in the Balance Sheet and lease payments not be recoverable. Impairment loss, if any, is recognised have been classified as financing cash flows. in the statement of profit and loss. In calculating the present value of lease payments, ii) Lease liabilities the Company uses its incremental borrowing rate at the lease commencement date because the interest Lease liabilities include the Net present value of the rate implicit in the lease is not readily determinable. following lease payment: After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest a) Fixed payments, including in-substance fixed and reduced for the lease payments made. In addition, payments; the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a b) Variable lease payments that depend on an index change in the lease payments (e.g., changes to future or a rate, initially measured using the index or rate payments resulting from a change in an index or rate as at the commencement date. used to determine such lease payments) or a change in the assessment of an option to purchase the underlying c) Using the practical expedient maintenance charges asset. are also included in the lease payments as it is not practical to separate maintenance cost from The Company recognises the amount of the the lease rent. (In any agreement, where rent re-measurement of lease liability due to modification as and maintenance are separately mentioned or an adjustment to the right-of-use asset and statement identifiable, then such maintenance charges are of profit and loss depending upon the nature of not considered as a part of lease payments). modification. Where the carrying amount of the right- 76 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

of-use asset is reduced to zero and there is a further p. Trade Receivables: reduction in the measurement of the lease liability, the Group recognises any remaining amount of the re- Trade Receivables are recognized initially at fair value measurement in statement of profit and loss. and subsequently measured at amortised cost using the effective interest method less provision for impairment. iii) Short-term leases and leases of low-value assets q. Trade and Other Payables: The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases These amounts represent liabilities for goods and that have a lease term of 12 months or less from the services provided to the company prior to the end commencement date and do not contain a purchase of financial year which are unpaid. The amounts are option). Lease payments on short-term leases are unsecured and are usually paid within 30 days of recognised on a straight-line basis as an expense in recognition. Trade and other payables are presented as Profit or loss over the lease term current liabilities unless payment is not due within 12 months after the reporting period. They are recognized at Company as a lessor their fair value and subsequently measured at amortised cost using the effective interest method. Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line r. Provisions basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying Provisions are recognised when the Company has a amount of the underlying asset and recognised as present obligation (legal or constructive) as a result of expense over the lease term on the same basis as lease a past event, it is probable that an outflow of resources income. The respective leased assets are included in embodying economic benefits will be required to settle the balance sheet based on their nature. The Company the obligation and a reliable estimate can be made of did not need to make any adjustments to the accounting the amount of the obligation. The expense relating to a for assets held as lessor as a result of adopting Ind AS provision is presented in the statement of profit and loss 116. net of any reimbursement.

In IRU granted for dark fiber, duct and embedded If the effect of the time value of money is material, electronics are treated as finance lease (sale of provisions are discounted using a current pre-tax rate intangible assets), where the IRU term substantially that reflects, when appropriate, the risks specific to the covers the estimated economic useful life of the asset liability. When discounting is used, the increase in the and the routes are explicitly identified in the agreement. provision due to the passage of time is recognised as a The cases where the IRU term does not significantly finance cost. represent the estimated useful life of the asset, the IRU is treated as operating lease. Asset Retirement Obligation (“ARO”) is provided for arrangements where the Company has a binding o. Inventories obligation to restore the said location/premises at the end of the period in a condition similar to inception of Inventories are valued at the lower of cost and net the arrangement. The restoration and decommissioning realizable value. Cost is determined on a weighted costs are provided at the present value of expected costs average basis and includes all applicable overheads to settle the obligation using estimated cash flows and in bringing the inventories to their present location and are recognised as part of the cost of the particular asset. condition. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning Net realizable value is the estimated selling price in the liability. The unwinding of the discount is expensed as ordinary course of business, less estimated costs to incurred and recognised in the statement of profit and make the sale. loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs TELESERVICES LIMITED 77

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

or in the discount rate applied are added to or deducted • Service costs comprising current service costs; and from the cost of the asset. • Net interest expense or income s. Employee benefits Actuarial gains/losses are immediately taken to the statement of Other Comprehensive Income and are not (i) Post–employment obligation deferred.

The Company has schemes of retirement benefits for (ii) Short-term and other long-term employee benefits provident fund and gratuity A liability is recognised for benefits accruing to 1) Provident fund with respect to employees covered employees in respect of wages and salaries and annual with the Government administered fund is a leave in the period the related service is rendered at the defined contribution scheme. The contributions to undiscounted amount of the benefits expected to be the government administered fund are charged to paid in exchange for that service. the statement of profit and loss for the year when the contributions are due for the year as and when Liabilities recognised in respect of short-term employee employee renders services. Also, the Company benefits are measured at the undiscounted amount of makes contributions to the Tata Teleservices the benefits expected to be paid in exchange for the Provident Fund Trust which is treated as defined related service. benefit plan. The Company has an obligation to make good the shortfall, if any, between the return from the Liabilities recognised in respect of other long-term investments of the trust and the notified interest rate. employee benefits are measured at the present value The shortfall/excess between the present value of of the estimated future cash outflows expected to be fund assets and the present value of the obligation made by the Company in respect of services provided are determined based on actuarial valuation obtained by employees upto the reporting date. at the end of each year as per the Projected Unit Credit Method and accounted accordingly. (iii) Compensated absences

2) Gratuity liability as per the Gratuity Act, 1972 and Liability for compensated absences is in accordance The Payment of Gratuity (Amendment) Act, 2010, with the rules of the Company. Short term compensated is defined benefit plan and is provided for on the absences are provided based on estimates. Long term basis of an actuarial valuation made at the end of compensated absences are provided based on actuarial each year as per the Projected Unit Credit Method. valuation obtained at the end of each year as per the The contribution towards gratuity is made to Life Projected Unit Credit Method. Insurance Corporation of India (‘LIC’) and Tata AIA Life Insurance Company Limited. t. Fair value measurement

Re-measurements, comprising of actuarial gains The Company measures financial instruments such as and losses and the return on plan assets (excluding derivatives and certain investments, at fair value at each amounts included in net interest on the net defined balance sheet date. benefit liability), are recognised immediately in the balance sheet with a corresponding charge or credit to Fair value is the price that would be received to sell an other comprehensive income in the period in which they asset or paid to transfer a liability in an orderly transaction occur. Remeasurements are not reclassified to profit or between market participants at the measurement date. loss in subsequent periods. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the Net interest is calculated by applying the discount rate liability takes place either: to the net defined benefit liability or asset. The Company recognises the following changes in the net defined • In the principal market for the asset or liability, or benefit obligation as an expense in the statement of • In the absence of a principal market, in the most profit and loss: advantageous market for the asset or liability. 78 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

The principal or the most advantageous market must be The Company uses valuation techniques that are accessible by the Company. appropriate in the circumstances and for which sufficient data are available to measure its fair value, maximising The fair value of an asset or a liability is measured using the use of relevant observable inputs and minimizing the the assumptions that market participants would use use of unobservable inputs. when pricing the asset or liability, assuming that market participants act in their economic best interest. u. Financial Instruments

A fair value measurement of a non-financial asset takes A financial instrument is any contract that gives rise to into account a market participant’s ability to generate a financial asset of one entity and a financial liability or economic benefits by using the asset in its highest and equity instrument of another entity. best use or by selling it to another market participant that would use the asset in its highest and best use. i) Financial assets

The Company uses valuation techniques that are Initial recognition and measurement appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the All financial assets are recognised initially at fair value use of relevant observable inputs and minimizing the plus, in the case of financial assets not recorded at use of unobservable inputs. fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. All assets and liabilities for which fair value is measured Transaction costs of financial assets carried at fair value or disclosed in the standalone financial statements are through profit and loss are expensed in profit or loss. categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant Subsequent measurement to the fair value measurement as a whole: For purposes of subsequent measurement financial Level 1 - Quoted (unadjusted) market prices in active assets are classified in two broad categories: markets for identical assets or liabilities Level 2 - Valuation techniques for which the lowest level • Financial assets at fair value input that is significant to the fair value measurement is • Financial assets at amortized cost directly or indirectly observable Level 3 - Valuation techniques for which the lowest level Where assets are measured at fair value, gains and input that is significant to the fair value measurement is losses are either recognised in the statement of profit and unobservable loss (i.e. fair value through profit or loss), or recognised in other comprehensive income (i.e. fair value through For assets and liabilities that are recognised in the other comprehensive income). balance sheet on a recurring basis, the Company determines whether transfers have occurred between A financial asset that meets the following two conditions levels in the hierarchy by re-assessing categorization is measured at amortized cost (net of any write down for (based on the lowest level input that is significant to the impairment) unless the asset is designated at fair value fair value measurement as a whole) at the end of each through profit or loss under the fair value option reporting period. • Business model test For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the The objective of the Company’s business model is basis of the nature, characteristics and risks of the asset to hold the financial asset to collect the contractual or liability and the level of the fair value hierarchy as cash flows (rather than to sell the instrument prior explained above. to its contractual maturity to realize its fair value changes). TELESERVICES LIMITED 79

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

• Cash flow characteristics test Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has The contractual terms of the financial asset give neither transferred nor retained substantially all the rise on specified dates to cash flows that are solely risks and rewards of the asset, but has transferred payments of principal and interest on the principal control of the asset amount outstanding. Even if an instrument meets the two requirements to be measured at amortized When the Company has transferred its rights to receive cost or fair value through other comprehensive cash flows from an asset or has entered into a pass- income, a financial asset is measured at fair value through arrangement, it evaluates if and to what extent it through profit or loss if doing so eliminates or has retained the risks and rewards of ownership. When significantly reduces a measurement or recognition it has neither transferred nor retained substantially all inconsistency (sometimes referred to as an of the risks and rewards of the asset, nor transferred ‘accounting mismatch’) that would otherwise arise control of the asset, the Company continues to recognise from measuring assets or liabilities or recognizing the transferred asset to the extent of the Company’s the gains and losses on them on different bases. continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset All other financial asset is measured at fair value and the associated liability are measured on a basis that through profit or loss. reflects the rights and obligations that the Company has retained. All equity investments, other than investments in subsidiaries, associates and joint ventures, are Continuing involvement that takes the form of a measured at fair value in the balance sheet, with guarantee over the transferred asset is measured at the changes in the value recognised in the statement of lower of the original carrying amount of the asset and the profit and loss, except for those equity investments maximum amount of consideration that the Company for which the entity has elected to present changes could be required to repay. in the values in ‘other comprehensive income’. Impairment of financial assets If an equity investment is not held for trading, an irrevocable election is made at initial recognition to The company assesses impairment based on expected measure it at fair value through other comprehensive credit losses (ECL) model to the following: income with only dividend income recognised in the statement of profit and loss. Once the selection is • Financial assets measured at amortised cost; made, there will be no recycling of the amount from • Financial assets measured at Fair value through other comprehensive income to statement of profit other comprehensive income (FVTOCI); and loss. Expected credit losses are measured through a loss De-recognition allowance at an amount equal to:

A financial asset (or, where applicable, a part of a • the 12-month expected credit losses (expected financial asset or part of a Company of similar financial credit losses that result from those default events assets) is primarily derecognised (i.e. removed from the on the financial instrument that are possible within Company’s statement of financial position) when: 12 months after the reporting date); or

• The rights to receive cash flows from the asset • full lifetime expected credit losses (expected credit have expired, or losses that result from all possible default events over the life of the financial instrument). • The Company has transferred its rights to receive cash flows from the asset or has assumed an The Company follows ‘simplified approach’ for obligation to pay the received cash flows in full recognition of impairment loss allowance on: without material delay to a third party under a ‘pass through’ arrangement; and either (a) the • Trade receivables and unbilled revenue; and 80 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

• All lease receivables • Financial liabilities at fair value through profit or loss include financial liabilities held for trading Under the simplified approach, the Company does and financial liabilities designated upon initial not track changes in credit risk. Rather, it recognizes recognition as at fair value through profit or loss. impairment loss allowance based on lifetime ECL’s at each reporting date, right from its initial recognition. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in The Company uses a provision matrix to determine the near term. This category also includes derivative impairment loss allowance on the portfolio of trade financial instruments entered into by the Company that receivables and unbilled revenue. The provision matrix are not designated as hedging instruments in hedge is based on its historically observed default rates over relationships as defined by Ind AS 109. Separated the expected life of the trade receivable and is adjusted embedded derivatives are also classified as held for for forward looking estimates. At every reporting date, trading unless they are designated as effective hedging the historical observed default rates are updated and instruments. changes in the forward-looking estimates are analysed. Gains or losses on liabilities held for trading are For recognition of impairment loss on other financial recognised in the statement of profit and loss. assets and risk exposure, the Company determines that whether there has been a significant increase in the Financial liabilities designated upon initial recognition at credit risk since initial recognition. If credit risk has not fair value through profit or loss are designated at the increased significantly, 12-month ECL is used to provide initial date of recognition, and only if the criteria in Ind AS for impairment loss. However, if credit risk has increased 109 are satisfied. significantly, lifetime ECL is used. If in a subsequent period, credit quality of the instrument improves such Loans and borrowings that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts After initial recognition, interest-bearing loans and to recognising impairment loss allowance based on borrowings are subsequently measured at amortized 12-month ECL. cost using the Effective Interest Rate (EIR) method. Gains and losses are recognised in the statement of For assessing increase in credit risk and impairment profit and loss when the liabilities are derecognized. loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the Amortised cost is calculated by taking into account any objective of facilitating an analysis that is designed to discount or premium on draw down and fees or costs enable significant increases in credit risk to be identified that are an integral part of the EIR. The EIR amortisation on a timely basis. is included as finance costs in the statement of profit and loss. ii) Financial liabilities Preference shares, which are mandatorily redeemable Initial recognition and measurement on a specific date, are classified as liabilities. The dividends on these preference shares are recognised in All financial liabilities are recognised initially at fair value profit or loss as finance costs. and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The fair value of the liability portion of an Optionally Convertible Non-Cumulative Preference Shares/ Subsequent measurement Debentures is determined using a market interest rate for an equivalent instrument. This amount is recorded The measurement of financial liabilities depends on their as a liability on an amortised cost basis until converted classification, as described below: on conversion or redemption. The remainder of the proceeds is attributable to the equity portion of the • Financial liabilities at amortised cost compound instrument. This is recognised and included TELESERVICES LIMITED 81

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

in shareholders’ equity, net of income tax effects, and there is a currently enforceable legal right to offset the not subsequently re-measured. recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the A Compulsory Convertible Non-Cumulative Preference liabilities simultaneously. The legally enforceable right Shares (CCPS) issued by the Company is a financial must be enforceable in the normal course of business instrument some of which are of entirely equity in nature and in the event of default, insolvency or bankruptcy of and compound financial instruments that contains a the Company or the counterparty. financial liability component and an equity component. CCPS in the nature of compound financial instrument may iv) Derivative financial instruments and hedge also contain a hybrid element of embedded derivative. accounting On the issue of such CCPS, the company fair values the financial liability and embedded derivative components The company enters into derivative contracts to and accounts for each separately at their fair values and hedge foreign currency/price risk on unexecuted the difference between the transaction price and these firm commitments and highly probable forecast fair values is accounted as equity. Subsequently, the transactions. Such derivative financial instruments are financial liability component is recognized at amortized initially recognised at fair value on the date on which a cost while the embedded derivative is recognized at fair derivative contract is entered into and are subsequently value through profit or loss. re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as Financial guarantee contracts financial liabilities when the fair value is negative.

Financial guarantee contracts issued by the Company Any gains or losses arising from changes in the fair value are those contracts that require a payment to be made of derivatives are taken directly to statement of profit and to reimburse the holder for a loss it incurs because the loss, except for the effective portion of cash flow hedges, specified debtor fails to make a payment when due in which is recognised in other comprehensive income and accordance with the terms of a debt instrument. Financial presented as a separate component of equity which is guarantee contracts are recognised initially as a liability later reclassified to statement of profit and loss when the at fair value. Subsequently, the liability is measured at hedge item affects profit or loss. the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the The effective portion of the gain or loss on the hedging amount recognised less cumulative amortisation. instrument is recognised in Other Comprehensive Income (OCI) in the cash flow hedge reserve, while De-recognition any ineffective portion is recognised immediately in the statement of profit and loss. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. If the hedging instrument expires or is sold, terminated When an existing financial liability is replaced by another or exercised without replacement or rollover (as part of from the same lender on substantially different terms, or the hedging strategy), or if its designation as a hedge the terms of an existing liability are substantially modified, is revoked, or when the hedge no longer meets the such an exchange or modification is treated as the de- criteria for hedge accounting, any cumulative gain or recognition of the original liability and the recognition of loss previously recognised in OCI remains separately in a new liability. The difference in the respective carrying equity until the forecast transaction occurs or the foreign amounts is recognised in the statement of profit and currency firm commitment is met. loss, unless it is in the nature of equity contribution by parent. The Company classifies a hedge as cash flow hedge when hedging the exposure to variability in cash flows iii) Offsetting of financial instruments that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable Financial assets and financial liabilities are offset and forecast transaction or the foreign currency risk in an the net amount is reported in the balance sheet if unrecognized firm commitment. 82 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) v. Non-current assets (or disposal group) held for sale x. Loss per share

Non-current assets (or disposal groups) are classified Basic loss per share is calculated by dividing the net loss as held for sale if their carrying amount will be recovered for the year attributable to equity shareholders by the principally through a sale transaction rather than through weighted average number of equity shares outstanding continuing use and a sale is considered highly probable. during the year. They are measured at the lower of their carrying amount and fair value less cost to sell, except for assets such For the purpose of calculating diluted earnings per as deferred tax assets, assets arising from employee share, the net profit or loss for the year attributable to benefit, financial assets and contractual right under equity shareholders and the weighted average number insurance contract which are specifically exempt from of shares outstanding during the year are adjusted for this requirement. the effects of all dilutive potential equity shares.

An impairment loss is recognized for any initial or y. Segment reporting subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognized for The Company’s chief operating decision makers look any subsequent increase in fair value less costs to sell at the financials and the Company as a whole without of an asset (or disposal group), but not in excess of segregating into any components for the purpose the cumulative impairment loss previously recognised. of allocating resources and assessing performance. A gain or loss not previously recognised by the date Accordingly, the Company has not identified any of the sale of a noncurrent asset (or disposal group) is operating segments to be reported. recognised at the date of de-recognition. z. Measurement of Earnings/Loss Before Interest, Tax, Non-current assets (including those that are part of a Depreciation and Amortization (EBITDA/LBITDA) disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other The Company has elected to present earnings before expenses attributable to the liabilities of a disposal group finance cost, finance income, profit on sale of current classified as held for sale continue to be recognised. investments, exceptional items and depreciation and amortization (EBITDA) as a separate line item on the Non-current assets classified as held for sale and the face of the statement of profit and loss. The Company assets of a disposal group classified as held for sale measures EBITDA on the basis of profit/ (loss) from are presented separately from the other assets in continuing operations. the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from aa. Contingent Liabilities other liabilities in the balance sheet. A contingent liability is a possible obligation that arises w. Cash and cash equivalents from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more Cash and cash equivalents in the balance sheet uncertain future events beyond the control of the comprise cash at banks and on hand and short-term Company or a present obligation that is not recognized deposits with an original maturity of three months or because it is not probable that an outflow of resources less, which are subject to insignificant risk of changes will be required to settle the obligation. A contingent in value. For the purpose of the statement of cash flows, liability also arises in extremely rare cases where there cash and cash equivalents consist of cash and short- is a liability that cannot be recognized because it cannot term deposits, as defined above, net of outstanding bank be measured reliably. The Company does not recognize overdrafts (including cash credit) as they are considered a contingent liability but discloses its existence in the an integral part of the Company’s cash management. standalone financial statements. TELESERVICES LIMITED 83

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) ab. Onerous Contracts 2.3 Significant accounting estimates and assumptions

An onerous contract is a contract in which the The estimates and judgements used in the preparation unavoidable costs of meeting the obligations under the of the said financial statements are continuously contract exceed the economic benefits expected to be evaluated by the Company, and are based on historical received under it. experience and various other assumptions and factors (including expectations of future events), that may have ac. Exceptional Items financial impact on the Company and that are believed to be reasonable under the existing circumstances. When items of income or expense are of such nature, size and incidence that their disclosure is necessary to The estimates and underlying assumptions are reviewed explain the performance of the Company for the year, the on an ongoing basis. Revisions to accounting estimates company makes a disclosure of the nature and amount are recognised in the period in which the estimate is of such items separately under the head “exceptional revised if the revision affects only that period or in the items.” period of the revision and future periods if the revision affects both current and future periods ad. Contributed equity In the following areas the management of the Company Equity shares are classified as equity. has made critical judgements and estimates:

Incremental costs directly attributable to the issue of i) Impairment assessment of Property, Plant and new shares are shown in equity as a deduction, net of Equipment tax, from the proceeds. An impairment exists when the carrying value of an ae. New and amended standards adopted by the asset or cash generating unit (‘CGU’) exceeds its Company recoverable amount. Recoverable amount is the higher of its fair value less costs to sell and its value The company has applied the following standards and in use. The value in use calculation is based on amendments for the first time for their annual reporting a discounted cash flow model. In calculating the value period commencing April 1, 2019: in use, certain assumptions are required to be made in respect of highly uncertain matters, including 1. Ind AS 116, Leases management’s expectations of growth in EBITDA, 2. Amendment to Ind AS 12 Income Taxes long term growth rates; and the selection of discount 3. Amendment to Ind AS 19 Employee Benefits rates to reflect the risks involved. Also, Judgement 4. Amendment to Ind AS 23 Borrowing Costs is involved in determining the CGU and impairment 5. Amendment to Ind AS 109 Financial Instruments testing.

The company had to change its accounting policies as a ii) Useful lives of property, plant and equipment result of adopting Ind AS 116. This is disclosed in Note no.35. The other amendments listed above did not have The Company reviews the useful life of property, plant any impact on the amounts recognised in prior periods and equipment at the end of each reporting period. This and are not expected to significantly affect the current or reassessment may result in change in depreciation future periods. expense in future periods. af. Standards issued but Not yet effective iii) Expected Credit Loss on Trade Receivable and unbilled revenue Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the existing standards. Trade receivables do not carry any interest and are There is no such notification which would have been stated at their nominal value as reduced by provision applicable from April 1, 2020. for impairment. The Company uses a provision matrix to determine impairment loss allowance on the portfolio 84 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

of trade receivables and unbilled revenue. The provision Company also make certain assumptions regarding the matrix is based on its historically observed default rates continuation of credit from lenders. over the expected life of the trade receivable and is adjusted for forward looking estimates. Individual trade vii) Defined benefit plans (gratuity benefits) receivables are written off when management deems them not to be collectible (Refer note 10). The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined iv) Contingent Liabilities and provisions using actuarial valuations. An actuarial valuation involves making various assumptions that may differ The contingent liability is a possible obligation that from actual developments in the future. These include arises from past events whose existence will be the determination of the discount rate, future salary confirmed by the occurrence or non-occurrence of one increases and mortality rates. Due to the complexities or more uncertain future events beyond the control of involved in the valuation and its long-term nature, a the Company. The Company evaluates the obligation defined benefit obligation is highly sensitive to changes through Probable, Possible or Remote model (‘PPR’). in these assumptions. All assumptions are reviewed at In making the evaluation for PPR, the Company take each reporting date (Refer note 34(e)) into consideration the Industry perspective, legal and technical view, availability of documentation/ viii) Fair value measurement and valuation agreements, interpretation of the matter, independent opinion from professionals (specific matters) etc. which Some of Company’s assets and liabilities are measured can vary based on subsequent events. The Company at fair value for financial reporting purposes. In provides the liability in the books for probable cases, estimating the fair value of an asset and liabilities, the while possible cases are shown as Contingent Liability. Company uses market – observable data to the extent The remote cases are not disclosed in the standalone it is available. Where Level 1 inputs are not available, financial statements. Contingent assets are neither the Company engaged third party qualified valuers to recognised nor disclosed in the financial statements. perform the valuation. v) Provision for foreseeable loss on long term contracts Information about the valuation techniques and inputs used in determining the fair value of various assets and Provision for foreseeable losses on long term contracts liabilities are disclosed in note 2.2(t) and note 40. is primarily on account of various contracts with IP vendors which became onerous due to closure of ix) Leases IP sites before the agreed lock in period. An onerous contract is a contract in which the unavoidable costs of The Company evaluates if an arrangement qualifies to meeting the obligations under the contract exceed the be a lease as per the requirements of Ind AS 116. The economic benefit expected to be received under it. application of Ind AS 116 requires company to make judgements and estimates that affect the measurement vi) Going concern of right-of-use assets and liabilities. The Company uses significant judgement in assessing the lease term and The Company prepares the standalone financial the applicable discount rate. statement on a Going Concern basis in view of financial support from promoter company and assuming the cash The Company determines the lease term as the non- flows generation from the continuation of operations, cancellable period of a lease, together with both outflow for capital expenditure and the repayment periods covered by an option to extend the lease if the obligations of debt and interest for the next twelve Company is reasonably certain to exercise that option; months. In calculating the cash flow generation from the and periods covered by an option to terminate the lease business, certain assumptions are required to be made if the Company is reasonably certain not to exercise in respect of highly uncertain matters, including that option. . In assessing whether the Company is management’s expectations of earnings, interest cost reasonably certain to exercise an option to extend and capex outflow to reflect the risks involved. The a lease, or not to exercise an option to terminate a TELESERVICES LIMITED 85

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

lease, it considers all relevant facts and circumstances x) Classification and Measurement of Assets Held for that create an economic incentive for the Company to Sale exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises The Company had entered into a Scheme of Arrangement the lease term if there is a change in the relevant facts for transfer of its Consumer Mobile Business (CMB) and circumstances. Estimates are required to determine to Bharti. Pending requisite approvals as at March the appropriate discount rate used to measure lease 31, 2019, the Company has classified the assets and liabilities. liabilities relating to CMB (disposal group) as ‘held for sale’ in accordance with Ind AS 105 – ‘Non-Current The Company cannot readily determine the interest rate Assets Held for Sale and discontinued operations’ in the implicit in the lease, therefore, it uses its incremental standalone financial statements. borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Company would The application of Ind AS 105 involves significant have to pay to borrow over a similar term, and with a management judgements in respect of identification of similar security, the funds necessary to obtain an asset assets and liabilities related to the disposal group and of a similar value to the right-of-use asset in a similar assessment/ re-assessment of fair value of assets and economic environment. liabilities included in the disposal group as at reporting date. 86 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

3. Property, plant and equipment (PPE)

FY 19-20

Gross Block Assets held Addition for sale As at Asset Group As at during the Disposal (Incl. other March 31, April 1, 2019 year adjustments) 2020 (refer note 1.2) Freehold land 11.12 - - - 11.12 Buildings 44.76 - - - 44.76 Plant and equipments 3,848.63 247.27 (18.12) 16.55 4,094.32 Furniture and Fixtures 1.07 - (0.89) - 0.18 Vehicles 0.02 0.02 - - 0.04 Leasehold Improvements 51.97 - (4.35) - 47.62 Total 3,957.57 247.29 (23.36) 16.55 4,198.05

Accumulated Depreciation Net Block Assets held Impairment loss As at for sale As at As at Asset Group For the recognised in April 1, Disposal (Incl. other March 31, March 31, year statement of 2019 adjustments) 2020 2020 profit and loss (refer note 1.2) Freehold land ------11.12 Buildings 0.55 0.85 - - - 1.40 43.36 Plant and equipments 2,376.02 339.83 3.72 (17.63) (0.13) 2,701.81 1,392.51 Furniture and Fixtures 0.69 0.23 - (0.89) - 0.03 0.15 Vehicles 0.01 - - - - 0.01 0.03 Leasehold Improvements 33.29 9.07 - (4.35) - 38.01 9.61 Total 2,410.56 349.98 3.72 (22.87) (0.13) 2,741.25 1,456.78

FY 18-19

Gross Block Assets held Addition for sale As at Asset Group As at during the Disposal (Incl. other March 31, April 1, 2018 year adjustments) 2019 (refer note 1.2) Freehold land 283.72 - - (272.60) 11.12 Buildings 83.39 0.22 - (38.85) 44.76 Plant and equipments 4,492.05 212.43 (178.02) (677.83) 3,848.63 Furniture and Fixtures 8.37 0.06 (2.97) (4.39) 1.07 Vehicles 0.02 - - - 0.02 Leasehold Improvements 69.36 0.18 (8.91) (8.66) 51.97 Total 4,936.91 212.89 (189.90) (1,002.33) 3,957.57 TELESERVICES LIMITED 87

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Accumulated Depreciation Net Block Assets held Impairment loss As at for sale As at As at Asset Group For the recognised in April 1, Disposal (Incl. other March 31, March 31, year statement of 2018 adjustments) 2019 2019 profit and loss (refer note 1.2) Freehold land - - 223.09 - (223.09) - 11.12 Buildings 7.30 0.55 25.82 - (33.12) 0.55 44.22 Plant and equipments 2,615.55 386.46 281.44 (174.67) (732.76) 2,376.02 1,472.61 Furniture and Fixtures 7.20 0.69 0.07 (2.93) (4.34) 0.69 0.38 Vehicles 0.01 - - - - 0.01 0.01 Leasehold Improvements 36.31 13.38 0.51 (8.62) (8.29) 33.29 18.68 Total 2,666.37 401.08 530.93 (186.22) (1,001.60) 2,410.56 1,547.01 a) For details of assets pledged refer note 18 b) Refer note 36 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

4. Right of Use assets

FY 19-20

Gross Block Ind AS 116 Addition As at Asset Group As at adjustment during the Disposal March 31, April 1, 2019 as on April 1, year 2020 2019 Building - 54.53 - (0.01) 54.52 Network sites - 434.16 79.03 (69.24) 443.95 Indefeasible Rights of Use (‘IRU’) * 483.55 - 25.60 - 509.15 Total 483.55 488.69 104.63 (69.25) 1,007.62

Accumulated Depreciation Net Block As at As at Asset Group As at For the year Disposal March 31, March 31, April 1, 2019 2020 2020 Building - 11.18 - 11.18 43.34 Network sites - 92.98 (4.26) 88.72 355.23 Indefeasible Rights of Use (‘IRU’) * 355.96 24.61 - 380.57 128.58 Total 355.96 128.77 (4.26) 480.47 527.15

*As per IND AS 116, ‘IRU’ which was previously considered under Intangibles is now considered as a part of ROU assets. “(Refer note 35)”

88 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

5. Capital work-in-progress

As at As at Asset Group March 31, 2020 March 31, 2019 Assets under construction 0.02 11.44 Other capital inventory* 51.64 56.65 Total 51.66 68.09

*Other capital inventory mainly comprises of network equipment

6. Investment Property

Gross Block Asset Group As at Addition during As at April 1, 2019 the year March 31, 2020 Building 142.09 - 142.09 Total 142.09 - 142.09

Accumulated Depreciation Net Block Asset Group As at As at As at For the year April 1, 2019 March 31, 2020 March 31, 2020 Building 12.96 3.05 16.01 126.08 Total 12.96 3.05 16.01 126.08

Gross Block Asset Group As at Addition As at April 1, 2018 during the year March 31, 2019 Building 142.09 - 142.09 Total 142.09 - 142.09

Accumulated Depreciation Net Block Asset Group As at As at As at For the year April 1, 2018 March 31, 2019 March 31, 2019 Building 9.91 3.05 12.96 129.13 Total 9.91 3.05 12.96 129.13 a. Information regarding income and expenditure of investment property

March 31, 2020 March 31, 2019 Rental income derived from investment properties 9.21 7.63 Direct operating expenses (including repairs and maintenance) generating (5.43) (4.76) rental income Direct operating expenses (including repairs and maintenance) that did not - generate rental income Profit arising from investment properties before depreciation and indirect 3.78 2.87 expenses TELESERVICES LIMITED 89

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

March 31, 2020 March 31, 2019 Less : Depreciation (3.05) (3.05) Profit/(Loss) arising from investment properties before indirect 0.73 (0.18) expenses b. Fair value of investment

The fair value of investment property as on March 31, 2020 is Rs.176.21 crores (March 31, 2019- Rs.164.60 crores). The Company conducts independent valuation of properties at least annually. The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available, the Company considers information from a variety of sources including:

• Current Prices in an active market for properties of different nature or recent prices of similar properties in less active market, adjusted to reflect those differences.

• Discounted cash flow projection based on reliable estimates of future cash flows.

• Capitalized income projection based upon a property’s estimated net market income, and a capitalization rate derived from an analysis of market evidence.

The fair value of investment properties have been determined by certified valuers. The main inputs used are location and locality, facilities and amenities, quality of construction, residual life of buildings, business potential, supply of demand, local nearby enquiry and market feedback of investigation. All resulting fair value estimates for investment properties are included in Level 3.

7. INTANGIBLE ASSETS

Gross Block Assets held for Asset Group As at Addition during sale (Incl. other As at April 1, 2019 the year adjustments) March 31, 2020 (refer note 1.2)* License Fees - - 20.00 20.00 Total - - 20.00 20.00

Accumulated Amortisation Net Block Impairment Assets held loss for sale As at As at Asset Group As at recognised (Incl. other For the year March 31, March 31, April 1, 2019 in statement adjustments) 2020 2020 of profit and (refer note loss 1.2)* License Fees - 2.47 - 11.85 14.32 5.68 Total - 2.47 - 11.85 14.32 5.68

* Asset classified as held for sale 90 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Gross Block Asset Group As at Addition during As at April 1, 2018 the year March 31, 2019 Indefeasible Right to Use (IRU) 483.55 - 483.55 Total 483.54 - 483.55

Accumulated Amortisation Net Block Asset Group As at As at As at For the year April 1, 2018 March 31, 2019 March 31, 2019 Indefeasible Right to Use (IRU) 328.39 27.57 355.96 127.59 Total 328.39 27.57 355.96 127.59

The opening balance of gross block and accumulated depreciation of intangible assets as at April 1, 2019 has been restated due to change in accounting policy.

As per IND AS 116, ‘IRU’ which was previously considered under Intangibles is now considered as a part of ROU assets (Refer note 35)

8. Investment in subsidiaries

As at As at March 31, 2020 March 31, 2019 Investments in Equity Instruments (Nos in crores) MMP Mobi Wallet Payment Systems Limited (MMP) (Unquoted) 71.00 71.00 7.1 (March 31, 2019 -- 7.1) Equity Shares of Rs 10 each fully paid up Add: Capital Contribution (refer note (a) below) 4.06 4.66 Less: Provision for diminution (refer note (a) below) (75.06) (75.66) NVS Technologies Limited ( NVS) (Unquoted) 0.10 0.10 0.01 (March 31, 2019 -- 0.01) Equity Shares of Rs.10 each fully paid up [refer note (b) below] “TTL Mobile Private Limited (TTL Mobile) (Unquoted) 230.06 230.06 46.01 (March 31, 2019 -- 46.01) Equity Shares of Rs 10 each fully paid up” Less: Provision for diminution [refer note (c) below] (230.06) (230.06) Tata Tele (Maharashtra) Limited (TTML) (Quoted) 2,042.18 2,042.18 94.42 Equity Shares of Rs 10 each fully paid up [refer note (d) below Add: Fair value adjustment of RPS (unquoted) 366.43 366.43 Add: Fair value adjustment of ICD (unquoted) 1,776.28 1,299.79 Add: Fair value adjustment of Loan given to TTML 76.77 - Less: Provision for diminution (4,091.71) (3,420.42) Total 170.05 288.08 Aggregate value of Quoted Investment - at cost 2,042.18 2,042.18 Aggregate value of Quoted Investment - at market value 169.95 287.98 Aggregate value of Unquoted Investment - at cost 305.22 305.82 Aggregate provision for diminution in value of Investment (4,396.83) (3,726.14) TELESERVICES LIMITED 91

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Subsidiaries As at March 31, 2020, the Company has invested Rs.0.10 crores as equity share capital (0.01 crores a) MMP Mobi Wallet Payment Systems Limited (‘MMP’) equity shares of Rs.10 each) of NVS (March 31, 2019 – Rs.0.10 crores). As at March 31, 2020, TTSL holds MMP has been promoted by the Company to provide 99.99 percent stake (March 31, 2019 – 99.99 percent) in mobile commerce and related services on pan India the equity share capital of NVS. basis. MMP was incorporated on July 13, 2010 as a limited company under Companies Act, 1956. MMP c) TTL Mobile Private Limited (TTL Mobile) (formerly received approval from Reserve Bank of India in Virgin Mobile India Private Limited) December 2011 to operate payment system in India and started its operations from June 29, 2012. MMP During the year ended March 31, 2018, the Company had applied and obtained approval from RBI on March purchased 23.01 crores equity shares of TTL Mobile 27, 2018 for voluntary surrender of the Certification of from Virgin Investments Mauritius Ltd for 1 GBP Authorisation, post which MMP has discontinued its (equivalent INR 85) increasing its stake from 50 percent operations. to 100 percent in the equity share capital of TTL mobile. As at March 31, 2020, the company’s investment is Board of Directors of the Company in its meeting Rs.230.06 crores (March 31 2019 - Rs.230.06 crores). dated November 6, 2018 waived the total receivable of The net worth of TTL Mobile is fully eroded. Rs.4.66 crores from MMP. During the year ended March 31, 2020 the Company has recovered an amount of Basis the review of TTL Mobile’s future plans and Rs.0.60 crores from MMP and the same is disclosed overall cash flow situation the company has provided as exceptional item (refer note 30) in the statement of for diminution of its entire investments to the extent of profit and loss with corresponding reversal of provision Rs.230.06 crores. Therefore the carrying value of the for diminution. investment as at March 31, 2020 is Rs.Nil (March 31, 2019 – Rs.Nil). As at March 31, 2020, the Company’s investment is Rs.75.06 crores (March 31, 2019 – Rs.75.66 crores) d) Tata Teleservices (Maharashtra) Limited (‘TTML’) and TTSL holds 100 percent stake (March 31, 2019 - 100 percent) in the equity share capital of MMP. The Company holds 94.42 crores equity shares (March 31, 2019 – 94.42 crores) representing 48.30 per cent Basis the review of MMP’s future plans and overall cash of the paid-up equity share capital of TTML (March 31, flow situation the company had provided for diminution 2019 – 48.30 percent). of its investments to the extent of Rs.71 crores during the year ended March 31, 2017, Rs.4.66 crores during The Company has re-assessed the carrying value of the year ended March 31, 2019. During the year ended its investment in equity of TTML and has provided for March 31, 2020 MMP has repaid Rs.0.60 crores, impairment in the value of its investment of Rs.655.02 resulting in reversal of provision for diminution of Rs.0.60 crores for the the year ended March 31, 2020 (Rs.877.48 crores. Therefore, the carrying value of the investment crores for the year ended March 31, 2019) and the as at March 31, 2020 is Rs.Nil (March 31, 2019 - Nil). same is disclosed as exceptional item (refer note 30) in the statement of profit and loss. The carrying value b) NVS Technologies Limited (NVS) of the investment as at March 31, 2020 is reduced to Rs.169.96 crores (Rs.287.98 crores as at March 31, NVS has been incorporated on September 12, 2019). 2014. NVS would primarily focus on the areas of Mobile Advertising (mAdvertising), Mobile Education On October 16, 2016, TTML had issued non-cumulative (mEducation), Mobile Health (mHealth), Mobile tracking Redeemable Preference Shares (RPS) of Rs.2,018 (mNavigation), Mobile Digital Properties in promising crores for a tenure of 23 months to TTSL with dividend products and services with the developer community. It of 0.1% per annum. The RPS got extended for a has not started operations as at the period end. further period of 24 months with an option to TTML to redeem at such earlier date as may be decided by the Board of Directors or Finance Committee of TTML. No 92 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

dividend has been paid by TTML to TTSL on the RPS. as a result of which TTML became a subsidiary of TTSL. Pursuant to Section 47(2) of the Companies Act, 2013, Accordingly, Investment in Equity shares of TTML has with effect from October 17, 2018, TTSL is entitled to been considered as ‘Investment in Subsidiary’ with additional voting rights of 26.26% in respect of the RPS, effect from October 17, 2018.

9. Investments

As at As at March 31, 2020 March 31, 2019 Non - Current Investments (Investment at fair value through profit and loss) (Nos in crores) Andhra Pradesh Gas Power Corporation Limited (Unquoted) 4.06 4.06 0.03 (March 31, 2019 -- 0.03) Equity Shares of Rs 10 each fully paid up Renew Wind Energy (Karnataka) Private Limited (Unquoted) 0.0005 0.05 0.05 (March 31, 2019 -- 0.0005) Equity Shares of Rs 100 each fully paid up Green Infra Wind Farms Limited (Unquoted) 0.003 (March 31, 2019 -- 0.03 0.03 0.003) Equity Shares of Rs 10 each fully paid up Total (a) 4.14 4.14 Non - Current Investments (Investment at amortised cost) Bharti Airtel Limited (Quoted) 0.05 (March 31, 2019 -- Nil) Equity Shares of 16.27 - Rs 5 each fully paid up Bharti Airtel Limited (Unquoted) 0.000001 (March 31, 2019 -- Nil) - - Preference Shares of Rs 100 each fully paid up * Tata Teleservices (Maharashtra) Limited (Unquoted) 20.18 crores 0.1% - 1,922.79 Non Cumulative Reedemable Preference shares of Rs 100 each fully paid up Less: Provision for diminution - (1,922.79) Total (b) 16.27 - Total (a+b) 20.41 4.14

* figures are below rounding off norm adopted by the company

As at As at March 31, 2020 March 31, 2019 Current Investments (Investment at fair value through profit and loss) Investment in mutual funds (Quoted) - 594.82 Current Investments (Investment at amortised cost) Preference Shares Tata Teleservices (Maharashtra) Limited (Unquoted) 20.18 crores 0.1% 1,922.79 - Non Cumulative Reedemable Preference shares of Rs 100 each fully paid up Less: Provision for diminution (1,922.79) - - - - 594.82 Aggregate book value of Quoted Investment - at cost 16.27 592.83 Aggregate value of Quoted Investment - at market value 20.67 594.82 Aggregate value of Unquoted Investment - at cost 1,922.79 1,922.79 Aggregate provision for diminution in value of Investment (1,922.79) (1,922.79) TELESERVICES LIMITED 93

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

March 31, 2020 March 31, 2019 Mutual funds Units Units (in Rs. Crores Rs. Crores (in crores) crores) HDFC Liquid Fund-Direct plan - Growth - - 0.04 157.90 Tata Liquid Fund - Direct Plan - Growth - - 0.15 436.92 Total - - 0.19 594.82

1. The investment in Andhra Pradesh Gas Power The said consideration received under TTML Scheme Corporation Limited (APGPCL) entitles the Company to has been recognised as distribution made by TTML tariff benefit on 1 MW of power drawn from APGPCL. to its shareholders and has been measured on initial recognition at Rs.16.27 crores, being the fair value of 2. The investment in Green Infra Wind Farms Limited BAL shares as on the Effective date of TTML Scheme (GIWFL) entitles the Company to tariff benefit on power (July 1, 2019), and the same is adjusted against the drawn from GIWFL. impairment loss in the value of investment in TTML equity. 3. The investment in Renew Wind Energy (Karnataka) Private Limited (RWEPL) entitles the Company to 10. Trade receivables procure 2.4 MW of power for its own use. As at As at 4. On October 16, 2016, TTML had issued non-cumulative March 31, 2020 March 31, 2019 Redeemable Preference Shares (RPS) of Rs.2,018 Considered Good - - - crores for tenure of 23 months to TTSL with dividend of Secured 0.1% per annum. The RPS got extended for a further period of 24 months with an option to TTML to redeem Considered Good - 292.05 301.10 at such earlier date as may be decided by the Board of Unsecured Directors or Finance Committee of TTML. No dividend Having significant - - has been paid by TTML to TTSL on the RPS. increase in credit risk Credit impaired 296.04 353.37 Pursuant to Section 47(2) of the Companies Act, 2013, Less: Loss allowance (335.87) (393.41) with effect from October 17, 2018, TTSL is entitled to additional voting rights of 26.26% in respect of the RPS, Less: CMB asset held - (82.41) as a result of which TTML became a subsidiary of TTSL. for sale 252.22 178.65 As per Ind AS 32, the RPS has been considered as interest free loan and accordingly, the Company has recognized No trade or other receivable are due from directors or other Rs.366.43 crores (March 31, 2019 – Rs.366.43 crores) officers of the company either severally or jointly with any as investment in equity. The Company has recognized other person. income of Rs.Nil (March 31, 2019 – Rs.Nil) as interest Nor any trade or other receivable are due from firms or private income on the RPS, for the year ended. The total companies respectively in which any director is a partner, a provision made in the books as at March 31, 2020 is director or a member. Rs.1,922.79 crores (March 31, 2019 – Rs.1,922.79 crores) for impairment of investment in RPS. Trade receivables are non-interest bearing and are generally on terms of 18 to 90 days. 5. Pursuant to the Scheme of Arrangement to transfer the CMB undertaking of TTML to BAL, (TTML Scheme), The Company has used a practical expedient by computing TTSL received the following as consideration: the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes • 1 BAL equity share for every 2014 equity shares into account historical credit loss experience and adjusted held in TTML; and for forward-looking information. The expected credit loss • 10 BAL Redeemable Preference Shares (RPS) to allowance is based on the ageing of the days the receivables all (and not each) TTML RPS holder are due and the rates as given in the provision matrix. 94 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Ageing of Receivables As at As at Particulars March 31, 2020 March 31, 2019 As at As at Particulars Transferred to Bharti (64.85) - March 31, 2020 March 31, 2019 (Refer note 1.2) Not due 43.00 - Other movements 5.32 (0.33) 0-90 days past due 143.00 124.43 Balance at the end of 335.87 393.41 91-180 days past due 78.44 79.09 the year > 180 days 323.65 450.95 Total 588.09 654.47 11. Cash and Cash equivalents

Ageing of expected credit loss allowance As at As at March 31, 2020 March 31, 2019 As at As at Cash on hand - 0.01 Particulars March 31, 2020 March 31, 2019 Cheques on hand 0.30 2.82 Not due - - Balance with Banks: 0-90 days past due 17.52 24.31 in Current Accounts 190.56 85.55 91-180 days past due 7.04 47.11 in Fixed Deposit with - 450.22 > 180 days 311.31 321.99 original maturity less Total 335.87 393.41 than 3 months

Movement in expected credit loss allowance 190.86 538.60 Fixed deposits with banks earn interest at floating rates based As at As at Particulars on daily bank deposit rates. Short-term deposits are made March 31, 2020 March 31, 2019 for varying periods of time between seven days and three Balance at the 393.41 450.43 months, depending on the immediate cash requirements of beginning of the year the Company, and earn interest at the respective short-term Movement in expected 1.99 (56.69) deposit rates. credit loss allowance on trade receivables calculated at lifetime expected credit losses

12. Other bank balances

As at As at March 31, 2020 March 31, 2019 Deposit with original maturity more than 3 months but less than 12 months 31.98 30.12 Deposit with original maturity more than 12 months and maturing within 12 0.10 - months 32.08 30.12

The Company has pledged short-term deposits of Rs.32.08 crores as of March 31, 2020, as against Rs.29.96 crores as on March 31, 2019, to fulfil collateral requirements. TELESERVICES LIMITED 95

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

13. Loans and other financial assets

Non current Current As at As at As at As at March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019 Loans Considered good – Secured; - - - - Considered good – Unsecured - - 798.91 - Having significant increase in credit risk - - - - Credit impaired - - 6.30 - Less: Loss allowance - - (6.30) - - - 798.91 - Other Financial Assets Premises and other deposits (at amortized cost) Considered good – Secured - - - - Considered good – Unsecured 29.16 32.60 20.10 15.07 Having significant increase in credit risk - - - - Credit impaired 6.80 3.82 1.91 1.59 Less: Loss allowance (6.80) (3.82) (1.91) (1.59) Unsecured, considered good Unbilled revenue - - 120.47 194.13 Insurance claims receivable 1.87 - - - Receivables from third party - - 51.13 - Unsecured, considered doubtful Inter corporate deposits to related parties 5,454.32 3,002.56 3,002.56 3,140.68 Loans and advances to related party - - 204.95 204.95 Less: Provisions for doubtful advances (5,454.32) (3,002.56) (3,207.51) (3,345.63) 31.03 32.60 191.70 209.20 31.03 32.60 990.61 209.20

a. There are no amounts due by directors of the company or by firms or private companies respectively in which any director is a partner or a director or a member.

b. Security deposits represent amount paid for lease of premises and network sites and others.

c. During the year ended March 31, 2020, the Company has subscribed Inter Corporate Deposits (ICD) in TTML of Rs.2,790.15 crores (March 31, 2019- Rs.3,644 crores) carrying an interest rate of 0.1% p.a. and Loan to TTML of Rs.825 crores carrying an interest rate of 0.01% p.a., out of which loan amounting to Rs.818 crores was transferred by TTML to BAL as on July 1, 2019.

These ICD and Loan have been considered as interest free and accordingly, out of the total ICD/Loan amount of Rs.3,615.15 crores, the Company has recognised Rs.3,061.88 crores (March 31, 2019- Rs.3,002.56 crores) as investment in ICD/Loan and Rs.553.27 crores (March 31, 2019-Rs.641.44 crores) as investment in equity. 96 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

The Company has made a provision of Rs.2,319.96 crores (ICD Rs.2,313.65 crores and Loan Rs.6.31 crores) (Rs.3,002.56 crores for the year ended March 31, 2019) during the year ended March 31, 2020 towards impairment and the same is disclosed as exceptional item in the statement of profit and loss.

14. Other assets

Non current Current As at As at As at As at March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019

Unsecured, considered good: Capital advances 2.72 8.38 - - Prepaid expenses 59.09 75.84 20.83 23.55 Advance to suppliers - - 20.60 3.54 Balance with government authorities 286.50 257.07 329.13 122.21 Advance paid under dispute* (net of provision 357.87 182.22 - - for contingencies Rs.4.06 crores (March 31, 2019 - Rs.4.01 crores)) Advances to employees - - 0.37 0.44 Unsecured, considered doubtful: Capital advances - 3.17 - - Advance to suppliers - - 6.17 7.27 Balance with government authorities 0.15 0.15 12.79 13.05 Less : Provision for doubtful advances (0.15) (3.32) (18.96) (20.32) 706.18 523.51 370.93 149.74

* includes amounts paid towards indemnification (Refer note 1.2)

15. Share capital

As at As at March 31, 2020 March 31, 2019 Authorised Share Capital (Nos. in crores) 5,263.00 (March 31, 2019 - 3,763.00) Equity Shares of Rs.10 each 52,630.00 37,630.00 63.00 (March 31, 2019 - 63.00) Compulsory Convertible Non-Cummulative 6,300.00 6,300.00 Preference Shares (CCPS) of Rs.100 each 462.20 (March 31, 2019 - 462.20) preference shares of Rs.100 each 46,220.00 46,220.00 Total Authorised Share Capital 1,05,150.00 90,150.00 Issued, Subscribed and Fully Paid Equity capital (Nos. in crores) 670.45 (March 31, 2019 - 577.50) Equity Shares of Rs.10 each, fully paid up 6,704.51 5,775.03 6,704.51 5,775.03 TELESERVICES LIMITED 97

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

The company had its Annual General Meeting on September 27, 2019, where the shareholders approved increase in Authorised Share Capital by creating additional 1,500 Crore Equity shares of Rs.10 each aggregating to Rs.15,000 crores, consequent to which the Authorised share capital of the company is Rs.105,150 crores.

a. Reconciliation of Shares Outstanding at the beginning and at the end of the reporting year

As at As at March 31, 2020 March 31, 2019 No. Crores Rs in Crores No. Crores Rs in Crores Equity Shares At the beginning of the year 577.50 5,775.03 577.50 5,775.03 Issued during the year 92.95 929.48 - - Outstanding at the end of the year 670.45 6,704.51 577.50 5,775.03

On August 7, 2019, the Company issued 92.95 crores Equity Shares of Rs. 10 each to Tata Sons Private Limited by way of right issue.

b. Details of shareholding holding more than 5% shares in the company

As at As at March 31, 2020 March 31, 2019 No. Crores % holding in No. Crores % holding in the class the class Equity shares of Rs 10 each fully paid Tata Sons Private Limited (TSPL) 499.49 74.50% 406.54 70.40% Tata Communication Limited 59.82 8.92% 59.82 10.36% Aranda Investments (Mauritius) Pte.Limited 30.39 4.53% 30.39 5.26% Tata Industries Limited 33.85 5.05% 33.85 5.86%

On October 31, 2017, NTT DOCOMO Inc. (DOCOMO) has transferred its entire shareholding of 124.90 crores shares in TTSL to Tata Sons Private Limited (TSPL) and its designated nominees and accordingly, DOCOMO has ceased to hold any shares in TTSL and as a result of which TTSL became a direct subsidiary of TSPL. c. Terms / rights attached to equity shares d. The Company during the preceding 5 years:

The Company has one class of equity shares having i) has not allotted equity shares pursuant to contracts a par value of Rs.10 per share. Each holder of equity without payment received in cash. shares is entitled to one vote per share. ii) has not issued equity shares by way of bonus In the event of liquidation of the Company, the holders of shares. equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential iii) has not bought back any equity shares. amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. 98 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) e. Shares held by holding company

Equity Shares (All nos. in crores) As at As at March 31, 2020 March 31, 2019 Tata Sons Private Limited, the holding company 499.49 (March 31, 2019- 406.54) Equity shares of Rs 10 each fully paid 4,994.87 4,065.39 Tata Communication Limited, Subsidiary of Tata Sons Private Limited 59.82 (March 31, 2019 - 59.82 ) Equity shares of Rs 10 each fully paid 598.21 598.21 The Tata Power Company Limited, Associate of Tata Sons Private Limited 1.66 (March 31, 2019 - 1.66) Equity shares of Rs 10 each fully paid 16.62 16.62 Tata Industries Limited, Joint venture of Tata Sons Private Limited 33.85 (March 31, 2019 - 33.85) Equity shares of Rs 10 each fully paid 338.51 338.51 Tata Steel Limited, Associate of Tata Sons Private Limited 8.74 (March 31, 2019 - 8.74) Equity shares of Rs 10 each fully paid 87.43 87.43 Tata Capital Financial Services Limited, Subsidiary of Tata Sons Private Limited 6.23 (March 31, 2019 - 6.23) Equity shares of Rs 10 each fully paid 62.25 62.25 Tata Chemicals Limited, Associate of Tata Sons Private Limited 0.13 (March 31, 2019 - 0.13) Equity shares of Rs 10 each fully paid 1.29 1.29 Tata Investment Corporation Limited, Subsidiary of Tata Sons Private Limited 0.57 (March 31, 2019 - 0.57) Equity shares of Rs 10 each fully paid 5.68 5.68 6,104.86 5,175.38 f. Reconciliation of the Compound Financial Instruments

As at March 31, 2020 As at March 31, 2019 No. Crores Rs in Crores No. Crores Rs in Crores i) 0.1% Compulsory Convertible Non- Cumulative Preference Shares * At the beginning of the year 62.24 6,224.49 62.24 6,224.49 Add: Issued during the year - - - - Outstanding at the end of the year 62.24 6,224.49 62.24 6,224.49 ii) 0.1% Optionally Convertible Non- Cumulative Preference Shares * At the beginning of the year 23.00 2,300.00 23.00 2,300.00 Add: Issued during the year - - - - Outstanding at the end of the year 23.00 2,300.00 23.00 2,300.00 iii) 0.1% Optionally Convertible Debentures* At the beginning of the year 117.41 11,740.64 125.00 12,500.00 Add: Issued during the year 20.00 2,000.00 151.61 15,160.64 Less: Converted during the year (86.96) (8,696.28) (159.20) (15,920.00) Outstanding at the end of the year 50.45 5,044.36 117.41 11,740.64

*Refer note 17 for terms of issue and conversion TELESERVICES LIMITED 99

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

16. Instruments entirely equity in nature

As at As at March 31, 2020 March 31, 2019 No. Crores Rs in Crores No. Crores Rs in Crores Opening balance 159.20 15,920.00 - - Add: Issued during the year 0.1% compulsory convertible non- cumulative 136.96 13,696.28 159.20 15,920.00 preference shares of Rs 100 each Closing balance 296.16 29,616.28 159.20 15,920.00

a. Issued, Subscribed and Fully Paid compulsory convertible non-cumulative preference shares (Nos. in crores)

As at As at March 31, 2020 March 31, 2019 296.16 (March 31, 2019 - 159.20) Compulsory Convertible Non- 29,616.28 15,920.00 cumulative Preference Shares of Rs 100 each, fully paid up 29,616.28 15,920.00

b. Details of shareholding holding more than 5% shares in the company

As at As at March 31, 2020 March 31, 2019 % holding in % holding in No Crores No Crores the class the class Compulsory Convertible Non-cumulative Preference Shares of Rs 100 each, fully paid up Tata Sons Private Limited 296.16 100% 159.20 100%

c. Shares held by holding company

Compulsory Convertible Non-Cumulative Preference Shares (All nos in crores)

As at As at March 31, 2020 March 31, 2019 Tata Sons Private Limited, the holding company 296.16 (March 31, 2019 - 159.20) Compulsory Convertible Non-Cumulative 29,616.28 15,920.00 Preference Shares of Rs 100 each, fully paid up 29,616.28 15,920.00

100 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Terms/Rights attached to Compulsory Convertible Preference Shares (Series 8-Tranche 1 CCPS) to Non-Cumulative Preference Shares Tata Sons Private Limited of Rs.100 each.

i) TTSL has issued 0.1% Optionally Convertible On August 7, 2019, the Company issued 40.71 Debentures (‘OCD’) – series II, aggregating 276.60 crores Compulsory Convertible Non-Cumulative crores of Rs.100 each to Tata Sons Private Limited Preference Shares (Series 8-Tranche 2 CCPS) to and Panatone finvest limited on various dates Tata Sons Private Limited of Rs.100 each. between December 22, 2017 and January 10, 2019. For more details on the terms of OCD, refer “Terms Refer “Terms and rights of CCPS issued as of conversion/ redemption of Optionally Convertible mentioned below. Debentures” in Note 17. Pursuant to the contractual arrangement and on request of Tata Sons Private Terms and rights of CCPS issued: Limited , 159.20 crores OCDs are converted and new 159.20 crores 0.1 % Compulsory Convertible I. CCPS would be compulsorily converted in to such non-cumulative Preference Shares (‘CCPS’) of number of equity shares of Rs.10 each, at face Rs.100 each were allotted through various tranches value at the option of the CCPS holder at any time during the previous year, which was approved by after 1 day from the date of allotment of CCPS but the Board of Directors on 10th January, 2019 and not later than 36 months from the date of allotment. 6th March, 2019. The Company has classified the CCPS alloted on conversion of OCD as instruments II. CCPS carry a non-cumulative right to receive entirely equity in nature dividend @ 0.1%.

On June 30, 2019, the Company issued 86.96 III. The holders of CCPS – crores Compulsory Convertible Non-Cumulative Preference Shares (Series 9-Tranche 3 CCPS) to a) carry a preferential right vis-à-vis the holders Tata Sons Private Limited of Rs.100 each. Pursuant of equity shares of the Company with respect to the contractual arrangement and on request of to payment of dividend and repayment in case Tata Sons Private Limited, 86.96 crores OCDs are of a winding up or repayment of capital; converted and new 86.96 crores 0.1 % Compulsory Convertible non-cumulative Preference Shares b) would not be entitled to participate in the (‘CCPS’) of Rs.100 each are allotted. The Company surplus funds; has classified the CCPS alloted on conversion as instruments entirely equity in nature. c) would not be entitled to participate in the surplus assets and profits, on winding up, Refer “Terms and rights of CCPS issued as which may remain after the entire capital has mentioned below. been repaid.

ii) On May 18, 2019, the Company issued 9.29 crores Compulsory Convertible Non-Cumulative TELESERVICES LIMITED 101

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

17. Other Equity As at As at March 31, 2020 March 31, 2019 a) Equity component of Compound Financial Instruments Balance as per the last financial statements 6,064.42 5,023.48 Add : Optionally convertible debentures Issued during the year (Refer note C 489.77 3,945.26 below) Add : Equity portion on extension of CCPS (Refer note A below) 732.74 - Less : Optionally convertible debentures converted during the year (Refer (1,690.23) (2,904.32) note B below) 5,596.70 6,064.42 The equity portion of compound financial instruments, is on account of dividend/ interest percentage being lower than effective market rate and is recorded in shareholders equity.

b) Securities Premium account Balance as per the last financial statements 12,112.48 12,112.48 Add : Securities premium on conversion of CCPS - - Closing Balance 12,112.48 12,112.48 Securities premium reserve is used to record the premium on shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

c) (Deficit) in the statement of profit and loss Balance as per last financial statements (53,187.46) (47,936.94) Add: Cumulative effect on opening retained earnings on adoption of - (8.69) Ind AS 115 Add: Cumulative effect on opening retained earnings on adoption of (91.43) - Ind AS 116 Other comprehensive loss for the year arising from measurement of defined (3.99) (12.29) benefit obligation net Loss for the year (13,325.26) (5,229.54) Closing Balance (66,608.14) (53,187.46) Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings includes re-measurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available to the Company.

d) Cash flow / Cost of Hedge Reserve Balance as per last financial statement (0.98) - Other comprehensive loss for the year (16.38) (0.98) Closing Balance (17.36) (0.98) The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flow hedge reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss.

e) Capital reserve Balance as per last financial statement 9.22 9.22 Closing Balance 9.22 9.22 102 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

As at As at March 31, 2020 March 31, 2019 f) CCPS Application money pending allotment Balance as per last financial statement 929.48 - Received during the year 4,070.52 929.48 CCPS Allotted during the year (5,000.00) Closing Balance - 929.48 Total Other Equity (48,907.10) (34,072.84)

A. Terms of conversion of Compulsory Convertible Further, during the current year, based on request from Non-Cumulative Preference Shares holder of Series 2 CCPS and approval from the Board vide Circular resolution no. 220 dated September 27, (i) The Company issued 10.25 crores and 9.95 crores 2019, the period of conversion has been extended up to Compulsory Convertible Non-Cumulative Preference September 30, 2021, with an option to CCPS holder for Shares (Series 2 CCPS) to Tata Sons Private Limited conversion at any time after one day notice. of Rs.100 each on March 31, 2015 and May 28, 2015 respectively. Series 2 CCPS carry a non-cumulative right (ii) On October 19, 2016, the Company issued 22.01 crores to receive dividend @ 0.1%. Compulsory Convertible Non-Cumulative Preference Shares (Series 3 CCPS) to Tata Sons Private Limited Each Series 2 CCPS shall be converted at the option of of Rs.100 each. Series 3 CCPS carry a non-cumulative the investor at any time after 3 months from the date of right to receive dividend @ 0.1% p.a. allotment of Series 2 CCPS, but not later than 36 months from the date of allotment i.e. March 31, 2018 and May Each Series 3 CCPS shall compulsorily be converted 28, 2018. into equity share at the option of the investor at any time after 3 months from the date of allotment of Series Each Series 2 CCPS shall be compulsorily converted 3 CCPS but not later than 36 months from the date of into such number of equity shares at the higher of:- allotment i.e. October 19, 2019.

I. Fair market value determined as on the date of Each Series 3 CCPS shall be compulsorily converted conversion subject to cap of Rs.19 per equity into such number of equity shares at the higher of:- shares or I. Fair market value determined as on the date of II. Rs.10 per equity share (being the face value of conversion of shares or shares) II. Rs.10 per equity share (being the face value of Based on request from holder of Series 2 CCPS and equity shares) approval from the Board vide Circular resolution no. 209 dated December 26, 2017, the period of conversion was During the current year, based on request from holder of extended up to March 31, 2019, with an option to CCPS Series 3 CCPS and approval from the Board vide Circular holder for conversion at any time after one day notice. resolution no. 220 dated September 27, 2019, the period of conversion has been extended up to September 30, Further, based on request from holder of Series 2 CCPS 2021, with an option to CCPS holder for conversion at and approval from the Board vide Circular resolution no. 219 any time after one day notice. dated March 1, 2019, the period of conversion was extended up to September 30, 2019, with an option to CCPS holder for (iii) On April 26, 2017, the Company issued 20.04 crores conversion at any time after one day notice. Compulsory Convertible Non-Cumulative Preference TELESERVICES LIMITED 103

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Shares (Series 4 CCPS) to Tata Sons Private Limited fair market valuation as at that date and accounted for of Rs.100 each. Series 4 CCPS carry a non-cumulative the gain on derivative part of CCPS as Rs.11.91 crores right to receive dividend @ 0.1% p.a. (March 31, 2019 – Rs.307.34 crores) in the statement of profit and loss for the year ended March 31, 2020. Each Series 4 CCPS shall compulsorily be converted into equity share at the option of the investor at any B. Terms of conversion/ redemption of Optionally time after 3 months from the date of allotment of Series Convertible Non-Cumulative Preference Shares 4 CCPS but not later than 36 months from the date of allotment i.e. April 26, 2020. On November 7, 2017, the company issued 23 crores Each Series 4 CCPS shall be compulsorily converted Optionally Convertible Non-Cumulative Preference into such number of equity shares at the higher of:- Shares – Series I (‘OCPS’) of a face value of Rs.100 each at par to Tata Sons Private Limited. These OCPS I. Fair market value determined as on the date of carry a non cumulative right to receive dividend @ 0.1% conversion of shares or p.a.

II. Rs.10 per equity share (being the face value of Each Series I OCPS shall optionally be converted equity shares) into such number of equity shares at the option of the investor at any time after 3 months from the date of CCPS (Series 2, Series 3 and Series 4) has been allotment of Series I OCPS but not later than 36 months considered as compound financial instrument and from the date of allotment i.e. November 7, 2020. OCPS has been separated into three components basis the shall be redeemed at par, if the holder does not exercise conversion will be exercised at the time of maturity of the conversion option. each CCPS series: Each Series I OCPS shall be optionally converted into a. the derivative financial asset/liability such number of equity shares at the higher of:- b. the equity component c. the debt component I. Fair market value determined as on the date of conversion of shares or Basis the above, the value of equity, debt and derivative financial asset of CCPS (Series 2, Series 3, and Series II. Rs.10 per equity share (being the face value of 4) as on March 31, 2020 and March 31, 2019 is as equity shares) follows: OCPS (Series I) has been considered as compound March 31, March 31, financial instrument and has been separated into two 2020 2019 components: Equity Component of CCPS 1,893.17 1,160.43 a. the equity component (Includes equity portion on b. the debt component extension of CCPS Rs.732.74 crores) Basis the above, the value of equity and debt of OCPS Liability Component of CCPS 5,652.01 6,035.33 (Series I) is as follows: Derivative financial assets of 5,952.50 5,940.59 CCPS March 31, March 31, 2020 2019 The interest cost on CCPS for the year is Rs.349.42 Equity Component of OCPS 612.34 612.34 crores (March 31, 2019 – Rs.212.73 crores). Liability Component of OCPS 2,161.44 1,949.16 As at March 31, 2020, the Company has accounted for derivative asset of Rs.5,952.50 crores (March 31, The interest cost on OCPS (Series I) for the year is 2019 – Rs.5,940.58 crores) on the CCPS based on the Rs.212.28 crores (March 31, 2019- Rs.190.28 crores). 104 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

C. Terms of conversion/ redemption of Optionally Convertible Debentures are converted during the Convertible Debentures year ended March 31, 2020.

Optionally Convertible Debentures: VIII. On August 7, 2019, the Company issued 20 crores 0.1% Optionally Convertible Debentures Series III I. On December 22, 2017, the Company issued 125 of Rs.100 each to Tata Sons Private Limited. crores 0.1 % Optionally Convertible Debentures Series II of Rs.100 each to Tata Sons Private Each OCD shall be converted into equity share at the Limited. Entire Optionally Convertible Debentures option of the investor at any time after one day from the were converted in previous year ended March 31, date of allotment of OCD but not later than 36 months 2019. from the date of allotment. OCD shall be redeemed at par, if the holder does not exercise the conversion II. On August 10, 2018, the Company issued 71.05 option. crores Optionally Convertible Debentures of Rs.100 each to Tata Sons Private Limited. Out of above, Each OCD shall be optionally converted into such 9.20 crores Optionally Convertible Debentures number of equity shares of Rs.10 each were converted in previous year ended March 31, 2019. Further 61.85 crores Optionally Convertible OCD (Series II and Series III) has been considered as Debentures are converted during the year ended compound financial instrument and has been separated March 31, 2020. into two components:

III. On August 10, 2018, the Company issued 25 crores a. the equity component 0.1% Optionally Convertible Debentures Series II b. the debt component of Rs.100 each to Tata Sons Private Limited. Entire Optionally Convertible Debentures were converted Basis the above, the value of equity and debt component in previous year ended March 31, 2019. of OCD (Series II and Series II) is as follows:

IV. On May 11, 2018, the Company issued 14 crores March 31, March 31, 0.1% Optionally Convertible Debentures of Rs.100 2020 2019 Series II each to Panatone finvest limited (Fellow Subsidiary). Equity Component of OCD 7,685.83 7,196.06 Decrease in Equity Component (4,594.64) (2,904.41) V. On October 4, 2018, the Company issued 5.89 on account of extinguishment crores 0.1% Optionally Convertible Debentures of of OCD Rs.100 Series II each to Tata Sons Private Limited. Liability Component of OCD 4,236.50 9,206.59 Entire Optionally Convertible Debentures are converted during the year ended March 31, 2020. The interest cost on OCD for the year is Rs.525.97 crores (March 31, 2019 – Rs.1,498.40 crores). VI. On October 4, 2018, the Company issued 17.10 crores 0.1% Optionally Convertible Debentures Note: Series II of Rs.100 each to Tata Sons Private Limited. Entire Optionally Convertible Debentures As the interest rate of OCD/CCPS/OCPS is lower than are converted during the year ended March 31, market rate, these have been considered as compound 2020. financial instruments and have been separated into equity component and liability component as per Ind AS VII. On January 10, 2019, the Company issued 18.56 32. Interest on liability component of OCD/CCPS/OCPS crores 0.1 % Optionally Convertible Debentures has been recognised by applying effective interest rate Series II of Rs.100 each to Tata Sons Private (EIR) ranging from 7.46% to 10.36% p.a. Limited. Out of above, 2.12 crores Optionally TELESERVICES LIMITED 105

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

18. Financial Liabilities - Borrowings (at amortised cost)

Non - Current portion Current Portion As at As at As at As at March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Secured: Term Loan Indian rupee loan from banks 513.51 445.43 738.53 - Foreign currency loan from banks 1,301.72 - - - 1,815.23 445.43 738.53 - Unsecured: Deferred payment liability for spectrum acquired - 2,221.93 - 460.11 through auction Interest accrued but not due on borrowings - - 0.98 0.13 Liability component of compound financial instruments (Nos. in crores) 50.44 (March 31, 2019- 117.40) 0.1% Optionally 4,236.50 9,206.59 - - Convertible Debentures - of Rs.100 each 62.24 (March 31, 2019 62.24) 0.1% Compulsory 3,652.55 1,931.56 1,999.45 4,103.77 convertible preference shares of Rs.100 each 23.00 (March 31, 2019 23.00) 0.1% OCPS of - 1,949.16 2,161.45 - Rs.100 each 7,889.05 15,309.24 4,161.88 4,564.01 Amount disclosed under the head “”Other financial - - (4,900.41) (4,564.01) Liabilities”” (refer note 19) 9,704.28 15,754.67 - -

Financial Liabilities - Short term borrowings Note:

As at As at Undrawn borrowing facilities: March 31, March 31, As at March 31, 2020, the company has undrawn committed 2020 2019 borrowing facilities of Rs.298.34 crores (March 31, 2019 – Secured Rs.495.31 crores). Vendor financing - 18.77 Unsecured Compliance with Loan covenant: Indian rupee loan from banks 2,160.00 375.00 As at March 31, 2020, the company has met financial Commercial Paper 2,574.56 6,785.92 covenant requirement as per the respective borrowing 4,734.56 7,179.69 arrangement with the lenders. Less : Liabilities directly - (3,612.74) associated with assets classified as held for sale 4,734.56 3,566.95

106 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Long term Borrowings on the fixed and current assets of the Company’s enterprise, fixed wireline and broad band division a. Secured loans excluding intangible assets and current and future investments in associate and subsidiary companies As on March 31, 2020 and Joint Ventures of the Company.

i. Indian rupee loans from banks Terms of repayment:-

Medium Term Loan outstanding from IndusInd - Loan from bank is repayable at the end of 2 Bank and ICICI Bank are secured by way of first years by a bullet repayment from the date of pari-passu charge on the fixed and current assets drawdown. of the Company’s enterprise, fixed wireline and - The maturity date of loan from ICICI Bank is broad band division excluding intangible assets April 8, 2021 and current and future investments in associate and subsidiary companies and Joint Ventures of Interest rate :- the Company. - Interest on the ICICI Bank Loan is on USD Terms of repayment:- 3M LIBOR + 3.05% which has been hedged against Coupon only Swap(CoS) - Loan from bank is repayable at the end of 2 years by a bullet repayment from the date of The Company has availed the moratorium of drawdown. two months granted by Reserve Bank of India (vide circular DOR.No.BP.BC.47/21.04.048/2019- - The maturity date of loan from IndusInd Bank 20 dated March 27, 2020) on payment of term loan is March 29, 2021 and from ICICI Bank is April installments falling due between April 1, 2020 and 8, 2021 May 31, 2020.

Interest rate :- Refer note 3 and 7 for carrying amount of property, plant and equipment and intangible assets pledged - Interest on the IndusInd Bank loan is on as security by the Company. floating basis based on overnight MIBOR+an agreed spread, this floating rate has been As on March 31, 2019 hedged with Interest Rate Swap (IRS) at a fixed rate. i. Indian rupee loans from banks

- Interest on the ICICI Bank Loan is on MCLR- Medium Term Loan outstanding from IndusInd 1Yr + 0.8% Bank is secured by way of first pari-passu charge on all the fixed and current assets of the Company’s The Company has availed the moratorium of enterprise, fixed wireline and broad band division three months granted by Reserve Bank of India excluding intangible assets and current and future (vide circular DOR.No.BP.BC.47/21.04.048/2019- investments in associate and subsidiary company 20 dated March 27, 2020) on payment of term loan and joint ventures of the Company. installments falling due between March 1, 2020 and May 31, 2020 Terms of repayment:-

ii. Foreign Currency loans from banks - Loan from bank is repayable at the end of 2 years by a bullet repayment from the date of Medium Term Loan ( FCNR-B) from ICICI Bank drawdown. (sub-limit of Rupee term loan covered in point i above) is secured by way of first pari-passu charge - The maturity date of loan from IndusInd bank is March 29, 2021 TELESERVICES LIMITED 107

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Interest rate :- i) Terms of repayment:-

- Interest on the IndusInd Bank loan is on - Loan from bank is repayable at the end of one year floating basis based on overnight MIBOR+an from the date of drawdown agreed spread, this floating rate has been hedged with IRS at a fixed rate. - The maturity date of loan from Standard Chartered Bank is February 17, 2021. b. Unsecured Loans ii) Interest rate:- As on March 31, 2020 - Rate for Initial 3 months from drawdown - 3 months For terms related to liability component of Compound T-Bill + 2.45% financial instruments refer note 17 - Rate for balance period – 1 month SBI MCLR + As on March 31, 2019 0.5%

For terms related to liability component of Compound The Company has availed the moratorium of two financial instruments refer note 17 months granted by Reserve Bank of India (vide circular DOR.No.BP.BC.47/21.04.048/2019-20 dated March 27, Short term Borrowings 2020) on payment of term loan instalments falling due between April 1, 2020 and May 31, 2020. a. Secured As on March 31, 2019 As on March 31, 2019 Commercial paper i. Vendor financing i) Terms of repayment:- The balance outstanding as on March 31, 2019 comprises of Suppliers Credit with Nil interest rate. - Commercial papers are fully repayable within 26 to 90 days from the date Commercial Paper issuance b. Unsecured ii) Interest rate:- As on March 31, 2020 - Interest rate for commercial papers is in the range Commercial paper of 8.70% to 8.95% p.a.

i) Terms of repayment:- Short Term Loan

- Commercial papers are fully repayable within The Company has availed unsecured Short Term loan from 8 to 364 days from the date of Commercial bank. Paper Issuance. i) Terms of repayment:- ii) Interest rate:- - Loan from bank is repayable after 6 months from - Interest rate for commercial papers is in the the date of drawdown. range of 7.00% to 9.00% p.a. ii) Interest rate:- Short Term Loan - Interest rate for loan is 9.10% p.a. The Company has availed unsecured Short Term loan from bank. 108 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

19. Other financial liabilities

As at As at March 31, 2020 March 31, 2019 Current maturities of long-term debt (Refer Note 18) 738.53 460.11 Interest accrued but not due on borrowings 0.98 0.13 Payables on purchase of fixed assets 20.13 33.68 Security deposit from customers 16.20 13.80 Advance from distributors 3.88 3.09 Liability component of Compound Financial Instruments (Refer note 18) 4,160.90 4,103.77 4,940.62 4,614.58

20. Provisions

Non - Current portion Current Portion As at As at As at As at March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Provision for contingencies* (net of amount - - 4,468.21 43.85 paid Rs.4,519.75 crores (March 31, 2019 - Rs.391.47 crores)) (Refer Note 34(a)) Provision for employee benefits: i) For gratuity (Refer note 34(e)) - - 9.21 4.70 ii) For leave encashment (Refer note 34(e)) - - 8.77 9.15 iii) For employee incentives - - 31.54 36.09 iv) For provident fund - - 11.56 8.42 Provision for asset retirement obligation 8.49 7.76 - - (Refer Note 34(d)) Provision for foreseeble losses on long term - - 323.46 158.93 contracts (Refer Note 2.3 (v) and 34(b)) Other provisions* (refer note 34(c)) - - 50.41 - 8.49 7.76 4,903.16 261.14

* includes provision towards indemnification (Refer note 1.2)

21. Other liabilities

Non - Current portion Current Portion As at As at As at As at March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Unearned Income 132.30 138.73 76.59 80.03 Advance from customers - - 35.96 43.20 Advanced received pursuant to the scheme and - - - 697.50 related agreements (Refer note 1.2) Statutory liabilities - - 45.90 45.60 Other payables to third party - - 0.07 - 132.30 138.73 158.52 866.33 TELESERVICES LIMITED 109

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

22. Assets classified as held for sale

As at As at March 31, March 31, 2020 2019 (i) Assets classified as held for sale a) Related to Company’s CMB [refer note 1.2 and 2.2(v)] Property, plant and equipment - 1,352.00 Capital work-in-progress - 3.25 Intangible assets - 2,975.97 Other Non current assets - 425.60 Current financial assets - 133.76 Other current assets - 616.39 Subtotal-Asset held for sale - 5,506.97 b) Investment in associates ATC Telecom Infrastructure Pvt Limited (Unquoted) 10.28 (March 31, 2019 - 10.28) 2,137.62 2,137.62 Equity Shares of Rs 10 each fully paid up Total assets classified as held for sale 2,137.62 7,644.59

(ii) Liabilities directly associated with assets classified as held for sale related to CMB Short term borrowings - 3,612.74 Current financial liabilities - trade payables - 608.73 Other current financial liabilities - 28.51 Other current liabilities - 52.64 Short term provisions - 506.86 Total liabilities directly associated with assets classified as held for sale - 4,809.48

Investment in Associates 24, 2018 to sell its entire stake in ATC, exercised the first put option to sell 13% shareholding at Rs.216 per share as per ATC Telecom Infrastructure Private Limited (‘ATC’) (erstwhile the terms of shareholders agreement (as amended) dated VIOM Networks Limited (‘VIOM’) October 21, 2015. Post approval by DoT, the shares were sold on March 27, 2019 for a cash consideration of Rs.2,480.02 The Company had opted to measure the fair value of its crores (net of expenses of Rs.0.90 crores) and gain on sale investments in ATC (erstwhile VIOM) as at the date of of Rs.91.23 crores has been disclosed as exceptional item transition to Ind AS i.e. April 1, 2015, as its deemed cost, in in the statement of profit and loss for the year ended March accordance with Ind AS 101. 31, 2019. The remaining investment of 11.63% in ATC has been As at April 19, 2018, the Company’s shareholding in ATC got classified as ‘asset held for sale’ and recorded it at lower of its diluted to 24.63% from 32.86% on account of issuance of carrying amount and fair value less costs to sell. As at March shares by ATC to other shareholders pursuant to the scheme 31, 2020, the carrying amount of the Company’s investment of amalgamation approved by NCLT between ATC and its is Rs.2,137.62 crores (March 31, 2019 – Rs.2,137.62 crores). fellow subsidiaries. While the investment in ATC is classified as assets held for sale as at March 31, 2020, the Company continues to have Further, the Company, after taking approval from the board of significant influence over ATC as it has power to participate in directors in its meeting dated August 14, 2018 and October the financial and operational policy of ATC. 110 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

23. Revenue from operations * These amounts include assets and liabilities held for sale

(Refer note 22) For the For the year ended year ended Year ended Year ended March 31, March 31, Revenue recognised in March 31, March 31, 2020 2019 relation to contract liabilities 2020 2019 Telecommunication services Service revenue 1,800.12 2,676.92 Revenue recognised during Sale of traded goods 0.46 1.24 the year that was include in the contract liability balance at the Other Operating Revenue beginning of the year Income from rendering of 36.55 40.22 services Revenue recognised that 71.13 389.07 Infrastructure sharing 13.41 118.41 was included in the contract 1,850.54 2,836.79 liability balance at th beginning of the period Disaggregation of Revenue * This includes impact of transitioning to Ind As 115 Year ended Year ended Revenue from operations March 31, March 31, Performance obligations As at As at 2020 2019 in respect of long term March 31, March 31, Revenue from subscribers 1,667.97 2,280.36 contracts 2020 2019 Revenue from operators# 109.93 373.37 Aggregate amount of 65.26 66.79 Other Revenue 67.30* 177.67* transaction value allocated to Total Revenue as per 1,845.20 2,831.40 long term contracts that are Financial Statement partially or fully pending to be *Other Revenue excludes IRU Lease deferment of Rs. 5.34 fulfilled as at reporting date crores which is covered under Ind AS 116 (March 31, 2019 - The Company expects that around 37% of the performance Rs. 5.39 crores) obligations pending in respect of these long term contracts # Revenue from operators comprises of revenue from will be recognised as revenue during the next reporting Interconnect Usages and Roaming charges (including Intra period with balance in future reporting periods thereafter. circle Roaming) Discount is offered to subscribers based on the tariff opted Contracts Assets and Liabilities by the subscribers. No discount is offered other than plan. A contract asset is recorded when revenue is recognized in Accordingly, discount is part of the contract price. Revenue is advance of the right to bill and receive consideration (i.e., recognised net of Discount and which is as per the contract additional services must be performed or a performance price. obligation must be satisfied in order to bill and receive consideration). The contract asset will decrease as services are billed. When consideration is received in advance of Deferred customer contract acquisition costs the delivery of services, a contract liability is recorded. Reductions in the contract liability will be recorded as we Costs to acquire customer contracts are generally defeered satisfy the performance obligations. and amortized over the estimated economic life of the contracts, subject to an assessment of the recoverability of Contract Assets and As at March As at March such costs. For contracts with and estimated amortization Liabilities 31, 2020 31, 2019 period of less than one year, acquisition costs are expensed Contract Assets immediately. The closing balance of assets recognised from Unbilled Revenue (refer note 120.47 194.13* the costs incurred in respect of long term contracts amounts 13) in Rs. 36.04 crores as at March 31, 2020 (Rs. 3242 crores as Contract Liabilities at March 31, 2019). During the year, in respect of such long Unearned Income (refer note 208.90 271.40* term contracts, the company recognised Rs. 15.78 crores 21) (March 31, 2019 Rs. 10.42 crores) as acquisition cost in the Statement of Profit and Loss. TELESERVICES LIMITED 111

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

24. Other income For the For the year ended year ended For the For the March 31, March 31, year ended year ended 2020 2019 March 31, March 31, Interconnection and other 416.78 1,121.56 2020 2019 access costs Other Income License fees and spectrum 120.41 152.36 Provision/Liability no longer 0.32 123.55 charges required written back Other operating expenses Miscellaneous Income 8.49 18.01 Customer acquisition costs 28.52 43.61 Other gains and losses Information technology 104.29 121.01 Foreign exchange gain (net) - 16.66 solutions Gain on discontinuation of 6.73 - Cost of goods sold 3.43 6.59 lease as per IND AS 116 Managed service charges 14.23 58.17 (Refer Note 35) Annual maintenance charges 46.92 69.34 Gain on fair value of - 1.61 Repairs and maintenance: investment in mutual funds - Plant and machinery - network 255.53 216.39 15.54 159.83 - Building 9.37 11.30 - Plant and machinery - others 34.33 27.89 25. Employee benefit expenses - Others 8.04 9.00 Leaseline and bandwidth 134.48 125.47 For the For the charges year ended year ended Telecalling charges 26.06 55.46 March 31, March 31, Port charges 26.57 14.07 2020 2019 691.77 758.30 Salaries and bonus 219.11 265.32 Other expenses Contribution to provident and 7.99 12.99 Commission, incentives and 52.22 88.61 other funds content cost Gratuity (Refer note 34(e)) 3.14 5.53 Travel and conveyance 12.11 16.58 Staff welfare expenses 17.00 22.79 Bad debt written off 0.10 57.91 247.24 306.63 Impairment loss/ (reversal) on 1.99 (56.69) financial assets 26. Operating and other expenses Insurance 11.41 13.52 Legal and professional fees 55.39 71.86 For the For the Advertisement and business 29.69 31.42 year ended year ended promotion expenses March 31, March 31, Rates and taxes 9.43 3.41 2020 2019 Miscellaneous expenses 55.94 75.33 Power and fuel 228.28 301.95 Network 162.08 300.94 Other losses Others - - - Loss on financial assets 1.98 - 162.08 300.94 mandatorily measured at Rent FVTPL Network 12.75 709.56 - Loss on property, plant and 0.52 8.01 Others 28.67 30.76 equipment sold / written off (net) 41.42 740.32 - Foreign exchange loss (net) 1.59 - 4.09 8.01 1,664.83 3,383.44 112 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

27. Depreciation and amortisation expense 29. Finance income

For the year For the year For the year For the year ended ended ended ended March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019 Interest income on: Depreciation on 349.99 401.08 - Bank deposits 0.53 0.10 Property plant and -Income Tax Refund 12.27 6.75 equipment Unwinding impact as 5.01 8.98 Amortisation of 2.47 27.57 per IND AS 109 on Intangible assets security deposits at Depreciation on 3.05 3.05 amortised cost Investment property Unwinding impact on 57.00 - loan given Depreciation on Right 128.77 - 74.81 15.83 of use assets 484.28 431.70 30. Exceptional items (net)

28. Finance cost For the year For the year ended ended March 31, 2020 March 31, 2019 For the year For the year Impairment reversal of (483.54) (1,824.52) ended ended CMB assets [refer note March 31, 2020 March 31, 2019 (a) below] Interest Expenses: Change in the value (11.91) (307.34) - On loans from banks/ 417.00 884.69 of derivative financial financial institutions asset [refer note (b) - On other loans 7.44 282.25 below] Impairment in the - On unwinding of 0.73 0.79 value of investment in asset retirement Subsidiaries obligation TTML [refer note (c) 655.02 877.48 - On liability 1,087.67 1,901.41 below] component of MMP (0.60) 4.66 Compound Financial Impairment in the 2,319.96 3,002.56 Instruments value of Inter corporate - On lease liabilities as 52.80 - deposit / Loan to TTML per Ind AS 116 (Refer [refer note 13 (c)] note 35) Restructuring cost 525.70 (105.17) Guarantee commission 12.08 8.36 [refer note (d) below ] Settlement of cases 36.74 - Other Finance charges 52.60 10.32 opted under LDRS Unwinding of 16.50 18.00 [refer note (e) below] borrowing cost Interest on GST 2.34 - Unwinding impact - 77.31 liability towards LF/ on provision for SUC payment to DoT foreseeble loss Gain on sale of - (91.23) investment in associate 1,646.82 3,183.13 [refer note 22] Additional provision for 8,204.78 - LF/SUC [refer note (f) below] 11,248.49 1,556.44 TELESERVICES LIMITED 113

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) a. As at June 30, 2019, the Company had reviewed the some reports are yet to be submitted and Special Audit recoverable amount of its CMB assets based on fair has been completed upto financial year 2010-11. DoT value less costs to sell and recorded Rs.483.54 crores has appointed a Special Auditor in July 2019 to carry out as partial reversal of impairment recorded during the Special Audit from financial year 2011- 12 till financial year ended March 31, 2018 and disclosed the same as year 2017-18. an exceptional item for the year ended March 31, 2020. (Rs.1,824.52 crores for the year ended March 31, 2019) As assessment is an exercise decentralized at Circles, the assessment is done at the circles level for b. As at March 31, 2020, TTSL has accounted for derivative different years. Based on the assessment at Circles, asset on the CCPS based on the fair market valuation demand is issued by DoT centrally, which also stands of TTSL as at that date and accounted for the gain on issued for different years for different circles. DoT has CCPS derivative component as Rs.11.91 crores in the issued guidelines/clarifications on February 3, 2020 statement of profit and loss for the year ended March for re-verification of deduction claims in respect of 31, 2020 (gain of Rs.307.34 crores for the year ended disallowances made during the assessment at Circles. March 31, 2019). During the quarter ended September 30, 2019, the c. The Company has re-assessed the carrying value of Company made additional provision of Rs.7,787 crores its investment in equity of TTML and has provided for as an initial estimate towards LF & Spectrum Usage impairment in the value of its investment of Rs.655.02 Charges (SUC), including interest, penalty and interest crores for the year ended March 31, 2020 (Rs.877.48 on penalty, as applicable, on account of the judgement crores for the year ended March 31, 2019) and the same and disclosed the same as an exceptional item. This is disclosed as an exceptional item in the statement of provision excluded demands based on disallowances profit and loss. The carrying value of the investment that are allowable on production of necessary documents as at March 31, 2020 is Rs.169.96 crores (Rs.287.98 regarding interconnect and roaming charges. It also crores as at March 31, 2019). excluded certain discrepancies identified by the Company in the said LF and SUC demands raised d. Restructuring cost of Rs.525.70 crores for the year by DoT on specific matters of fact, for which written ended March 31, 2020. During the year ended March 31, representations have been made to the DoT in the past. 2019, there has been a reduction of provision towards restructuring cost by Rs.105.17 crores on account of DoT vide letter dated November 13, 2019 directed all adjustments in the ordinary course of business. the telecom licensees to undertake self-assessment and make payment of LF and other dues within e. Provision for settlement of cases opted under Legacy three months in accordance with the Judgment. The Dispute Resolution Scheme (LDRS) - Rs.36.74 crores Company and other operators filed review petitions for the year ended March 31, 2020 in SC challenging imposition of penalty and interest thereon. These petitions were dismissed. The Company f. The Hon’ble Supreme Court (‘SC’) pronounced its and other operators have filed modification applications Judgement on October 24, 2019 (‘Judgement’), in the SC seeking modification of Supplementary dismissing the appeals of operators and allowing Order dated October 24, 2019 to allow the Company Department of Telecommunication’s (DoT) appeal in and DoT to conduct the exercise for ascertaining and respect of the definition of Gross Revenue (GR) and payment of the amounts due under the Judgment. Adjusted Gross Revenue (‘AGR’) as defined in the These applications were mentioned for listing before License Agreement. the SC on January 21, 2020 and the SC had ordered listing of these applications before the bench which gave Over the years, the Company received multiple the Judgment. On February 14, 2020, the SC passed provisional assessment orders for the same period an order and listed the applications of the operators for from DoT towards License Fees (‘LF’), calculated as March 17, 2020, which took place on March 18, 2020. a percentage of AGR. These were based on DoT’s assessments and also after audits conducted by CAG DoT raised a consolidated demand in Dec 2019 for or Special Auditors appointed by DoT. CAG audit has Rs.14,056.46 crores towards LF, SUC, interest, penalty been completed upto financial year 2016-17, though and interest on penalty. The demand also includes 114 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

additions on account of CCA disallowances and 31. Loss per share discrepancies which are yet to be rectified by DoT. Basic loss per share amounts are calculated by dividing Based on self-assessment, the Company made a the loss for the year attributable to equity holders by the payment of Rs.1,707.98 crores on February 17, weighted average number of Equity shares outstanding 2020. The Company in good faith and by way of during the year. abundant caution, had also made additional ad-hoc payment of Rs.1,850 crores on March 2, 2020 to cover The following reflects the income and share data used in reconciliation and verification differences with DoT, if the basic and diluted loss per share computations: any. A modification petition has been filed by DoT in the SC on March 16, 2020 with respect to giving 20 year Basic Loss Per Share period for recovery of LF dues and to cease the interest after a particular date. As on date, the matter is still not March 31, 2020 March 31, 2019 heard. On March 18, 2020, SC held that no exercise of i) Loss after tax (13,325.26) (5,229.54) self-assessment/re-assessment of the dues which were placed before the SC is permitted and the said dues ii) Weighted average 637.69 577.50 need to be deposited, as ordered in the judgement. number of shares However, the prayer of DoT to allow it to recover the outstanding (in dues over 20 year period is pending and the Court has crores) indicated that it would consider such prayer of DoT to iii) Nominal value of 10.00 10.00 recover the dues over a longer period on the next date. equity shares (in Rs.) Further, during the quarter ended March 31, 2020, iv) Basic loss per (20.90) (9.06) the Company has evaluated the AGR obligations share and reassessed the estimates as a result of more information or experience gained to reflect the current Diluted Loss per share best estimate. In evaluating the estimate, the Company has taken into consideration the industry perspective The effect of CCPS (Series 2, Series 3, Series 4, Series 8 and legal opinion on certain legal issues from Senior and Series 9), OCPS (Series I) and OCD (Series II and III) Counsel. During the quarter ended March 31, 2020, has been anti-dilutive; hence, there is no change in basic and the Company has made net additional provision of diluted loss per share. Rs.417.78 crores towards LF, SUC, Interest, Penalty and Interest on Penalty as applicable, and the same 32. Payment to Auditors (excluding GST): has been disclosed as an exceptional item. Accordingly, the provisions pertaining to AGR matter as on March 31, 2020 stand at Rs.7,976.60 crores and disclosed as Particulars March 31, 2020 March 31, 2019 provision for contingencies. The amount was provisioned i) For audit fees 0.84 0.99 in compliance with the accounting standards, strictly ii) For other services 3.85 2.60 without prejudice to the Company’s legal rights, claims, iii) For reimbursement 0.40 0.36 remedies and contentions available under law. The of expenses Company does not admit, acknowledge or confirm any liability towards the same and the fact that some 5.09 3.95 amount is being provisioned does not affect or dilute the Company’s defense against the enforcement of the said LF and SUC demands by DoT in any way.

Also refer note 36 (b) of Contingent Liability. TELESERVICES LIMITED 115

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

33. The Company has certain dues to suppliers registered under Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act’). The disclosures pursuant to the said MSMED Act are as follows:

SN Particulars March 31, 2020 March 31, 2019 1 Principal amount due to suppliers registered under the MSMED Act 4.57 3.77 and remaining unpaid as at year end 2 Interest due to suppliers registered under the MSMED Act and 0.42 0.07 remaining unpaid as at year end 3 Principal amounts paid to suppliers registered under the MSMED Act, - - beyond the appointed day during the year end. 4 Interest paid, other than under Section 16 of MSMED Act, to suppliers - - registered under the MSMED Act, beyond the appointed day during the year. 5 Interest paid, under Section 16 of MSMED Act, to suppliers registered - - under the MSMED Act, beyond the appointed day during the year 6 Interest due and payable towards suppliers registered under MSMED - - Act, for payments already made 7 Further interest remaining due and payable for earlier years - - 4.99 3.84

34. Movement in Provisions

a) Provision for contingencies :

The following table sets forth the movement in the provision for contingencies:

Provision Payments made/ As at adjusted As at Description (reversed) April 1, 2019 against March 31, 2020 during the provision year Provision for contingencies 43.85 8,204.78 (3,780.42) 4,468.21

Provision Payments made/ As at adjusted As at Description (reversed) April 1, 2018 against March 31, 2019 during the provision year Provision for contingencies 600.89 (557.04) - 43.85

Provision for contingencies is primarily towards the outstanding claims / litigations against the Company. The Company has evaluated the obligations through Probable, Possible and Remote (PPR) model and reassessed the estimates as a result of more information or experience gained and to reflect the current best estimate, the Company has reversed during the year ended March 31, 2019 provision of Rs.584.09 crores made in earlier years towards certain regulatory matters. In making the evaluation for PPR, the Company has taken into consideration the Industry perspective, legal and technical view, availability of documentation/ agreements, recent court judgements, interpretation of the matter, independent opinion from professionals (specific matters) etc. Also refer Note 30(f) 116 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

b) Provision for foreseeable loss on long term contracts:

The following table sets forth the movement in the provision for foreseeable loss on long term contracts.

Provision Transfer to As at Utilisation/ As at Description made during BAL (refer April 1, 2019 Reversal March 31, 2020 the year note 1.2) Provision for foreseeable 636.16* 277.03 (448.45) (141.28) 323.46 loss on long term contracts

Provision Transfer to As at Utilisation/ As at Description made during BAL (refer April 1, 2018 Reversal March 31, 2019 the year note 1.2) Provision for foreseeable 3,133.64 359.50 - (2,856.98) 636.16* loss on long term contracts

* Out of total provision of Rs.636.16 crores, provision of Rs.477.14 crores has been classified as liabilities directly associated with assets classified as held for sale.

c) Other provisions

The following table sets forth the movement in other provisions:

Provision As at towards As at Description April 1, 2019 indemnification March 31, 2020 (Refer note 1.2) Other provisions - 50.41 50.41

d) Provision for asset retirement obligation (ARO):

The provision for ARO is the expected cost to dismantle and remove the infrastructure equipment from the site and the expected timing of these costs. Discount rates are determined based on the government bond rate of a similar period as the liability.

As at Unwinding of As at Description April 1, 2019 interest March 31, 2020 Provision for asset retirement obligation 7.76 0.73 8.49

As at Unwinding of As at Description April 1, 2018 interest March 31, 2019 Provision for asset retirement obligation 6.97 0.79 7.76

e) Gratuity and other post-employment benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity (included as part of Note 25 Employee benefits expense) ii. Long-term compensated absences (included as part of Note 25 Employee benefits expense) TELESERVICES LIMITED 117

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

iii. Provident fund (included as part of Note 25 The change in benefit obligation and funded status of the Employee benefits expense) gratuity plan for the year ended March 31, 2020 is as follows: iv. Contribution to other funds March 31, March 31, (i) Gratuity 2020 2019 The Company has defined benefit gratuity plan. Change in benefit obligation Every employee who has completed five years Benefit obligation at the 34.59 49.13 or more gets the gratuity on departure at 15 days beginning of the year salary i.e. last drawn salary for each completed year of service. The scheme is funded with an insurance Service cost 2.40 4.38 company in the form of a qualifying insurance policy. Interest cost 1.90 3.04 Acquisition/Business (7.54) - Summary of the gratuity plan is as follows: Combination/Divestiture/ Transfers Components of net benefit cost Benefits paid (9.13) (21.70) Actuarial gain - Demographic - (0.24) March 31, March 31, assumptions 2020 2019 Actuarial (gain)/loss - Financial 0.80 (0.43) Service cost 2.40 4.38 Interest cost 1.90 3.04 Actuarial loss - Experience 0.68 0.41 Interest (Income) on plan (1.16) (1.89) Benefit obligation at the end 23.70 34.59 assets of the year Net gratuity cost as per note 25 3.14 5.53 Change in fair value of plan assets The current service cost, interest cost and expected return Fair value of plan assets at 21.83 35.77 on plan assets for the year are included in the ‘Employee beginning of year benefits expenses’ line item in the statement of profit and Expected return on plan 1.16 1.89 loss. The remeasurement on the defined benefit liability is assets included in other comprehensive income. Actual contribution - 3.53 Re-measurement effects recognised in Other Benefits paid (9.13) (21.70) Comprehensive Income (OCI): Actuarial gain 0.63 2.34 March 31, March 31, Fair value of plan assets at 14.49 21.83 2020 2019 end of year Actuarial gain due to - (0.24) Actual return on plan assets 1.79 4.23 demographic assumption changes in Defined Benefit Obligation (DBO) * Actuarial (gain)/loss due to 0.80 (0.43) financial assumption changes in DBO Actuarial loss due to 0.68 0.41 experience on DBO Return on plan assets greater (0.63) (2.34) than discount rate Total actuarial loss/(gain) 0.85 (2.60) included in OCI

*figures are below rounding off norm adopted by the Company. 118 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Net asset / (liability) recognised in the Balance Sheet March 31, March 31, 2020 2019 March 31, March 31, Attrition rate 28.00% 35.00% 2020 2019 Salary increase rate 6.00% 6.00% Present value of defined 23.70 34.59 Retirement age 60 years 60 years benefit obligation Life Expectation (years) IALM IALM Fair value of plan assets 14.49 21.83 (2006-08) (2006-08) Funded status [Surplus/ (9.21) (12.76) Ultimate Ultimate (Deficit)] Estimate of amount of 6.59 12.33 Net liability recognised in the (9.21) *(12.76) contribution in the immediate Balance Sheet* next year

* Out of net gratuity liability of Rs.12.76 crores as at The expected rate of return on plan assets is determined March 31, 2019, net gratuity liability of Rs.8.06 crores after considering several applicable factors such as the has been classified as liabilities directly associated with composition of the plan assets, investment strategy, assets classified as held for sale. market scenario, etc. In order to protect the capital and optimise returns within acceptable risk parameters, the The assumptions used in accounting for the gratuity plan assets are well diversified. plan for the year are as below: The discount rate is based on the prevailing market March 31, March 31, yields of Government of India securities as at the balance 2020 2019 sheet date for the estimated term of the obligations. Discount rate 5.50% 6.70% The estimate of future salary increases considered, Expected return on plan 5.50% 6.70% takes into account the inflation, seniority, promotion, assets (as declared by LIC) increments and other relevant factors.

Experience adjustment: (Rs. in crores) Year ended Year ended Year ended Year ended Year ended Gratuity March 31, March 31, March 31, March 31, March 31, 2020 2019 2018 2017 2016 Present value of DBO 23.70 34.59 49.13 54.21 43.67 Fair value of plan assets 14.49 21.83 25.95 45.89 43.59 Funded status [Surplus / (Deficit)] (9.21) (12.76) (23.18) (8.32) (0.08) Experience (gain) / loss adjustments 0.68 0.41 (2.92) 10.15 (1.08) on plan liabilities Experience gain / (loss) adjustments 0.63 2.34 (0.90) 2.75 0.77 on plan assets

Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and mortality. The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. TELESERVICES LIMITED 119

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Effect on gratulity obligation Particulars Change in March 31, March 31, assumptions 2020 2019 Delta effect of change in Rate of discounting +1% (0.69) (0.76) -1% 0.66 0.73 Delta effect of change in Rate of salary increase +1% 0.54 0.73 -1% (0.58) (0.77)

The above sensitivity analyses are based on a change to the plan during the year ending March 31, 2020 is in an assumption while holding all other assumptions Rs.6.59 crores (March 31, 2019 – Rs.12.33 crores). constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. (ii) Compensated absences When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same The compensated absences cover the Company`s method (present value of the defined benefit obligation liability for earned leave. calculated with the projected unit credit method at the end of the reporting period) has been applied as when Total compensated absences provision as on March 31, calculating the defined benefit liability recognised in the 2020 is Rs.8.77 crores (Rs.12.87 crores as on March 31, balance sheet. The sensitivity analysis presented above 2019, out of which, Rs.3.72 crores has been classified may not be representative of the actual change in the as liabilities directly associated with assets classified as defined benefit obligation as it is unlikely that the change held for sale) that is presented as short-term provision, in assumptions would occur in isolation of one another since the Company does not have an unconditional as some of the assumptions may be correlated. right to defer settlement for any of these obligations. Provision for compensated absences has been made There was no change in the methods and assumptions on the basis of actuarial valuation carried out as at the used in preparing the sensitivity analysis from prior balance sheet date. years. (iii) Provident fund The following payments are expected contributions to the defined benefit plan in future years: Provident fund with respect to employees covered with the Government administered fund is a defined March 31, March 31, contribution scheme for which the Company has made 2020 2019 a contribution of Rs.2.27 crores (March 2019 – Rs.3.47 crores) during the current year. Also, the Company Within the next 12 months 6.59 12.33 makes contributions to the Tata Teleservices Provident Between 1 to 2 years 5.79 9.68 Fund Trust which is treated as defined benefit plan and Between 3 to 5 years 11.94 17.33 for which the Company has made a contribution of Between 6 to 10 years 9.00 8.59 Rs.5.68 crores (March 2019 – Rs.8.52 crores) during the current year. The average duration of the defined benefit plan obligation at the end of the reporting period is 3 years Summary of the provident fund plan is as follows: (March 31 2019: 2 years). March 31, March 31, The estimates of future salary increases, considered in 2020 2019 actuarial valuation, take account of inflation, seniority, Components of net benefit promotion and other relevant factors, such as supply cost and demand in the employment market. Further, the Service cost 6.92 9.78 estimated amount of contributions expected to be paid 120 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Interest cost 19.50 22.25 Settlements (21.65) (26.83) Expected return on plan (20.28) (23.46) Less: Impairment of certain 7.32 (23.37) assets plan assets Net cost 6.14 8.57 Fair value of plan assets at 278.56 302.75 end of year Re-measurement effects recognised in Other Comprehensive Income (OCI): Net asset / (liability) recognised in the Balance Sheet

March 31, March 31, Fund balance March 31, March 31, 2020 2019 2020 2019 Movement in Present Value of (21.05) 311.17 Defined benefit obligation (290.12) (311.17) DBO Fair value of plan assets 278.56 302.75 Movement in Fair value of plan 24.19 (302.78) Funded status asset/(liability) (11.56) (8.42) assets Net Liability recognized in (11.56) (8.42) Total actuarial loss/(gain) 3.14 8.39 the Balance Sheet included in OCI The assumptions used in accounting for the Provident The change in benefit obligation and funded status of Fund Plan for the year are as below: the Provident Fund plan for the year ended March 31, 2020 is as follows: March 31, March 31,

2020 2019 March 31, March 31, Discount rate 5.50% 6.70% 2020 2019 Expected return on Plan Assets 8.62% 8.71% Change in benefit obligation (Internal Rate of Return on the Benefit obligation at the 311.17 352.10 portfolio of plan assets, given beginning of the year below) Service cost 6.92 9.78 Attrition rate 28.00% 35.00% Interest cost 19.50 22.25 Interest rate guarantee 8.50% 8.65% for Benefits paid (40.29) (62.50) 1st year Actuarial loss 4.97 2.22 and 8.55% Employee contributions 9.50 14.15 thereafter Settlements (21.65) (26.83) Retirement age 60 years 60 years Life Expectation (years) IALM IALM Benefit obligation at the end 290.12 311.17 (2006-08) (2006-08) of the year Ultimate Ultimate Change in fair value of plan assets The expected rate of return on plan assets is determined Fair value of plan assets at 302.75 363.79 after considering several applicable factors such as the beginning of year composition of the plan assets, investment strategy, Expected return on plan assets 20.28 23.46 market scenario, etc. In order to protect the capital and Employer Contribution 5.71 8.52 optimise returns within acceptable risk parameters, the plan assets are well diversified. Employee contribution 9.50 14.15 Benefits paid (40.29) (62.50) The discount rate is based on the prevailing market Asset gain/(loss) (5.06) 5.53 yields of Government of India securities as at the balance sheet date for the estimated term of the obligations. TELESERVICES LIMITED 121

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

Experience adjustment:

March 31, March 31, March 31, March 31, March 31, Fund balance 2020 2019 2018 2017 2016 Present Value of DBO 290.12 311.17 352.10 361.93 359.08 Fair value of plan assets 278.56 302.75 363.79 390.83 372.41 Funded status [Surplus/(Deficit)] (11.56) (8.42) 11.69 28.90 13.33 Experience (gain) / loss adjustments on plan 5.09 3.11 4.44 (1.02) 14.61 liabilities Experience gain / (loss) adjustments on plan (5.06) 5.53 (13.18) 8.52 14.31 assets

A quantitative sensitivity analysis for significant assumption as at March 31, 2020 is as shown below:

Effect on fund obligation Particulars Change in March 31, 2020 March 31, 2019 assumptions Discount rate +50 basis points (0.58) (0.51) -50 basis points 0.64 0.56 Interest rate guarantee +50 basis points 7.70 6.42 -50 basis points (4.86) (4.57)

The above sensitivity analyses are based on a change March 31, March 31, in an assumption while holding all other assumptions 2020 2019 constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. Within the next 12 months 57.61 81.71 When calculating the sensitivity of the defined benefit Between 1 to 2 years 44.25 58.16 obligation to significant actuarial assumptions the same Between 3 to 5 years 93.54 101.69 method (present value of the defined benefit obligation Between 6 to 10 years 95.79 74.77 calculated with the projected unit credit method at the end of the reporting period) has been applied as when Major Categories of Plan assets as a percentage of total calculating the defined benefit liability recognised in the assets: balance sheet. The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change Major categories of plan March 31, March 31, in assumptions would occur in isolation of one another assets as a percentage to 2020 2019 as some of the assumptions may be correlated. total assets Government of India securities/ 21.47% 20.20% There was no change in the methods and assumptions Gilt Mutual Funds used in preparing the sensitivity analysis from prior State Government Securities 31.38% 27.74% years. PSU Bonds 33.14% 35.80% The following payments are expected contributions to Private Sector Bonds/Equity/ 14.01% 16.25% the defined benefit plan in future years: Mutual Funds 122 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

The estimates of future salary increases, considered in Lessor accounting under Ind AS 116 is substantially actuarial valuation, take account of inflation, seniority, unchanged from Ind AS 17. Lessors will continue to promotion and other relevant factors, such as supply classify leases as either operating or finance leases and demand in the employment market. Further, the using similar principles as in Ind AS 17. Therefore, Ind estimated amount of contributions expected to be paid AS 116 did not have an impact for leases where the to the plan during the year ending March 31, 2020 is Company is the lessor. Rs.5.71 crores (March 31, 2019 – Rs.8.52 crores). On adoption of IND AS 116, The Company recognised (iv) Contribution to other funds right-of-use assets and lease liabilities for those leases previously classified as operating leases under IND AS The Company makes Superannuation Fund, Employee 17, except for short-term leases and leases of low-value State Insurance Scheme and Labor Welfare fund assets. contributions which are defined contribution plans, for qualifying employees. The Company recognised Rs. Lease liabilities were recognised based on the present NIL crores for the year ended March 31, 2020 (Rs. value of the remaining lease payments, discounted 0.86 crores for the year ended March 31, 2019) for using the incremental borrowing rate at the date of initial Superannuation Fund contributions, Rs.0.04 crores for application. the year ended March 31, 2020 (Rs. 0.12 crores for the year ended March 31, 2019) for Employee State (ii) Practical Expedients applied Insurance Scheme contributions and Rs.NIL crores for the year ended March 31, 2020 (Rs.0.01 crores for the The Company also applied the following practical year ended March 31, 2019) for Labor Welfare fund expedients: contribution in the Statement of Profit and Loss. The contributions payable to these plans by the Company a) Applying a single discount rate to a portfolio of are at rates specified in the rules of the schemes. leases with reasonably similar characteristics

35. Change in Accounting Policy b) Accounting for operating leases with a remaining lease term of less than 12 months as at April 1, (i) Impact on Financial Statements - Lessee Accounting 2019 as short-term leases

As indicated in note 2.2(n) above, The Company has c) Using hindsight in determining the lease term adopted Ind AS 116, effective annual reporting period where the contract contains options to extend or beginning April 1, 2019 and applied the standard to its terminate the lease. leases, retrospectively, with the cumulative effect of initially applying the standard, recognised on the date of d) Excluding leases for which the underlying asset is initial application (April 1, 2019) (modified retrospective of low value. approach). The reclassification and the adjustment arising from the new leasing rules are therefore e) Not to separate non-lease components from recognised in opening balance sheet on April 1, 2019. lease components, and instead account for each The new Accounting policies are disclosed in Note 2.2(n) lease component and any associated non-lease components as a single lease component. The Company has lease contracts for Network Sites and Building. Before the adoption of Ind AS 116, the The Company also elected to use the transition practical Company classified each of its leases (as lessee) at the expedient to not reassess whether a contract is, or inception date as either a finance lease or an operating contains a lease at April 1, 2019. Instead, the Company lease. Refer to Note 2.2(n) Leases for the accounting applied the standard only to contracts that were policy prior to April 1, 2019. previously identified as leases applying Ind AS 17 and appendix C to Ind AS 17. TELESERVICES LIMITED 123

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

(iii) Measurement of Lease Liabilities (v) The change in accounting policy affected the following items in the balance sheet on April 1, 2019 Reconciliation: Increase/ Amount (Decrease) Off-Balance sheet lease obligations as of 913.32 by March 31, 2019 Assets Effect from discounting at the incremental 147.27 Right of use assets 972.24 borrowing rate as at April 1, 2019 Intangible Asset (483.55) Discounted using the Lessee incremental 766.05 Other Financial Assets (Prepayments) (8.57) Borrowing rate at the date of Initial Total assets 480.12 application Liabilities (Less): Short term leases not recognised as 182.47 a liability Other Financial Liabilities 571.55 (Less): Variable Lease Payments 12.03 Total liabilities 571.55 Lease liabilities due to initial application 571.55 Total adjustment on equity of Ind AS 116 as at April 1, 2019 Retained earnings (91.43) Increase in Cash inflow from operating 144.88 The lease liabilities were discounted using the activities incremental borrowing rate of the Company as at April Decrease in Cash intflow from financing (144.88) 1, 2019. The weighted average discount rate used for activities on account of lease payments * recognition of lease liabilities was 9.5%

The Net impact on retained earnings on April 1, 2019 Leases previously classified as finance leases was decrease of Rs.91.43 crores. The Company did not change the initial carrying amounts The company has reclassified IRU of Rs.483.55 crores of recognised assets and liabilities at the date of initial and Security deposits of Rs.8.57 crores to ROU assets application for leases previously classified as finance as on April 1, 2019. leases (i.e., the right-of-use assets and lease liabilities equal the lease assets and liabilities recognised under The impact of change in accounting policy on Ind AS 17). The requirements of Ind AS 116 were applied account of adoption of Ind AS 116 is as follows: to these leases from April 1, 2019. The carrying value of this asset was reclassified in ROU. Particulars Amount (iv) Measurement of ROU assets Decrease in Intangible Asset by (483.55) Decrease in Financial Assets (Security (8.57) The right-of-use assets for most leases were recognised Deposit) by based on the carrying amount as if the standard had Increase in lease liability by (571.55) always been applied, apart from the use of incremental borrowing rate at the date of initial application. In some Increase in ROU assets (due to Ind AS 116 480.12 leases, the right-of-use assets were recognised based calculation) by on the amount equal to the lease liabilities, adjusted Increase in ROU assets (due to reclassification 492.12 for any related prepaid and accrued lease payments of Security Deposit and Intangible assets) by previously recognised. The Net impact on retained earning decrease (91.43) by

The Net impact on retained earnings on April 1, 2019 was decrease on INR 91.43 crores. 124 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

(vi) Disclosure pertaining to leases as per Ind AS 116: Amount Modification Adjustment (1.95) A. Background of leasing activity: As at March 31, 2020 483.85 The Company has lease contracts for various Current 101.42 Network Sites, buildings and dark fibre (IRU). Non current 382.43 Company is using Network Sites for transmission and for in-door network coverage purpose. The For maturity analysis of lease liabilities refer note 42 buildings taken on lease are used as offices. The average lease period for the sites is 4 years with C. Total cash outflow an average escalation of 3-5% per annum. The average lease period for buildings is 2-3 years The company has a total cash flow for leases with an average escalation of 3-5%. Generally the of Rs.332.16 crores in 2019-20, out of which company is restricted to sublet the sites taken on the amount paid against interest component is lease. Rs.52.80 crores and against principal is Rs.96.08 crores for the sites considered for ROU and Lease B. Lease liabilities: Liability calculation, the balance payment is made for short term leases and variable rent. Set out below are the carrying amounts of lease liabilities D. Amount recognized in Statement of Profit and Loss for year ended 2019-20 Amount As at April 1, 2019 571.55 Particulars Amount Additions 79.03 Increase in finance cost by 52.80 Deletion (68.70) Increase in depreciation by 104.16 Accretion of interest 52.80 Gain on discontinuation of Lease included in 6.73 Payments (148.88) other income

E. Future cash outflows

Future cash outflows not reflected in 1 year or less 1 to 5 years Over 5 years Total the measurement of lease liabilities Future variable lease payments 3.73 12.36 - 16.09

The average escalation rate of 5% is used to F. Additional information on short term and low calculate the future variable payments value leases

Additional information pertaining to variable Company had leases of a building and network lease payments sites which are short term i.e. lease term of less than 1 year. These leases were short term lease The company has lease contracts for Network and the company elected not to recognize right to sites where a part of the total rent is variable. The use assets and lease liabilities for these leases. additional rent paid during the year is Rs.3.56 The lease payments of such leases are directly crores. debited to Statement of Profit and Loss. TELESERVICES LIMITED 125

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

G. Additional information on extension and Claims against the Company not acknowledged as termination option debts*

Under IND AS 116, lease term is defined as non- March 31, March 31, S.N. Description cancellable period together with any renewal option 2020 2019 or termination option with lessee if it is reasonably 1 BSNL walky ADC [Refer 137.64 124.96 certain to exercise the option. Both these options para (a) below] with the Company are only considered for the purpose of determination of lease term and 2 Revenue Share - - 3,263.66 the options with lessor is ignored. Most of the License Fees (LF) [Refer lease contracts have an option of extension and note 30(f)] termination on mutual concession. The company 3 SUC demands [refer 683.13 1,300.69 reassesses whether it is reasonably certain to para (b) below] exercise the options if there is a significant event 4 SMS Termination 268.83 268.83 or significant change in circumstances within its charges demanded by control. Generally, the company assesses at lease other operators [refer commencement whether it is reasonably certain para (c) below] to exercise the options. The Company assesses 5 DoT demands for EMF 15.21 14.43 the probability of options basis the review of the [refer para (d) below] network design and the technology and business plans. 6 UASL rollout obligation 175.40 175.40 (refer para (e) below) 36. Commitments and contingencies 7 Subscriber verification 214.07 210.80 demand from Term Cell A. Commitments and contingencies (refer para (f) below) 8 BSNL claims for 51.08 51.08 March 31, March 31, interconnection [refer S.N. Description 2020 2019 para (g) below] (i) Capital Commitment 9 Port Charges demanded 245.50 235.34 Estimated value of 158.17 50.09 to other operators contracts remaining 10 Service Tax demands 65.04 144.76 to be executed on 11 Sales Tax/VAT demands 37.78 33.19 capital account and 12 Entry Tax demands 82.63 77.88 not provided for (net of advances) 13 Entertainment Tax 21.04 21.04 demands (ii) Other Commitments 14 Income tax demands 161.16 161.73 Indemnity given to others 102.26 102.26 15 Other miscellaneous 133.88 177.66 (iii) Contingent Liabilities demands/claims Claims against 2,292.39 6,261.45 2,292.39 6,261.45 the Company not

acknowledged as debts* * includes contingent liabilities towards indemnification (Refer 2,552.82 6,413.80 Note 1.2)

Unless otherwise stated below the management believes that, based on legal advice, the outcome of these contingencies will be favourable and that a loss is not probable, further outflow of economic resources is not probable in either case: 126 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) a. Bharat Sanchar Nigam Limited (‘BSNL’) raised demands The total demands as at March 31, 2020 are Rs.651.04 of Rs.651.04 crores (March 31, 2019- Rs.651.04 crores) crores (March 31, 2019 Rs.651.04 crores) including including interest of Rs.294.55 crores (March 31, 2019- interest of Rs.294.55 crores (March 31, 2019 – Rs.294.55 Rs.294.55 crores) on January 15, 2005 with effect crores). As at March 31, 2020, the Company has made from November 14, 2004 stating that ‘fixed wireless’ on account payment under protest of Rs.570.30 crores services provided by the Company under the brand (March 31, 2019 – Rs.570.30 crores) against the total name “WALKY” had mobility features and should be demands. treated as mobile for the purpose of Interconnect Usage Charges Regulations and Access Deficit Charge (‘ADC’) As at March 31, 2020, the Company has provided was payable on such calls. Hon’ble Telecom Dispute Rs.570.30 crores (March 31, 2019 – Rs.570.30 crores) and Settlement Appellate Tribunal (‘TDSAT’) negated and excluded the demand in respect of Gujarat circle the Company’s petition. The Company filed an appeal of Rs.44.88 crores (March 31, 2019 – Rs.44.88 crores). before the Hon’ble Supreme Court, which confirmed that The balance amount of Rs.35.85 crores (March 31, ADC was payable on fixed wireless service vide order 2019 – Rs.35.85 crores) together with accumulated dated April 30, 2008. As there were claims and counter- interest on unpaid amount of Rs.101.79 crores (March claims between the Company and BSNL, the senior 31, 2019 – Rs.89.11 crores) aggregating Rs.137.64 counsel of BSNL offered and Hon’ble Supreme Court crores (March 31, 2019 – Rs.124.96 crores) has been directed that quantification of amounts payable to each disclosed as contingent liability. other be made by Hon’ble TDSAT. b. As disclosed in Note 30(f) on AGR matter under Hon’ble TDSAT vide its various interim orders had exceptional items, the Company has evaluated the directed that BSNL and the Company to exchange obligation through Probable, Possible and Remote relevant information and reconcile the differences. (PPR) model and reassessed the estimates as a result of On April 15, 2010, Hon’ble TDSAT confirmed BSNL more information or experience gained and independent demands for period up to August 25, 2005 and has opinion on certain legal issues from senior legal counsel, given it liberty to lodge its claim for a further period up to to reflect the current best estimate, the company has February 28, 2006 without quantification. As TDSAT in considered Penalty and Interest on penalty on SUC its aforesaid judgment has not considered the directions amounting to Rs.683.13 crores, as contingent liability. of Hon’ble Supreme Court vide judgment dated April 30, 2008 to reconcile claims/ counter claims and quantify c. Bharti raised invoices/demands on the Company for amounts payable by parties to each other, the Company period since June 2009 in respect of SMS terminating has filed an appeal in Hon’ble Supreme Court against on its network based on the interconnection agreement TDSAT order of April 15, 2010 which has been admitted between the Company and the operator. The Company by the Hon’ble Supreme Court on July 23, 2010. The disputed on the ground that the charges are not Company has also moved an application for interim relief reasonable and is discriminatory. TDSAT vide its against the Hon’ble TDSAT order, which is pending. order dated August 30, 2012, directed TTSL to pay During 2015-16, the Company has filed petition in the these charges. On October 17, 2012, TTSL’s appeal Hon’ble Supreme Court with respect to the matter for against the said judgment was admitted by the Hon’ble claiming the refund of excess payment made to BSNL. Supreme Court, but directed the Company to pay the The matter will be listed for hearing in due course of above amount on a condition that any amounts paid time. Based on the legal advice available with the by the Company would be refunded back with interest Company, the penalty clause invoked by BSNL does not in the event the matter is adjudged in the Company’s apply and the Company is entitled to seek refund of the favour. Total amount payable to the operator (net of excess ADC amount paid to BSNL along with interest. access charges receivable by the Company) amounts The Company has received favorable order by TDSAT to Rs.422.05 crores (March 31, 2019 – Rs.422.05 core) in respect of Gujarat circle on April, 4, 2019 basis which has been fully provided by the Company. Amount which the Company has reduced Contingent liability paid under dispute as at March 31, 2020 amounts to by Rs.44.88 crores including accumulated interest on Rs.387.81 crores (March 31, 2019 – Rs.387.81 crores). unpaid amount. TELESERVICES LIMITED 127

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Other operators have raised claims for SMS termination Based on TDSAT judgments, the company has amounting to Rs.268.83 crores (March 31, 2019 – reassessed its position and revised contingent liability to Rs.268.83 crores), which were challenged in TDSAT Rs.15.21 crores (March 31, 2019: Rs.14.43 crores). by the Company. During the year 2015-16, TDSAT has pronounced judgement with respect to SMS termination e. DoT has issued demand notes on March 15, 2018 of charges. The Company believes that the amounts Rs.25.45 crores and Rs.149.95 crores followed by adjudged as payable by TDSAT are not tenable in the SCN issued earlier for delay in roll out obligation of absence of any contractual arrangements with these CDMA and GSM services as per License agreements. operators for SMS termination and has filed the appeal The Company has challenged the demand in TDSAT. against the judgment in Hon’ble Supreme Court and the TDSAT has stayed the demand and restrained DOT matter will be heard in due course. Accordingly, these from taking coercive action. The Company based on the claims have been disclosed as contingent liabilities. data available and internal assessment, believes that the demand will be quashed and hence, disclosed the d. The Company has received show cause notice (‘SCN’) demand as contingent liability. The Company has also and demands from DoT for radiation and certain challenged the Demand Notice dated September 16, procedural issues (non–submission/late submission of 2019 vide TP No. 80 of 2019, whereby DoT has sought Electro Magnetic Field (‘EMF’) radiation self certificate, liquidated damages amounting to Rs.28.30 crores (while etc) amounting to Rs.666.05 crores (March 31, 2019: Rs.21 crores have been claimed for delay in meeting Rs.662.31 crores). The Company has responded to all first phase of roll-out obligation within the specified time, SCN and demands stating the facts and made a provision Rs.7.30 crores have been claimed in respect of the Rs.2.01 crores pertaining to radiation related demands second phase roll-out obligation) for alleged default in and SCN. TTSL filed Telecom Petition no. 16 of 2015 to complying with the first phase and second phase roll- set aside Demand notice of Rs.0.80 crores dated May out obligations in respect of dual (second) technology 02, 2014, alleging deviation of EMF exposure norms spectrum for Kerala, Odisha and UP (W) circles. TDSAT of self certificates in Rajasthan Circle. The Company vide orders dated October 9, 2019 stayed the operation also challenged Demand Notice dated April 11, 2016 of the impugned demands. in Karnataka Circle alleging delay in submission of self certificates. The matter is currently stayed, Industry had f. DoT has issued instruction to TERM Cell in each filed a set of four petitions in TDSAT challenging the issue Licensed Service Area to conduct monthly audit to of penalty for missing/improper/absent signage’s on the check compliance levels of subscriber verification cell sites (Petition No 223 of 2014); against testing fee norms. DoT has also issued circulars to impose penalty (Petition No 500 of 2014), penalty for sharing operators for non-compliances to its instructions observed during to submit fresh Self-Certificate on up-gradation (Petition the monthly audits. Total penalty raised to TTSL on No 199 of 2015) and penalty to all sharing operators account of subscriber verification norms is Rs.214.07 due to non-compliance on EMF exposure (Petition No crores as at March 31, 2020 Some of these penalties 133 of 2015) and TDSAT has granted a stay. TDSAT have been challenged by TTSL in various High Courts had allowed petition nos. 500 of 2014, 271 of 2013 in and TDSAT. Based on legal opinion that the circulars favour of the Operators and partially allowed Petition are contrary to Section 20A of the Indian Telegraph Act, no. 133 of 2015 in favour of the Operators including 1885, as the circulars prescribe penalties in excess of the Company. Two joint petitions (out of 5) in TDSAT those prescribed under the Telegraph Act, the Company challenging the issue of (i) penalty for missing/improper/ has disclosed the said demands as contingent liability. absent signages on the cell sites (Petition No. 223 of 2014) and (ii) penalty for sharing operators to submit Household Direct Exchange Lines (RDELs) installed in fresh self-certificate on up-gradation (Petition No 199 Rajasthan circle during the period 2005-2010 and raised of 2015) are pending adjudication. TDSAT has directed penalty demands aggregating to Rs.426.88 crores on DoT not to take any coercive measures for enforcement the Company. The Company has challenged these of the impugned demand notices/invocation of bank demands before TDSAT, where it has an interim stay guarantee in the above two petitions. in its favour. Based on legal advice, the Company has considered the said demand as remote in nature. 128 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) g. BSNL, in 2001, issued letters to the Company and other surrendered the spectrum. The Review Petition was operators seeking unilateral increase in interconnection dismissed by TDSAT orders dated August 30, 2019. The access charges. The Company along with other Company has challenged the TDSAT orders dated May operators filed a petition before TDSAT. TDSAT held the 10, 2019 and August 30, 2019 vide Civil Appeal Diary matter in favor of the Company. BSNL filed an appeal No. 32001 of 2019 since TDSAT had not dealt with the in the Hon’ble Supreme Court of India. The Hon’ble fact of surrender of spectrum. TTSL’s contention is that Supreme Court has stayed the operation of TDSAT even if DoT is empowered to levy OTSC, OTSC cannot order. Demands raised on TTSL are Rs.51.08 crores be levied on TTSL since TTSL has already surrendered (March 31, 2019 – Rs.51.08 crores). In March 2009, the spectrum. The Supreme Court issued notice in the BSNL demanded payment and issued disconnection Appeals vide Order dated September 30, 2019. TTSL notices in case of failure to pay. The Hon’ble Supreme has filed its Reply to DoT’s Appeal and DoT has also Court has stayed disconnection and further clarified that filed its Reply to TTSL’s Appeal. Time has been granted the stay regarding TDSAT judgment was only towards to parties to file Rejoinder Affidavits. There is no specific refunds to be made by BSNL to TTSL. next date of hearing in the matters. Based on legal advice, the Company has considered the said demand h. The Company received demands from DoT for as remote in nature. payment of one-time spectrum fees for additional CDMA spectrum held beyond 2.5MHz in all its circles i. The Company has evaluated the impact of the Supreme for the period from January 1, 2013 till the expiry of the Court (SC) judgement dated February 28, 2019 initial terms of the respective licenses. The Company responded to DoT, intimating about its decision to retain in case of “Vivekananda Vidyamandir And Others only one block spectrum in Delhi Circle and surrender Vs The Regional Provident Fund Commissioner (II) the balance spectrum. In the opinion of Company, West Bengal” and the related circular (Circular No. inter-alia, the above demand amounts to alteration of C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated financial terms of the licenses issued in the past and March 20, 2019 issued by the Employees’ Provident therefore, the Company has filed a Writ Petition before Fund Organisation in relation to non-exclusion of certain Hon’ble Kolkata High Court challenging the decision to allowances from the definition of “basic wages” of the levy one-time spectrum charge and has subsequently, relevant employees for the purposes of determining obtained a stay against the demand. The Company has contribution to provident fund under the Employees’ paid Rs.198.20 crores (March 31, 2019 – Rs.198.20 Provident Funds & Miscellaneous Provisions Act, crores) for the period January 1, 2013 to December 31, 1952. In the assessment of the management which is 2018 under protest. Kolkata High Court disposed off supported by legal advice, the Company believes that the matter and permitted TTSL to approach TDSAT on the aforesaid judgement does not have material impact March 12, 2019. TDSAT granted relief vide orders dated on the Company. The Company will continue to monitor May 10, 2019 in terms of (a) setting aside the impugned and evaluate its position based on future events and decisions / orders dated 28.12.2012, 15.03.2013 and developments. demands dated 20.03.2013, (b) held that the amount of Rs.198.20 Cr. paid by TTSL for retaining 1.25 MHz B. Rental expenses relating to operating leases CDMA spectrum beyond the startup spectrum in Delhi recognised in the Statement of Profit and Loss : Circle was not legal and should be refunded back to TTSL within 2 months from the date of the order, April 1, 2018 and (c) directed payment of interest at rate of 8% per to March 31, Particulars annum from the respective dates when the instalments 2019 were paid. DoT filed CA no. 6766/2019 seeking a stay of TDSAT orders dated May 10, 2019. The Company Network sites and others 740.32 filed a Review Petition seeking declaration that DoT is not entitled to OTSC in view of the fact that TTSL had TELESERVICES LIMITED 129

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

C. Future Minimum Lease payments under Non- D Associate cancellable operating lease: ATC Telecom Infrastructure Private Limited (Formerly known as Viom Networks Limited) (ATC Infrastructure As at Services Private Limited has been amalgamated w.e.f Particulars March 31, September 27, 2019) 2019 (i) Due not later than one year 206.62 E Subsidiaries, associate and joint venture (ii) Due later than one year and not later 668.66 companies of holding company with whom the than 5 years Company had transactions (iii) Due later than 5 years 38.04 Associate Of Holding Company Total 913.32 Conneqt Business Solutions Limited (formerly Tata

Business Support Services Limited) The agreements are executed for a period ranging from 6 months to 15 years with a renewable clause and in many Tata Chemicals Limited cases also provide for termination at will by either party Tata Coffee Ltd. giving a prior notice period ranging between 30 to 180 days. Tata Elxsi Limited Escalation ranges from 2% - 3% per annum depending upon Tata Consumer Products Limited (formerly Tata Global the terms of the agreement with each vendor. Beverages Limited) Tata Marcopolo Motors Ltd 37. Segment Reporting Tata Metaliks Ltd TMF Holdings Limited (formerly Tata Motors Finance The Company is engaged in providing telecommunication Limited) services under Unified License. These, in the context Tata Motors Insurance Broking and Advisory Services of Ind AS 108 on “Segment reporting”, are considered Limited to constitute a single reportable segment. Further, the Tata Motors Ltd Company provide telecommunication services only in Tata power Delhi Distribution ltd the Indian domestic market and accordingly secondary segment reporting disclosure are not required. Tata Power Solar Systems Limited Tata Power Trading Company Limited 38. Related Party Transactions in terms of Ind AS 24 Tata Steel Limited Tata Steel Downstream Products Limited (formerly List of Related parties Tata Steel Processing and Distribution Limited) Tata Steel BSL Limited (formerly Bhushan Steel A Holding Company Limited) (under amalgamation) Tata Sons Private Limited Tata Steel Foundation Tata Technologies Ltd B Investing Party of Holding Company Tatanet Services Ltd Sir Dorabji Tata Trust The Indian Hotels Company ltd Sir Ratan Tata Trust The Tata Power Company Limited Titan Company Limited. C Subsidiaries Titan Engineering And Automation Limited MMP Mobi Wallet Payment Systems Limited Nelco Limited Tata Teleservices (Maharashtra) Ltd (w.e.f October 17, Tata Ceramics Limited (ceased w.e.f January 8, 2020) 2018) Trent Ltd. TTL Mobile Private Limited (formerly Virgin Mobile Voltas Limited (India) Private Limited) NVS Technologies Limited 130 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Associate Of Fellow Subsidiary Tril Infopark Limited STT Global Data Centres Private limited (Formerly Tata AIG General Insurance Company Limited known as Tata Communications Data Centers Pvt Ltd) Panatone Finvest Limited (w.e.f. May 28, 2018) Tata Projects Ltd Joint venture of fellow subsidiary Tata AutoComp GY Batteries Private Limited (formerly Fellow Subsidiaries Tata AutoComp GY Batteries Limited) APTOnline Limited (Formerly APOnline Limited) Tata Boeing Aerospace Limited (formerly Tata Automotive Stampings and Assemblies Limited Aerospace Limited) C-Edge Technologies Limited Tata Lockheed Martin Aerostructures Limited Tata Advanced Materials Ltd. (w.e.f May 31, 2019) Tata Sikorsky Aerospace Limited (Formerly known as Infiniti Retail Limited Tara Aerospace Systems Limited) Kriday Realty Private Limited Smart Value Homes (New Project) LLP Mponline Limited Taj Air Limited Joint Venture of Holding Company Tata Advanced Systems Limited Tata SmartFoodz Limited (formerly SmartFoodz Tata Asset Management Limited Limited) (w.e.f March 27, 2019) Tata Autocomp Systems Limited Tata AIA Life Insurance Company Limited Tata Capital Financial Services Limited Tata Industries Limited (w.e.f March 27, 2019) Tata Capital Housing Finance Limited Tata Sky Limited Tata Capital Limited Tata Unistore Limited (Formerly Tata Industrial Services Tata Communication Ltd Limited) (Upto March 27, 2019) Tata Communications (America) Inc.(w.e.f. May 28, Tata Advanced Materials Ltd. (upto May 30, 2019) 2018) Tata Sky Broadband Private Limited Tata Communications Collaboration Services Private Ltd(w.e.f. May 28, 2018) F Post employment benefit plans of Company Tata Communications Payment Solutions Ltd(w.e.f. (Refer note 34(e) for transactions during the year) May 28, 2018) Tata Teleservices Provident Fund Tata Communications Services (Bermuda) (w.e.f. May Tata Teleservices Gratuity Fund 28, 2018) Tata Teleservices Superannuation Fund Tata Communications Transformation Services Limited(w.e.f. May 28, 2018) G Key Management Personnel Tata Consultancy Services Limited Mr. N.Srinath - Managing Director (upto March 31, Tata Consulting Engineers Limited 2020)/Non-Executive Director (w.e.f. April 1, 2020) Tata Housing Development Company Limited Ms. Bharati Rao- Independent Director Tata Interactive Systems (Upto July 5,2018) Mr. Gopichand Katragadda- Non-Executive Director Tata International Limited (Resigned w.e.f. January 16, 2019) Tata Limited Mr. Narendra Damodar Jadhav- Independent Director Tata Realty and Infrastructure Limited Ms. Vibha Paul Rishi- Independent Director (Resigned Tata Securities Limited w.e.f. July 18, 2019) Tata Sia Airlines Limited Mr. Saurabh Agrawal- Non-Executive Director Tata Toyo Radiator Ltd Mr. Ankur Verma - Non-Executive Director (w.e.f. June Tata Value Homes Limited (Formerly known as Smart 1, 2018) Value Homes Limited) Mr. Anurag Shrivastav - Chief Financial Officer (upto TCS e-Serve International Limited June 15, 2018) TRIL Amritsar Projects Limited (formerly TRIF Amritsar Mr. Ilangovan G., Chief Financial Officer (w.e.f. June Projects Limited) (upto December 09, 2019) 15, 2018) TELESERVICES LIMITED 131 5.24 0.07 0.15 0.48 55.26 30.54 12.83 16.08 28.79 97.65 (1.90) (0.60) 934.58 825.00 (21.73) (50.60) (244.11) (929.48) (553.91) Total Total 1,087.68 2,790.15 (8,696.28) (5,000.00) (2,000.00) (29,616.28) (12,049.96) ------0.15 16.08 Key Personnel Managerial ------(0.01) party of Holding Company Investing ------0.48 0.07 0.02 2.38 (29.92) Joint Holding Company Venture of Venture ------0.01 (0.27) Joint venture of fellow subsidiary ------0.11 0.11 0.02 2.03 5.90 0.01 1.42 1.02 (7.23) Company Associate Of Holding ------0.01 (0.30) (0.01) (0.05) of fellow Associate subsidiary ------4.10 3.73 4.02 55.15 30.64 55.56 (0.06) 355.86 121.29 (21.73) (176.07) (160.88) Fellow (1,254.82) Subsidiaries ------0.11 0.11 0.27 (0.21) (0.14) 541.45 (330.62) Associate ------0.85 3.09 0.48 35.23 24.76 38.46 (0.10) (1.90) (0.60) 825.00 (30.17) (50.54) (63.84) 2,790.15 Subsidiary ------966.39 (929.48) Holding (8,696.28) (5,000.00) (2,000.00) Company (29,616.28) (10,795.14) Expenses Administrative and Other Expenses Advertisement and Business Promotion Expenses Customer Service and Call Centre Cost Acces Cost Interconnect and Other Network Operation Cost Rent Managerial Remuneration Director Sitting Fees OCD Interest expense on CCPS/ OCPS/ Income Rent income Service Revenue Other Income Other Transactions Reimbursement of Expenses paid Reimbursement of Expenses Received Asset Purchase of Fixed Issuance of new CCPS by conversion of OCD Issuance of new CCPS Issue of OCD by the Company Issue of Equity Shares Partial repayment of liability waived as Other Equity for MMP Loans ICD given Loan given* Outstanding as at: entirely equity in nature Instrument (CCPS) Borrowings Payables Trade Receivables Trade Details of transactions with related parties for the year ended March 2020 1) 2) 3) 4) 5) Notes to the standalone financial statements as at and for year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) In the table above, income receipts and liabilities are shown in brackets. crores) has *On July 1, 2019, pursuant to the Scheme of demerger of CMB, out the loan of face value Rs.825 crores, face value of loan amounting to Rs.818.06 crores (amortised cost Rs.743.11 Airtel Limited. been transferred on the same terms to Bharti

132 25th 2019-20 - 0.18 5.86 0.17 0.54 15.09 28.77 54.70 (0.26) (0.60) 148.14 975.56 173.78 (18.64) (52.64) (175.01) (177.62) (534.46) Total Total 2,627.71 1,901.41 3,644.00 (8,320.64) (15,920.00) (15,920.00) (17,191.08) ------5.86 0.17 Key Personnel Managerial ------0.16 0.06 2.70 (27.91) Joint Holding Company Venture of Venture ------(0.27) Joint venture of fellow subsidiary ------1.35 6.26 7.45 0.38 1.41 1.52 (1.03) (7.84) Company Associate Of Holding ------0.01 0.17 (1.77) (0.28) of fellow Associate subsidiary ------14.64 28.20 13.94 97.84 12.35 (0.08) 138.81 403.47 142.05 (11.49) (113.11) (177.53) (164.20) Fellow (1,400.00) (1,133.53) Subsidiaries ------0.43 (0.24) 515.44 (343.17) 2,599.88 Associate ------1.11 1.11 7.98 0.57 0.18 6.44 0.54 50.38 41.97 26.91 (5.38) (0.26) (0.09) (0.52) (25.36) (52.64) (28.56) 3,644.00 Subsidiary ------0.21 1,803.57 Holding (6,920.64) Company (15,920.00) (15,920.00) (16,057.55)

Expenses Administrative and Other Expenses Customer Service and Call Centre Cost Acces Cost Interconnect and Other Intercircle roaming expense Network Operation Cost Rent expenses Managerial Remuneration Director Sitting Fees Interest expense on CCPS / OCPS OCD Income Rent income Service Revenue Intercircle roaming revenue Other Income Other Transactions Reimbursement of Expenses paid Reimbursement of Expenses Received Asset Purchase of Fixed Assets Sale of Fixed Issuance of new CCPS by conversion OCD Issue of OCD by the Company Loans ICD given Outstanding as at: Instrument entirely equity in nature (CCPS) Borrowings Payables Trade Receivables Trade 1) 2) 3) 4) 5) In the table above, income receipts and liabilities are shown in brackets. Notes to the standalone financial statements as at and for year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) Details of transactions with related parties for the year ended March 2019 TELESERVICES LIMITED 133

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Transactions with Key management personnel

March 31, 2020 March 31, 2019 Short term employee benefits 15.87 5.69 Post-employment benefits 0.21 0.17 Directors sitting fee 0.15 0.17 Total 16.23 6.03

As the liabilities for the gratuity and compensated absences are provided on an actuarial basis, and calculated for the Company as a whole rather than each of the individual employees, the said liabilities pertaining specifically to Key managerial personnel are not known and hence, not included in the above table.

39. Hedging activities and derivatives

Derivatives not designated as hedging instruments

The Company uses foreign exchange forward contracts and interest rate swaps to manage some of its exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions.

Hedge disclosures

The current status of hedging of derivative instruments is given below:

Notional amount Fair value assets/ (USD in Millions) (liabilities) (INR Cr) Particulars March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Forwards contracts 0.53 2.51 (0.01) (0.67) ICICI Bank loan - Forward Contracts 172.49 - 54.43 - Total 173.02 2.51 54.42 (0.67)

The foreign currency exposure that are not hedged by derivative instruments:

Notional amount (USD in Millions) Particulars March 31, 2020 March 31, 2019 Trade Payables 0.10 1.48 Total 0.10 1.48

Interest rate Swap Contract

Using Interest rate swap contracts, the Company agrees to exchange floating rate of interest rate to fixed rate on agreed principal amounts. Such contracts enable the Company to mitigate the interest rate risk on borrowings. Such Contracts are settled on quarterly, semi-annual and on annual basis. The terms of the interest rate swaps generally match the terms of the underlying exposure. In cases where any hedge ineffectiveness arises, it is recognized through profit or loss. Interest Rate Swaps measured at fair value through OCI are designated as hedging instruments in cash flow hedges of floating rate borrowings. 134 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Details are listed below:

Notional amount (USD in Fair value assets/(liabilities) Millions) (INR Cr) Interest rate swaps - hedged March 31, March 31, March 31, March 31, 2020 2019 2020 2019 ICICI Bank Loan 172.49 - (14.30) -

Fair value assets/(liabilities) Notional amount (INR Cr) (INR Cr) Interest rate swaps - hedged March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Induslnd Bank 742.5 450.00 (0.75) (0.98)

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessment to ensure that an economic relationship exists between the hedged item and hedging instrument. There was no recognised ineffectiveness during the year ended March 31, 2020(for the year ended March 31, 2019: Rs.NIL).

Movement in Cash Flow Hedge Reserve and Cost of Hedge Reserve

Cash Flow Hedge Reserve Amount As at 31.03.2018 - Add: Change in fair value of Interest rate swaps (0.98) As at 31.03.2019 (0.98) Add: Change in fair value of Interest rate swaps (3.83) Closing (4.81) Cost of Hedge Reserve Amount As at 31.03.2019 - Add: Change in Fair Value of Forward contracts and Interest rate swaps (12.55) Closing (12.55)

40. Fair Values of financial assets and liabilities

The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial assets, financial liability and equity instrument are disclosed in note 2.2.(t) to the standalone financial statements. Set out below, is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments. TELESERVICES LIMITED 135

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Financial Assets & Liabilities (including assets held for sale and associated liabilities as at March 31, 2019)

Fair Value Carrying Value March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Financial Assets Fair Value through Profit & Loss (FVTPL) Investments 4.14 598.96 4.14 598.96 Derivative Financial Assets 5,991.87 5,940.59 5,991.87 5,940.59 Amortised Cost Trade receivables 252.22 261.06 252.22 261.06 Cash and cash equivalents 190.86 538.60 190.86 538.60 Other Bank balances 32.08 30.12 32.08 30.12 Loans and Advances 1,021.64 293.14 1,021.64 293.14 Investments 16.27 - 16.27 - 7,509.08 7,662.47 7,509.08 7,662.47 Financial Liabilities Fair Value through Profit & Loss (FVTPL) Derivative Financial Liabilities- Others - 1.65 - 1.65 Amortised Cost Borrowings 14,438.84 22,934.36 14,438.84 22,934.36 Lease Liabilities 483.85 - 483.85 - Trade payables 754.25 1,183.90 754.25 1,183.90 Other current financial liabilities 4,940.62 4,643.09 4,940.62 4,643.09 20,617.56 28,763.00 20,617.56 28,763.00

The carrying amounts of trade receivables, trade For fair value of Investment and derivative financial payables, capital creditors, short term borrowings and assets/liabilities, the following methods and assumptions cash and cash equivalents are considered to be the are used to estimate the fair values: same as their fair value, due to their short-term nature. a) The fair values of the FVTPL financial assets The fair value for loans, security deposits and investment (investments in mutual funds) are derived from in preference shares were calculated based on cash quoted market prices in active markets. flows discounted using a current lending rate. They are classified as level 3 fair values in fair value hierarchy b) The fair value of CCPS derivative component is due to the inclusion of unobservable inputs including based on valuation from certified valuer. The valuer counterparty credit risk. has used binomial lattice model. The rate of interest assumed between 4.25% to 4.57% and volatility The fair values of non-current borrowings are based on assumed between 83% to 165%. discounted cash flows using a current borrowing rate. They are classified as level 3 fair values hierarchy due to c) The other derivative assets/liabilities are basis the the use of unobservable inputs, including own credit risk. valuation received from the banks.

For financial assets and liabilities that are measured d) The current and non-current portion of derivative at fair value, the carrying amounts are equal to the fair assets and liabilities as disclosed above is as values. follows: 136 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

March 31, March 31, The financial assets categorised as Level 3 pertain to Particulars 2020 2019 unquoted investments in equity instruments of an entity Derivative Assets- Non current 3,994.20 1,868.40 in the normal course of business to obtain savings in electricity expenses. Thus, the management believes Derivative Assets- Current 1,997.67 4,072.19 that the carrying value is a fair approximation of the fair Derivative Liabilities- Current - 1.65 value.

41. Fair value hierarchy The fair values of the financial assets and financial liabilities included in the level 2 category above have The following table provides the fair value measurement been determined in accordance with generally accepted hierarchy of the Company’s assets and liabilities. pricing models based on a discounted cash flow analysis, The fair value hierarchy is based on inputs to valuation with the most significant inputs being the discount rate techniques that are used to measure fair value that are that reflects the credit risk of counterparties. either observable or unobservable and consists of the following three levels. During the year ended March 31, 2020 and March 31, 2019, there were no transfers between Levels of fair • Level 1 — Quoted (unadjusted) market prices in value measurements. active markets for identical assets or liabilities • Level 2 — Valuation techniques for which the 42. Financial risk management objectives and policies lowest level input that is significant to the fair value measurement is directly or indirectly observable The risk management objective of the Company is to • Level 3 — Valuation techniques for which the hedge risk of change in the foreign currency exchange lowest level input that is significant to the fair value rates associated with its direct transactions denominated measurement is unobservable in foreign currency. Since most of the transactions of the For the purpose of fair value disclosures, the company Company are denominated in its functional currency has determined classes of assets and liabilities on the (INR), any foreign exchange fluctuation affects the basis of the nature, characteristics and risks of the asset profitability of the Company and its financial position. or liability and the level of the fair value hierarchy as Hedging provides stability to the financial performance explained above. by estimating the amount of future cash flows and reducing volatility. The following table summarises financial assets and liabilities measured at fair value on a recurring basis and The Company follows a consistent policy of mitigating financial assets that are not measured at fair value on a foreign exchange risk by entering into appropriate recurring basis (but fair value disclosures are required) hedging instruments as considered from time to time. The Company is having a defined risk management March 31, March 31, policy for exposure in foreign currencies. The Company 2020 2019 does not enter into a foreign exchange transaction for Financial Assets speculative purposes. FVTPL The Company’s principal financial liabilities, other than Quoted Investments Level 1 - 594.82 derivatives, comprise loans and borrowings, trade and Derivative financial Level 2 5,991.87 5,940.59 other payables. assets Unquoted Level 3 4.14 4.14 a) Market risk Investments 5,996.01 6,539.55 The company’s activities expose it primarily to Financial Liabilities the financial risks of changes in foreign currency FVTPL exchange rates and interest rates. The Company Derivative financial Level 2 - 1.65 enters into a variety of derivative financial liabilities Others instruments to manage its exposure to foreign - 1.65 currency risk and interest rate risk, including: TELESERVICES LIMITED 137

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

i. Forward foreign exchange contracts to hedge ii. Foreign currency risk management the exchange rate risk arising on the supplier’s credit and foreign currency trade payables. Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate ii. Interest rate swaps to mitigate risk of rising because of changes in foreign exchange rates. The interest rate. Company undertakes transactions denominated in foreign currencies; consequently, exposures to There has been no change to the Company’s exchange rate fluctuations arise. Exchange rate exposure to market risks or the manner in which exposures are managed within approved risk these risks are managed and measured management policy parameters using forward foreign exchange contracts and principal only i. Interest rate risk management swaps contracts.

The Company is exposed to interest rate risk The Company’s exposure to the risk of changes because it borrows funds at both fixed and floating in foreign exchange rates relates primarily to the interest rates. The floating interest rate risk on Company’s foreign currency borrowing and interest borrowing is managed by the Company by the use thereon. When a derivative is entered into for the of interest rate swap contracts. Hedging activities purpose of being a hedge, the Company negotiates are evaluated regularly to align with the interest the terms of those derivatives to match the terms of rate views and defined risk appetite, ensuring the hedged exposure. the most cost-effective hedging strategies are applied. The Company’s exposures to interest rate The Company is having risk management policy financial liabilities are detailed in the liquidity risk which provides the guidelines for managing the management section of this note. currency risk exposure. Accordingly, the Company hedges upto 100% of its underlying liabilities due As at March 31, 2020, the Company has variable within next one year. For the balance underlying rate borrowings of Rs.4,713.75 crores (Rs.445.43 liabilities the Company hedge ranges from 0-50%. crores as at March 31, 2019), out of which net As at March 31, 2020 the company has unhedged exposure to interest rate risk is Rs.2,673.51 crores foreign currency exposure of USD 0.10 million (Rs.Nil as at March 31,2019) after considering the (USD 1.48 million as at March 31, 2019) and hence effect of derivative instruments. the impact of foreign currency fluctuation is not material. The sensitivity analysis below have been determined based on floating rate rupee liabilities that are not b) Credit risk hedged by derivative instruments, the analysis is prepared assuming the amount of the liability Financial assets outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point The Company maintains exposure in cash and cash increase or decrease represents management’s equivalents, term deposits with banks, security deposits assessment of the reasonably possible change in with counter-parties, loans to third parties. Individual risk interest rates. limits are set for each counterparty based on financial position, credit rating and past experience. Credit limits If interest rate had been 50 basis points higher/ and concentration of exposures are actively monitored lower and all other variables were held constant, by the Company. the company’s profit/other comprehensive income The Company’s maximum exposure to credit risk as and equity for the year ended March 31, 2020 at March 31, 2020 and March 31, 2019 is the carrying would decrease by Rs.181.11 crores and increase value of each class of financial assets as disclosed in by Rs.205.35 crores (March 31, 2019 - Rs.Nil). the standalone financial statements.

138 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Trade receivables company’s short-, medium- and long-term funding and liquidity management requirements. The Company Trade receivables and unbilled revenue are typically manages liquidity risk by maintaining adequate banking unsecured and are derived from revenue earned from facilities and reserve borrowing facilities (i.e. cash credit, customers. Trade receivables of the Company consist bank loans, bill discounting, buyers credit and suppliers of a large number of customers, spread across diverse credit), by continuously monitoring forecast and actual industries and geographical areas and hence the cash flows, and by matching the maturity profiles of Company has minimal concentration of credit risk of financial assets and liabilities. Also refer note 1.3 on its customers. Credit risk has been managed by the going concern. Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness Note below sets out details of additional undrawn of customers to which the Company grants credit facilities that the Company has at its disposal to further terms in the normal course of business. On account of reduce liquidity risk. adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. As at March 31, 2020, the company has undrawn The Company uses a provision matrix and forward committed borrowing facilities of Rs.298.34 crores looking information and an assessment of the credit risk (March 31, 2019 – Rs.495.31 crores) towards working over the expected life of the financial asset to compute capital limits expiring within a year and renewable at the expected credit loss allowance for trade receivables. discretion of the banks

The Company’s maximum exposure to credit risk for the The table below summarises the maturity profile of components of the balance sheet at March 31, 2020 and the Company’s financial liabilities (including liabilities March 31, 2019 is the carrying amounts as illustrated in directly associated with assets held for sale) based on Note 10. contractual undiscounted payments. c) Liquidity risk

Ultimate responsibility for liquidity risk management rests with the management and board of directors, which has established an appropriate liquidity risk management framework for the management of the

As at March 31, 2020

Total Carrying Upto 1 Particulars 1-3 year 3-5 year 5+ year contracted amount year cash flows Financial Liabilities: Non-Derivative Liabilities: Non-Current Borrowings (including 9,704.28 - 9,087.51 2,000.83 - 11,088.34 interest accrued but not due)* Current Borrowings (including 4,734.56 5,012.40 - - - 5,012.40 interest accrued but not due)* Lease Liabilities 483.85 143.17 141.81 298.58 - 583.56 Trade and other payables 754.25 754.25 - - - 754.25 Other financial liabilities 4,940.62 5,278.51 - - - 5,278.51 Total Non-Derivative Liabilities 20,617.56 11,188.33 9,229.32 2,299.41 - 22,717.06

* It includes contractual interest payment based on interest rate prevailing at the end of the reporting period after adjustment for the impact of interest swaps, over the tenure of the borrowings. TELESERVICES LIMITED 139

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

As at March 31, 2019:

Total Carrying Upto 1 Particulars 1-3 year 3-5 year 5+ year contracted amount year cash flows Financial Liabilities: Non-Derivative Liabilities: Non-Current Borrowings (including 15,754.67 - 5,258.93 11,742.36 1,761.82 18,763.12 interest accrued but not due) Current Borrowings (including 7,179.68 7,257.77 - - - 7,257.77 interest accrued but not due) Trade and other payables 1,183.90 1,183.90 - - - 1,183.90 Other financial liabilities 4,643.09 4,819.11 - - - 4,819.11 Total Non-Derivative Liabilities 28,761.34 13,260.78 5,258.93 11,742.36 1,761.82 32,023.90 Derivative Liabilities: - Forwards 0.67 0.67 - - - 0.67 Interest Rate Swap 0.98 0.98 - - - 0.98 Total Derivative Liabilities 1.65 1.65 - - - 1.65

The disclosed financial derivative instruments in the above table are the gross undiscounted cash flows. However, those amounts may be settled gross or net.

Excessive risk concentration

There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions. Further, the Company’s policies and procedures include specific guidelines to whereby maximum bank wise limits are set upto which the Company can hedge with each of the banks.

43. Net Debt Reconciliation

As at As at March 31, 2020 March 31, 2019 Borrowings Current borrowings (Including liabilities directly associated with assets 4,734.56 7,179.69 classified as held for sale) Non-current borrowings (including current maturities of long term debt and 14,603.70 20,318.55 liabilities directly associated with assets classified as held for sale) Interest accrued but not due 0.98 0.13 Total Borrowings 19,339.24 27,498.37 Cash and cash equivalents 190.86 538.60 Current investments - 594.82 190.86 1,133.42 Total Net Debt 19,148.38 26,364.95

140 25th 2019-20

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Cash Current Total Total Net Debt and cash investments Borrowings equivalents Net debt as at March 31, 2018 37.35 250.38 35,868.76 35,581.03 Cash flows 501.25 342.60 6,613.37 5,769.52 Interest expense - - 3,183.13 3,183.13 Interest paid - - (1,093.83) (1,093.83) Other non-cash movements - Fair value adjustments - 1.84 (3,945.26) (3,947.10) - Notional Interest/ DRE - - (98.10) (98.10) - Finance Set up cost - - (14.02) (14.02) Conversion of OCD into equity instruments - - (13,015.68) (13,015.68) Net debt as at March 31, 2019 538.60 594.82 27,498.37 26,364.95

Cash Current Total Total Net Debt and cash investments Borrowings equivalents Net debt as at March 31, 2019 538.60 594.82 27,498.37 26,364.95 Cash flows (347.74) (592.84) 2,684.65 3,625.23 Interest expense - - 1,531.71 1,531.71 Interest paid - - (689.37) (689.37) Other non-cash movements - Fair value adjustments - (1.98) - 1.98 - Transferred to Bharti (Refer Note 1.2) - - (3,457.55) (3,457.55) - Conversion of OCD into equity instruments - - (8,696.29) (8,696.29) - Transfer to Equity Component - - 467.72 467.72 Net debt as at March 31, 2020 190.86 - 19,339.24 19,148.38

44. Deferred taxes Rs.35,258.83 crores) in aggregate which can be carried forward against future taxable income. Tax losses carry No provision for current income tax is required to be forward for which no deferred tax assets were recorded made as, on the basis of the Company’s computations, amounted to: there is no taxable income. The Company also carries forward accumulated losses resulting into tax loss As at As at carry forward situation. Since, it is not probable that the Particulars March 31, March 31, company will generate future taxable profits; no deferred 2020 2019 * tax asset has been recognized on unused tax losses. Expiring within 1 year - - Accordingly, the Company has restricted recognition of deferred tax asset to the extent of deferred tax liability. Expiring within 1 to 5 years - 5,152.10 Given that uncertainty over future taxable profits Expiring within 5 to 8 years 4,315.76 5,523.26 available for set off against unabsorbed depreciation Expiring without limitation 17,683.78 24,583.47 and unabsorbed business losses, the Company has not recognised deferred tax assets of Rs.7,686.64 Total 21,999.54 35,258.83

crores (March 31, 2019 Rs.12,203.08 crores) in respect * includes temporary difference relating to CMB of unabsorbed depreciation and business losses undertaking which has been transferred to Bharti (Refer amounting to Rs.21,999.54 crores (March 31, 2019 note 1.2). TELESERVICES LIMITED 141

Notes to the standalone financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

The tax rate for March 2020 was 34.94% (March 2019: The gearing ratio at the end of the reporting period was 34.61%) as follows:

45. Capital management As at As at Particulars March 31, March 31, The Company manages its capital to ensure it will be 2020 2019 able to continue as a going concern while maximizing Debt* 19,339.24 27,498.37 the return to shareholders through the optimization of the debt and equity balance. The capital structure of Equity share capital 6,704.51 5,775.03 the Company includes issued net debt (borrowings Instruments entirely equity in 29,616.28 15,920.00 as detailed in note 18 and 19 offset by cash and bank nature balances and current investments) and total equity of Other equity (48,907.10) (34,072.84) the Company, Total Equity (12,586.31) (12,377.81) The Company manages its capital structure and makes Net debt to equity ratio (1.54) (2.22) adjustments in light of changes in economic conditions and the requirements of the financial covenants. The *Debt is defined as non-current and current borrowings Company monitors capital using a gearing ratio, which (excluding derivatives, financial guarantee contracts is net debt divided by total equity. and lease liabilities) including current maturities of long term debt and interest accrued but not due (including liabilities directly associated with assets held for sale for the year ended March 31, 2019).

In terms of our report attached

For Price Waterhouse Chartered Accountants LLP For and on Behalf of the Board of Directors Firm Registration No.: 012754N/N500016

Nitin Khatri Ankur Verma N Srinath Partner (Director) (Director) Membership Number: 110282 (DIN No: 07972892) (DIN No: 00058133)

Ilangovan G Rishabh Aditya (Chief Financial Officer) (Company Secretary) Place : Mumbai Place : Mumbai Date : June 2, 2020 Date : June 2, 2020 142 25th 2019-20

INDEPENDENT AUDITOR’S REPORT To the Members of Tata Teleservices Limited statements in India in terms of the Code of Ethics issued by ICAI and the relevant provisions of the Act, Report on the Audit of the Consolidated Financial and we have fulfilled our other ethical responsibilities Statements in accordance with these requirements. We believe that the audit evidence we have obtained and the audit Opinion evidence obtained by the other auditors in terms of their reports referred to in sub-paragraph 16 of the Other 1. We have audited the accompanying consolidated Matter paragraph below, is sufficient and appropriate to financial statements of Tata Teleservices Limited provide a basis for our opinion. (hereinafter referred to as the ‘Holding Company”) and its subsidiaries (Holding Company and its subsidiaries Emphasis of Matter together referred to as “the Group”) (refer Note 1.1 and 2.2 to the attached consolidated financial statements), 4. We draw your attention to Note 1.4 to the consolidated which comprise the Consolidated Balance Sheet as financial statements, which describes the management’s at March 31, 2020, and the Consolidated Statement assessment of the impact of the outbreak of Coronavirus of Profit and Loss (including Other Comprehensive (Covid-19) on the business operations of the Group. Loss), the Consolidated Statement of Changes in The management believes that no adjustments are Equity and the Consolidated Cash Flows Statement required in the consolidated financial statements as it for the year then ended, and notes to the consolidated does not impact the current financial year, however, in financial statements, including a summary of significant view of the various preventive measures taken (such accounting policies and other explanatory information as complete lock-down restrictions by the Government prepared based on the relevant records (hereinafter of India, travel restrictions etc.) and highly uncertain referred to as “the consolidated financial statements”). economic environment, a definitive assessment of the impact on the subsequent periods is highly dependent 2. In our opinion and to the best of our information and upon circumstances as they evolve. Our opinion is not according to the explanations given to us, the aforesaid modified in respect of this matter. consolidated financial statements give the information required by the Companies Act, 2013 (“the Act”) in 5. We draw your attention to Note 1.5 to the consolidated the manner so required and give a true and fair view financial statements which states that the Company in conformity with the accounting principles generally had received an anonymous letter alleging irregularities accepted in India, of the consolidated state of affairs in procurement of certain materials for which the of the Group as at March 31, 2020, of consolidated investigation by the Company is yet to be concluded. total comprehensive loss (comprising of loss and other comprehensive loss), consolidated changes in equity Our opinion is not modified in respect of these matters. and its consolidated cash flows for the year then ended. Key Audit Matters Basis for Opinion 6. Key audit matters are those matters that, in our 3. We conducted our audit in accordance with the Standards professional judgment, were of most significance in on Auditing (SAs) specified under section 143(10) of our audit of the consolidated financial statements of the Act. Our responsibilities under those Standards the current period. These matters were addressed in are further described in the Auditor’s Responsibilities the context of our audit of the consolidated financial for the Audit of the Consolidated Financial Statements statements as a whole, and in forming our opinion section of our report. We are independent of the Group thereon, and we do not provide a separate opinion on in accordance with the ethical requirements that are these matters. relevant to our audit of the consolidated financial TELESERVICES LIMITED 143

Key audit matter How our audit addressed the key audit matter 1. Accuracy of revenue recorded for telecommunication Our audit procedures included control testing and substantive services given the complexity of the related IT systems procedures covering, in particular: (Refer notes 2.3 (d) and 22 to the consolidated financial statements) • Understanding and evaluating the relevant IT systems and design of key controls including procedures on testing of The Group’s revenue from telecommunication services IT general controls. is recorded through complex automated (IT) structure wherein the data is processed through multiple systems, • Testing operating effectiveness of key controls over: which requires periodic reconciliation controls to ensure completeness and accuracy. a) Capturing and recording of revenue transactions; b) Authorization of rate changes and the input of this There is an inherent risk around the accuracy of revenue information to the billing systems; recorded given the complexity of billing, rating and other c) Accuracy of calculation of amounts billed to customers; relevant support systems and the impact of changing pricing models to revenue recognition (tariff structures, discounts, • Testing the end-to-end reconciliation from billing and etc.). rating systems to the general ledger. The testing included validating material journals processed between the billing & rating system and general ledger;

• Performing tests on the accuracy of customer bill generation on a sample basis and testing of a sample of the credit notes issued;

• Testing cash receipts for a sample of customers back to the customer invoice.

Based on the procedures performed above, we did not find any material exceptions in the accuracy of telecommunication services revenue recognized during the year. 2. Assessment of contingent liabilities and provisions Our procedures included the following: for litigations (Refer note 19 – “Provisions” and note 34 – “Contingent • Testing design and implementation of key controls Liabilities” and note 2.3(r), 2.3(bb), 2.4(iv) on Companies surrounding litigation, regulatory and tax procedures and accounting policies with regard to provision and contingent assessment of probable outflow; liabilities.) • Discussing with the management and tax and regulatory There are a number of material regulatory and tax cases department heads to understand significant matters under against the Group. Significant judgement is required in litigation; estimating / reassessing the level of provisioning and/or disclosures. The management’s assessment is supported • Obtaining and substantively testing evidences to support by advice from independent legal/ tax consultants obtained the management’s assessment and rationale for provision by them. made or the decision not to record provisions, including correspondence with external legal counsel; We considered this as a Key Audit Matter as the eventual outcome of litigations is uncertain and the positions taken by • Reviewing the minutes of board of directors’ meetings in the Management are based on the application of significant respect of discussions relating to litigations/legal matters; judgement and estimation. Any unexpected adverse outcomes could significantly impact the Group’s results and • Reading external legal opinions obtained by financial position. management, where available;

• Evaluating independence, objectivity and competence of the management’s tax/legal consultants; 144 25th 2019-20

Key audit matter How our audit addressed the key audit matter • Monitoring and considering external information sources such as media reports to identify potential legal actions

• Obtaining confirmations, where appropriate, of relevant third party legal representatives and discussing with them certain material litigation, if required;

• Testing that the adjustments arising on account of reassessment in estimates during the year are either due to changes occurred in the circumstances on which estimate was based or as a result of more information or more experience gained during the current year.

• Assessing management’s conclusions through understanding precedents in similar cases;

• For Direct and Indirect tax litigations, involving auditors’ tax experts to understand the current status of tax cases and monitoring changes in the disputes by reading external advice received by the Group;

• Performing detailed procedures on the underlying calculations supporting the provisions recorded and ensuring adequacy of disclosures made.

• Assessing the appropriateness of the disclosures made in consolidated financial statements.

Based on the above procedures performed, we have not identified any significant exceptions relating to disclosure of contingent liabilities and accounting for provisions for litigations. 3. Accounting for demerger of Consumer Mobile Our audit procedures included: Business (Refer Note 1.2, 21 and 29 to the consolidated financial • Understanding the management’s basis of identifying statements) the assets and liabilities related to Consumer Mobile Business. During the year, the Group received all the requisite regulatory approvals in respect of the Scheme of • Reading the scheme related documents and agreements Arrangement for transfer of its Consumer Mobile executed between the Holding Company and Bharti Business (CMB) to Bharti Airtel Limited and Bharti for appropriate identification of the assets and liabilities Hexacom Limited (together referred as “Bharti”). transferred to Bharti and focusing on accounting for non- Accordingly the scheme was given effect to in the books routine transaction, estimates and judgements in respect of accounts with effect from the appointed and effective of the derecognition of the assets and liabilities. date of July 1, 2019, as approved by the National Company Law Tribunal (NCLT). • Verifying the approvals received from regulatory authorities and assessing the compliance with the This has been considered as a key audit matter in view of conditions specified therein. magnitude of the transaction, complexity involved in ensuring accuracy and completeness of the assets and liabilities • Verifying the underlying agreements to assess the transferred for CMB, estimates and significant management appropriateness of restructuring costs recognised by the judgements in respect of the derecognition of the same. Group. TELESERVICES LIMITED 145

Key audit matter How our audit addressed the key audit matter • Verifying correct identification of assets and liabilities relating to the CMB and ensuring accuracy and completeness of the balances transferred to Bharti;

• Assessing the appropriateness of the disclosures made in consolidated financial statements.

Based on the above procedures performed, we noted that the demerger of CMB has been accounted appropriately. 4. Assessment of Going Concern as a basis of Our procedures included the following : accounting: (Refer note 1.3 to the consolidated financial statements) • Obtained the management assessment of appropriateness of Going Concern basis of accounting. The Group has significant accumulated losses and has incurred loss during the current and earlier years. Its • Discussed with the management on future business and net worth is eroded and the current liabilities exceed its their plans to ensure that the Group is able to meet its current assets as at that March 31, 2020. This may create financial obligations in the foreseeable future. a doubt regarding the Group’s ability to continue as a going concern. • Read the minutes of board of directors meeting for discussion on future business plans and on liquidating However, the consolidated financial statements have certain assets to ensure availability of liquid funds. been prepared on a going concern basis in view of the financial support from the promoter Company and the • Verified the support letter obtained by the Group from its management’s plan to generate cash flows through Promoter indicating that Promoter will take necessary monetisation of certain assets and operations which actions to organize for any shortfall in liquidity in Group would enable the Group to meet its financial obligations that may arise to meets its financial obligations and timely as and when they fall due. repayment of debt during the period of 12 months from the balance sheet date. We considered this to be a key audit matter because management’s assessment is largely dependent on the • Verified the financial ability of the Promoter Company to support letter obtained from its Promoter Company. support the Group from the latest audited consolidated financial statements of the Promoter Company.

• Verified that the promoter Company has supported the Group in the past when the need arose.

Based on the above procedures, we noted the management assessment of going concern basis of accounting as appropriate.

Other Information In connection with our audit of the consolidated financial statements, our responsibility is to read the 7. The Holding Company’s Board of Directors is responsible other information and, in doing so, consider whether for the other information. The other information comprises the other information is materially inconsistent with the the information included in the director’s report and consolidated financial statements or our knowledge other information in annual report but does not include obtained in the audit or otherwise appears to be materially the consolidated financial statements and our auditor’s misstated. If, based on the work we have performed report thereon. and the reports of the other auditors as furnished to us (Refer paragraph 16 below), we conclude that there is a Our opinion on the consolidated financial statements material misstatement of this other information, we are does not cover the other information and we do not required to report that fact. We have nothing to report in express any form of assurance conclusion thereon. this regard. 146 25th 2019-20

Responsibilities of Management and Those Charged with conducted in accordance with SAs will always detect a Governance for the Consolidated Financial Statements material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, 8. The Holding Company’s Board of Directors is individually or in the aggregate, they could reasonably responsible for the preparation and presentation of be expected to influence the economic decisions of these consolidated financial statements in term of the users taken on the basis of these consolidated financial requirements of the Act that give a true and fair view of statements. the consolidated financial position, consolidated financial performance and consolidated cash flows, and changes 12. As part of an audit in accordance with SAs, we exercise in equity of the Group in accordance with the accounting professional judgment and maintain professional principles generally accepted in India, including the skepticism throughout the audit. We also: Accounting Standards specified under section 133 of the Act. The respective Board of Directors of the companies • Identify and assess the risks of material included in the Group are responsible for maintenance misstatement of the consolidated financial of adequate accounting records in accordance with the statements, whether due to fraud or error, design provisions of the Act for safeguarding the assets of the and perform audit procedures responsive to those Group and for preventing and detecting frauds and other risks, and obtain audit evidence that is sufficient irregularities; selection and application of appropriate and appropriate to provide a basis for our opinion. accounting policies; making judgments and estimates The risk of not detecting a material misstatement that are reasonable and prudent; and the design, resulting from fraud is higher than for one resulting implementation and maintenance of adequate internal from error, as fraud may involve collusion, forgery, financial controls, that were operating effectively for intentional omissions, misrepresentations, or the ensuring accuracy and completeness of the accounting override of internal control. records, relevant to the preparation and presentation of the consolidated financial statements that give a true • Obtain an understanding of internal control relevant and fair view and are free from material misstatement, to the audit in order to design audit procedures whether due to fraud or error, which have been used for that are appropriate in the circumstances. Under the purpose of preparation of the consolidated financial section 143(3)(i) of the Act, we are also responsible statements by the Directors of the Holding Company, as for expressing our opinion on whether the Holding aforesaid. Company has adequate internal financial controls with reference to consolidated financial statements 9. In preparing the consolidated financial statements, the in place and the operating effectiveness of such respective Board of Directors of the companies included controls. in the Group are responsible for assessing the ability of the Group to continue as a going concern, disclosing, • Evaluate the appropriateness of accounting policies as applicable, matters related to going concern and used and the reasonableness of accounting using the going concern basis of accounting unless estimates and related disclosures made by management either intends to liquidate the Group or to management. cease operations, or has no realistic alternative but to do so. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, 10. The respective Board of Directors of the companies based on the audit evidence obtained, whether a included in the Group are responsible for overseeing the material uncertainty exists related to events or financial reporting process of the Group. conditions that may cast significant doubt on the ability of the Group to continue as a going concern. Auditor’s Responsibilities for the Audit of the If we conclude that a material uncertainty exists, Consolidated Financial Statements we are required to draw attention in our auditor’s report to the related disclosures in the consolidated 11. Our objectives are to obtain reasonable assurance financial statements or, if such disclosures are about whether the consolidated financial statements as inadequate, to modify our opinion. Our conclusions a whole are free from material misstatement, whether are based on the audit evidence obtained up to the due to fraud or error, and to issue an auditor’s report that date of our auditor’s report. However, future events includes our opinion. Reasonable assurance is a high or conditions may cause the Group to cease to level of assurance, but is not a guarantee that an audit continue as a going concern. TELESERVICES LIMITED 147

• Evaluate the overall presentation, structure and Other Matters content of the consolidated financial statements, including the disclosures, and whether the 16. We did not audit the financial statements of one subsidiary consolidated financial statements represent the whose financial statements reflect total assets of Rs 0.08 underlying transactions and events in a manner that crores and net assets of Rs (0.05) crores as at March achieves fair presentation. 31, 2020, total revenue of Rs. Nil, total comprehensive loss (comprising of loss and other comprehensive loss) • Obtain sufficient appropriate audit evidence of Rs 0.01 crores and net cash flows amounting to Rs regarding the financial information of the entities Nil, for the year ended on that date, as considered in or business activities within the Group entities to the consolidated financial statements. This financial express an opinion on the consolidated financial statement have been audited by other auditor whose statements. We are responsible for the direction, reports have been furnished to us by the Management, supervision and performance of the audit of the and our opinion on the consolidated financial statements consolidated financial statements of such entities insofar as it relates to the amounts and disclosures included in the consolidated financial statements included in respect of this subsidiary and our report of which we are the independent auditors. For the in terms of sub-section (3) of Section 143 of the Act other entities included in the consolidated financial including report on Other Information insofar as it relates statements, which have been audited by other to the aforesaid subsidiary is based solely on the reports auditors, such other auditors remain responsible of the other auditor. for the direction, supervision and performance of the audits carried out by them. We remain solely Our opinion on the consolidated financial statements, and responsible for our audit opinion. our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matter with 13. We communicate with those charged with governance of respect to our reliance on the work done and the reports the Holding Company and such other entities included in of the other auditor. the consolidated financial statements of which we are the independent auditors regarding, among other matters, Report on Other Legal and Regulatory Requirements the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in 17. As required by Section 143(3) of the Act, we report, to internal control that we identify during our audit. the extent applicable, that:

14. We also provide those charged with governance (a) We have sought and obtained all the information with a statement that we have complied with relevant and explanations which to the best of our knowledge ethical requirements regarding independence, and and belief were necessary for the purposes of to communicate with them all relationships and other our audit of the aforesaid consolidated financial matters that may reasonably be thought to bear on statements. our independence, and where applicable, related safeguards. (b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid 15. From the matters communicated with those charged consolidated financial statements have been kept with governance, we determine those matters that were so far as it appears from our examination of those of most significance in the audit of the consolidated books and the reports of the other auditors. financial statements of the current period and are therefore the key audit matters. We describe these (c) The Consolidated Balance Sheet, the Consolidated matters in our auditor’s report unless law or regulation Statement of Profit and Loss (including other precludes public disclosure about the matter or when, comprehensive loss), Consolidated Statement in extremely rare circumstances, we determine that of Changes in Equity and the Consolidated Cash a matter should not be communicated in our report Flow Statement dealt with by this Report are in because the adverse consequences of doing so would agreement with the relevant books of account and reasonably be expected to outweigh the public interest records maintained for the purpose of preparation benefits of such communication. of the consolidated financial statements. 148 25th 2019-20

(d) In our opinion, the aforesaid consolidated financial ii. Provision has been made in the consolidated statements comply with the Accounting Standards financial statements, as required under the specified under Section 133 of the Act. applicable law or accounting standards, for material foreseeable losses, if any, on long- (e) On the basis of the written representations received term contracts including derivative contracts from the directors of the Holding Company as on as at March 31, 2020 – Refer Note 19 to the March 31, 2020 taken on record by the Board of consolidated financial statements in respect of Directors of the Holding Company and the reports such items as it relates to the Group. of the statutory auditors of its subsidiary companies incorporated in India, none of the directors of iii. During the year ended March 31, 2020, there the Group companies incorporated in India is were no amounts which were required to be disqualified as on March 31, 2020 from being transferred to the Investor Education and appointed as a director in terms of Section 164(2) Protection Fund by the Holding Company, and of the Act. its subsidiary companies incorporated in India.

(f) With respect to the adequacy of internal financial iv. The reporting on disclosures relating to controls with reference to consolidated financial Specified Bank Notes is not applicable to the statements of the Group and the operating Group for the year ended March 31, 2020. effectiveness of such controls, refer to our separate report in Annexure A. 18. The Group has paid/ provided for managerial remuneration in accordance with the requisite approvals (g) With respect to the other matters to be included in mandated by the provisions of Section 197 read with the Auditor’s Report in accordance with Rule 11 of Schedule V to the Act. the Companies (Audit and Auditor’s) Rules, 2014, in our opinion and to the best of our information and For Price Waterhouse Chartered Accountants LLP according to the explanations given to us: Firm Registration No. 012754N/N500016

i. The consolidated financial statements disclose the impact, if any, of pending litigations on the Nitin Khatri consolidated financial position of the Group Partner – Refer Note 34 to the consolidated financial Place: Mumbai Membership Number. 110282 statements. Date: June 2, 2020 UDIN: 20110282AAAABD2431 TELESERVICES LIMITED 149

ANNEXURE A TO INDEPENDENT AUDITORS’ REPORT Referred to in paragraph 17(f) of the Independent Auditors’ by the ICAI and the Standards on Auditing deemed to Report of even date to the members of Tata Teleservices be prescribed under section 143(10) of the Companies Limited on the consolidated financial statements for the year Act, 2013, to the extent applicable to an audit of internal ended March 31, 2020 financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Report on the Internal Financial Controls with reference Standards and the Guidance Note require that we to consolidated financial statements under Clause (i) of comply with ethical requirements and plan and perform Sub-section 3 of Section 143 of the Act the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to 1. In conjunction with our audit of the consolidated financial consolidated financial statements was established and statements of the Company as of and for the year maintained and if such controls operated effectively in all ended March 31, 2020, we have audited the internal material respects. financial controls with reference to consolidated financial statements of Tata Teleservices Limited (hereinafter 4. Our audit involves performing procedures to obtain audit referred to as “the Holding Company”) and its subsidiary evidence about the adequacy of the internal financial companies, which are companies incorporated in India, controls system with reference to consolidated financial as of that date. statements and their operating effectiveness. Our audit of internal financial controls with reference to consolidated Management’s Responsibility for Internal Financial financial statements included obtaining an understanding Controls of internal financial controls with reference to consolidated financial statements, assessing the risk that a material 2. The respective Board of Directors of the Holding weakness exists, and testing and evaluating the design Company, its subsidiary companies, to whom reporting and operating effectiveness of internal control based on under clause (i) of sub section 3 of Section 143 of the the assessed risk. The procedures selected depend on Act in respect of the adequacy of the internal financial the auditor’s judgement, including the assessment of controls with reference to financial statements, which the risks of material misstatement of the consolidated are companies incorporated in India, are responsible for financial statements, whether due to fraud or error. establishing and maintaining internal financial controls based on, “internal control over financial reporting 5. We believe that the audit evidence we have obtained criteria established by the Company considering the and the audit evidence obtained by the other auditors essential components of internal control stated in the in terms of their reports referred to in the Other Matters Guidance Note on Audit of Internal Financial Controls paragraph below, is sufficient and appropriate to provide Over Financial Reporting issued by the Institute a basis for our audit opinion on the Company’s internal of Chartered Accountants of India (ICAI)”. These financial controls system with reference to consolidated responsibilities include the design, implementation and financial statements. maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and Meaning of Internal Financial Controls with reference to efficient conduct of its business, including adherence to consolidated financial statements the respective Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and 6. A Holding Company’s internal financial control with errors, the accuracy and completeness of the accounting reference to consolidated financial statements is a records, and the timely preparation of reliable financial process designed to provide reasonable assurance information, as required under the Act. regarding the reliability of financial reporting and the preparation of consolidated financial statements Auditor’s Responsibility for external purposes in accordance with generally accepted accounting principles. A Company’s internal 3. Our responsibility is to express an opinion on the Holding financial control with reference to consolidated financial Company’s internal financial controls with reference statements includes those policies and procedures that (1) to consolidated financial statements based on our pertain to the maintenance of records that, in reasonable audit. We conducted our audit in accordance with the detail, accurately and fairly reflect the transactions and Guidance Note on Audit of Internal Financial Controls dispositions of the assets of the Company; (2) provide Over Financial Reporting (the “Guidance Note”) issued reasonable assurance that transactions are recorded 150 25th 2019-20

as necessary to permit preparation of consolidated financial statements and such internal financial controls financial statements in accordance with generally with reference to consolidated financial statements accepted accounting principles, and that receipts and were operating effectively as at March 31, 2020, based expenditures of the Company are being made only in on the internal control over financial reporting criteria accordance with authorisations of management and established by the Company considering the essential directors of the Company; and (3) provide reasonable components of internal control stated in the Guidance assurance regarding prevention or timely detection Note on Audit of Internal Financial Controls Over of unauthorised acquisition, use, or disposition of the Financial Reporting issued by the Institute of Chartered Company’s assets that could have a material effect on Accountants of India. Also refer paragraph 4 and 5 of our the consolidated financial statements. main audit report.

Inherent Limitations of Internal Financial Controls with Other Matter reference to consolidated financial statements 9. Our aforesaid reports under Section 143(3)(i) of the 7. Because of the inherent limitations of internal financial Act on the adequacy and operating effectiveness of the controls with reference to consolidated financial internal financial controls with reference to consolidated statements, including the possibility of collusion or financial statements insofar as it relates to one subsidiary improper management override of controls, material Company, which is Company incorporated in India, is misstatements due to error or fraud may occur and not based on the corresponding reports of the auditor of be detected. Also, projections of any evaluation of the such Company incorporated in India. Our opinion is not internal financial controls with reference to consolidated qualified in respect of this matter. financial statements to future periods are subject to the risk that the internal financial control with reference to consolidated financial statements may become For Price Waterhouse Chartered Accountants LLP inadequate because of changes in conditions, or that Firm Registration Number: 012754N/N500016 the degree of compliance with the policies or procedures may deteriorate.

Opinion Nitin Khatri 8. In our opinion, the Holding Company and its subsidiary Partner companies, which are companies incorporated in India, Place: Mumbai Membership Number. 110282 have, in all material respects, an adequate internal Date: June 2, 2020 UDIN: 20110282AAAABD2431 financial controls system with reference to consolidated TELESERVICES LIMITED 151

CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2020 (All amount in Rupees Crores unless stated otherwise) Notes As at As at March 31, 2020 March 31, 2019 ASSETS Non-current assets Property, plant and equipment 3 2,134.35 2,222.19 Right of use assets 4 740.59 - Capital work-in-progress 5 90.84 94.40 Investment property 6 20.80 21.30 Intangible assets 7 8.43 170.49 Financial assets Investments 8 20.41 4.14 Loans and other financial assets 12 42.15 36.16 Derivative financial assets 3,994.20 1,868.40 Income tax assets (net) 176.50 - Other non-current assets 13 880.71 788.34 Total non-current assets 8,108.98 5,205.42 Current assets Financial assets Investments 8 3.14 1,206.40 Trade receivables 9 279.76 208.47 Cash and cash equivalents 10 275.99 710.04 Bank balances other than above 11 35.48 33.99 Loans and other financial assets 12 1,072.48 286.25 Derivative financial assets 1,998.03 4,072.19 Income tax assets (net) 78.77 270.62 Other current assets 13 601.08 258.16 4,344.73 7,046.12 Assets classified as held for sale 21 2,220.07 9,797.96 Total current assets 6,564.80 16,844.08 Total assets 14,673.78 22,049.50

EQUITY AND LIABILITIES Equity Share capital 14 6,704.51 5,775.03 Instruments entirely equity in nature 15 29,616.28 15,920.00 Other equity 16 (46,331.55) (33,096.85) Equity attributable to owners of the company (10,010.76) (11,401.82) Non controlling interest (9,036.71) (7,661.85) Total equity (19,047.47) (19,063.67) 152 25th 2019-20

Notes As at As at March 31, 2020 March 31, 2019 Non-current liabilities Financial liabilities Borrowings 17 10,148.68 16,494.58 Lease liabilities 33 536.20 - Provisions 19 10.45 9.62 Other non-current liabilities 20 151.50 159.23 Total non-current liabilities 10,846.83 16,663.43 Current liabilities Financial liabilities Borrowings 17 9,065.92 10,498.05 Lease liabilities 33 141.29 - Trade and other payables - Total outstanding dues of micro enterprise and small enterprises 31 8.60 5.47 - Total outstanding dues of creditors other than micro enterprises 949.32 720.34 and small enterprises Other financial liabilities 18 5,704.70 5,075.68 Derivative financial liabilities 0.70 3.50 Provisions 19 6,766.68 316.26 Other current liabilities 20 237.21 1,172.34 22,874.42 17,791.64 Liabilities directly associated with assets classified as held for sale 21 - 6,658.10 Total current liabilities 22,874.42 24,449.74 Total equity and liabilities 14,673.78 22,049.50

Summary of significant accounting policies 2.3

The accompanying notes form an integral part of these consolidated financial statements

In terms of our report attached

For Price Waterhouse Chartered Accountants LLP For and on Behalf of Board of Directors Firm Registration No.: 012754N/N500016

Nitin Khatri Ankur Verma N Srinath Partner Director Director Membership Number: 110282 [DIN No: 07972892] [DIN No: 00058133]

Ilangovan G Rishabh Aditya Chief Financial Officer Company Secretary

Place: Mumbai Place: Mumbai Date: June 2, 2020 Date: June 2, 2020 TELESERVICES LIMITED 153

CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2020 (All amount in Rupees Crores unless stated otherwise) Notes For the year ended For the year ended March 31, 2020 March 31, 2019 INCOME Revenue from operations 22 2,865.42 4,013.24 Other income 23 25.62 197.61 Total Income 2,891.04 4,210.85 EXPENSES Employee benefit expenses 24 306.36 371.42 Provision for contingencies 32(a) - (962.66) Operating and other expenses 25 2,197.86 4,242.18 Total expenses 2,504.22 3,650.94 Earnings before interest, tax, depreciation and amortisation 386.82 559.91 (EBITDA) Depreciation and amortisation expense 26 (676.70) (606.73) Finance cost 27 (2,189.86) (3,992.76) Finance income 28 80.57 21.88 Profit on sale of current investments 43.67 86.47 Loss before exceptional items and tax (2,355.50) (3,931.23) Exceptional items (net) 29 (10,704.39) 1,238.72 Share of profit in associate 21 - 29.26 Loss before tax (13,059.89) (2,663.25) Tax expense Current tax - - Deferred tax - - Loss after tax from continuing operations (A) (13,059.89) (2,663.25) Profit before tax from discontinued operations 0.38 0.23 Tax expense of discontinued operations - - Profit from discontinued operations (B) 45 0.38 0.23 Loss after tax (A+B) (13,059.51) (2,663.02) Other Comprehensive Loss a. Items that will be reclassified to profit or loss Effective portion of loss on designated portion of hedging (15.47) (2.59) instruments in cash flow hedge b. Items that will not be reclassified to profit or loss Remeasurements of defined benefit plans (4.25) (5.23) Total other comprehensive loss (a+b) (19.72) (7.82) Total comprehensive loss (13,079.23) (2,670.84) Loss attributable to: Owners of the Company (11,139.32) (2,317.88) Non-controlling Interest (1,920.19) (345.14) (13,059.51) (2,663.02) 154 25th 2019-20

Notes For the year ended For the year ended March 31, 2020 March 31, 2019 Other Comprehensive Loss attributable to: Owners of the Company (20.06) (7.28) Non-controlling Interest 0.34 (0.54) (19.72) (7.82) Total Comprehensive Loss attributable to: Owners of the Company (11,159.38) (2,325.16) Non-controlling Interest (1,919.85) (345.68) (13,079.23) (2,670.84) Total Comprehensive Loss attributable to Owners of the Company arising from: Continuing Operations- Loss (11,159.76) (2,325.39) Discontinued Operations- Gain 0.38 0.23 (11,159.38) (2,325.16) Loss per equity share (Face value of Rs.10 each) from continuing operations attributable to Owners of the Company Basic (in Rs) 30 (17.47) (4.01) Diluted (in Rs) 30 (17.47) (4.01) Loss per equity share (Face value of Rs.10 each) from discontinued operations attributable to Owners of the Company Basic (in Rs) - - Diluted (in Rs) - - Loss per equity share (Face value of Rs.10 each) from continuing and discontinued operations attributable to Owners of the Company Basic (in Rs) 30 (17.47) (4.01) Diluted (in Rs) 30 (17.47) (4.01)

Summary of significant accounting policies 2.3

The accompanying notes form an integral part of these consolidated financial statements

In terms of our report attached For Price Waterhouse Chartered Accountants LLP For and on Behalf of Board of Directors Firm Registration No.: 012754N/N500016

Nitin Khatri Ankur Verma N Srinath Partner Director Director Membership Number: 110282 [DIN No: 07972892] [DIN No: 00058133]

Ilangovan G Rishabh Aditya Chief Financial Officer Company Secretary

Place: Mumbai Place: Mumbai Date: June 2, 2020 Date: June 2, 2020 TELESERVICES LIMITED 155

CONSOLIDATED CASH FLOW STATEMENT AS AT AND FOR THE YEAR ENDED MARCH 31, 2020 (All amount in Rupees Crores unless stated otherwise) For the year For the year ended ended March 31, 2020 March 31, 2019 CASH FLOW FROM OPERATING ACTIVITIES Profit/(Loss) before tax from - Continuing operations (13,059.89) (2,663.25) - Discontinued operations 0.38 0.23 Loss before tax including discontinued operations (13,059.51) (2,663.02) Adjustments for : Depreciation and amortisation expenses 676.70 606.73 Exceptional items (net) 6,220.78 (1,238.72) Finance cost 2,189.86 3,992.76 Finance Income (80.57) (21.88) Profit on sale of current investments (43.67) (86.47) (Gain)/ loss on financial assets mandatorily measured at fair value through profit or 9.09 (3.73) loss (Gain)/ loss on property, plant and equipment sold / written off (net) (1.57) 12.73 (Gain)/ loss on derivatives not designated in hedge accounting relationship (0.60) 0.36 Provision/Liability no longer required written back (0.32) (158.38) Impairment loss/(reversal) on financial assets 1.04 (108.05) Bad debts written off 0.13 108.97 Share of profit in associates - (29.26) Foreign exchange loss/(gain), net 1.67 (11.30) Gain on discontinuation of lease as per IND AS 116 (11.36) - Provision for contingencies - (962.66) Movement in working capital: (Increase) / Decrease in Inventories - 1.53 (Increase) / Decrease in Trade receivables 8.05 (39.70) (Increase) / Decrease in Financial assets 16.84 103.48 (Increase) / Decrease in Other assets (415.77) (1,499.89) Increase / (Decrease) in Trade payables 36.13 (3,192.74) Increase / (Decrease) in Financial liabilities (129.40) (50.89) Increase / (Decrease) in Other liabilities (18.07) (169.05) Increase / (Decrease) in Provisions 44.03 (39.87) Cash (used in) operations (4,556.52) (5,449.05) Taxes paid (net of refunds) 15.35 (34.70) NET CASH (USED IN) OPERATING ACTIVITIES (A) (4,541.17) (5,483.75)

CASH FLOW FROM INVESTING ACTIVITIES Payments for property, plant and equipment (including capital advances) (200.68) (478.84) Proceeds from disposal of property, plant and equipment 0.50 13.32 Finance Income 12.82 11.63 Payments for purchase of current investments (18,228.92) (22,849.84) Proceeds from sale of current investments 19,464.85 22,369.64 Investment in bank deposits (having original maturity of more than three months) (1.49) (13.27) Proceeds from Sale of Investment in Associate - 2,480.02 Advance received pursuant to the Scheme and related agreements (Refer Note 1.2) 66.93 919.80 156 25th 2019-20

For the year For the year ended ended March 31, 2020 March 31, 2019 NET CASH GENERATED FROM INVESTING ACTIVITIES (B) 1,114.01 2,452.46 CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of Equity shares 929.48 - Proceed from issue of Compulsory Convertible Preference Shares (CCPS) 4,070.52 - Proceeds from borrowings 45,990.58 65,275.47 Repayment of borrowings (46,501.17) (58,279.08) Finance cost paid (1,362.51) (4,261.18) CCPS application money pending allotment - 929.48 Payments of Lease liabilities - Principal (133.79) - NET CASH GENERATED FROM FINANCING ACTIVITIES (C) 2,993.11 3,664.69

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A + B + C) (434.05) 633.40 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 710.04 76.64 CASH AND CASH EQUIVALENTS AT THE END OF YEAR (Refer note 10) 275.99 710.04

Non-cash investing and financing activities:

Pursuant to the Scheme and related agreements entered between the Group and Bharti, assets and liabilities pertaining to CMB undertaking have been transferred to Bharti. (Refer note 1.2).

The accompanying notes form an integral part of these consolidated financial statements

In terms of our report attached

For Price Waterhouse Chartered Accountants LLP For and on Behalf of Board of Directors Firm Registration No.: 012754N/N500016

Nitin Khatri Ankur Verma N Srinath Partner Director Director Membership Number: 110282 [DIN No: 07972892] [DIN No: 00058133]

Ilangovan G Rishabh Aditya Chief Financial Officer Company Secretary

Place: Mumbai Place: Mumbai Date: June 2, 2020 Date: June 2, 2020 TELESERVICES LIMITED 157 - - - 4.71 (0.01) (7.82) 929.48 (14.77) Total (115.72) 3,945.26 (2,904.32) (2,670.84) (2,663.02) 5,775.03 5,775.03 (40,874.42) (40,758.70) (40,062.98) (40,048.21) 15,920.00 15,920.00 - - - - Rs in crores Rs in crores (0.54) (3.14) 524.26 (12.56) Non- (345.68) (345.14)

interest (7,674.41) (7,661.85) (7,840.43) (7,837.29) controlling - - 4.71 (0.01) (7.28) 159.20 159.20 577.50 577.50 929.48 (11.63) (103.16) (524.26) 3,945.26 Equity As at March 31, 2019 As at March 31, 2019 (2,904.32) (2,325.16) (2,317.88) (33,200.01) (33,096.85) (32,222.55) (32,210.92) Total Other Total ------No. crores No. crores 929.48 929.48 929.48 CCPS money pending allottment application ------929.48 (1.76) (1.76) (1.76) (1.76) 5,775.03 6,704.51 flow/ Cash 15,920.00 13,696.28 29,616.28 hedge Cost of reserve ------Rs in crores Rs in crores 898.73 898.73 898.73 898.73 Capital Reserve on Consolidation 92.95 ------159.20 136.96 296.16 577.50 670.45 As at March 31, 2020 As at March 31, 2020 35.02 (35.02) General Reserve No. crores No. crores ------4.50 67.55 67.55 (72.05) Other equity ------5.63 20.49 20.49 (26.12) Reserves & surplus reserve Debenture redemption - - - Attributable to owners of Tata Teleservices Ltd. Teleservices Attributable to owners of Tata (5.52) 772.71 (11.63) (40.44) (103.16) (524.26) (2,323.40) (2,317.88) earnings Retained (53,395.35) (53,292.19) (51,176.80) (51,165.17) ------267.00 Capital reserve (267.00) (267.00) ------(906.53) account premium 13,211.00 13,211.00 13,211.00 13,211.00 12,304.47 12,304.47 Securities ------of 6,064.42 6,064.42 3,945.26 5,023.48 5,023.48 Equity (2,904.32) financial compound component instruments Instruments entirely equity in nature Other Equity Equity Share Capital Restated balance as at April 1,2019 Restated balance as at Change in accounting policy {Refer note 2.3(n) and 33} Balance as at March 31, 2019 Compulsory convertible preference shares (CCPS) application money received during the year OCDs converted during the year (Refer note 16) Issue of Optionally convertible debentures (OCD) during the year (Refer note 16) Transactions with the owners in their Transactions capacity as owners: Adjustment on account of Equity method accounting discontinued for investment in associate (ATC) Adjustment for Non controlling Interest in TTML Adjustment for share in associate (ATC) Adjustment for share in associate (ATC) upto date of classification as held for sale Total comprehensive loss for the year Total Other comprehensive loss for the year Restated balance as at April 1, 2018 Restated balance as at Loss for the year Balance as at April 1, 2018 Balance as at Change in accounting policy {Refer note 2.3(d)} Equity Shares At the beginning of year Issued during the year (Refer note 14) Outstanding at the end of year Compulsory Convertible Non Cumulative Preference Shares At the beginning of year Issued during the year (Refer note 15) Outstanding at the end of year (B) (C) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020 FOR THE OF CHANGES IN EQUITY STATEMENT CONSOLIDATED (All amount in Rupees Crores unless stated otherwise) (A) 158 25th 2019-20 - 732.74 489.77 (17.41) (19.72) Total 4,070.52 (5,000.00) (1,690.23) (55,368.26) (13,079.23) (13,059.51) - - - - - 0.34 574.96 (17.41) Non- interest (9,036.71) (1,919.85) (1,920.19) controlling 732.74 489.77 (20.06) (574.96)

4,070.52 Equity (5,000.00) (1,690.23) (11,139.32) (11,159.38) (46,331.55) Total Other Total ------

4,070.52 CCPS money pending (5,000.00) allottment application ------

flow/ Cash (17.70) (15.94) (15.94) hedge Cost of reserve ------N Srinath Director [DIN No: 00058133] Rishabh Aditya Company Secretary 898.73

Capital Reserve on Consolidation ------

General Reserve ------

Other equity ------

Reserves & surplus reserve Debenture redemption ------Attributable to owners of Tata Teleservices Ltd. Teleservices Attributable to owners of Tata (4.12) (574.96) earnings Retained (11,139.32) (65,113.75) (11,143.44) ------Capital reserve For and on Behalf of Board Directors Ankur Verma Director [DIN No: 07972892] Ilangovan G Chief Financial Officer Place: Mumbai Date: June 2, 2020 ------account premium 12,304.47 Securities ------732.74 489.77 of

5,596.70 Equity (1,690.23) financial compound component instruments

Balance as at March 31, 2020 CCPS alloted during the year CCPS application money received during the year OCD converted during the year (Refer note 16) Issue of CCPS during the year (Refer note 16) Issue of OCD during the year (Refer note 16) Transactions with the owners in their Transactions capacity as owners: Consideration to Non controlling interest pursuant to the scheme of demerger CMB {Refer note 1.2 and 29(f)} Adjustment for Non controlling Interest in TTML Total comprehensive loss for the year Total Loss for the year Other comprehensive loss for the year The accompanying notes form an integral part of these consolidated financial statements In terms of our report attached Accountants LLP Chartered For Price Waterhouse Firm Registration No.: 012754N/N500016 Nitin Khatri Partner Membership Number: 110282 Place: Mumbai Date: June 2, 2020 TELESERVICES LIMITED 159

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

1. Background 2018 by virtue of additional voting rights of 26.26% in respect of Redeemable Preference Shares (RPS) issued 1.1 Nature of business by TTML to TTSL, thus increasing total voting rights of TTSL from 48.30% to 74.56%. The equity shares of Tata Teleservices Limited (‘TTSL’ or ‘The Company’), part TTML are listed on BSE & NSE and the Commercial of the Tata Group, became a pan-India telecom operator Papers are listed on NSE in India. in January 2005. TTSL together with its subsidiaries (referred to as the Group) and associate are listed below. MMP had been providing Mobile Commerce and its related services on pan India basis since 2011. MMP Name of the Companies Percentage Holding had applied and obtained approval from RBI on March 27, 2018 for voluntary surrender of the Certification of 2019-20 2018-19 Authorization, post which MMP has discontinued its Subsidiaries operations. During the previous year, MMP published MMP Mobi Wallet Pay- 100.00% 100.00% newspaper advertisements giving notice to its customers ment Systems Limited to claim their outstanding balances and submitted (‘MMP’) closure request to RBI, based on which RBI approved NVS Technologies Limited 100.00% 100.00% the closure vide its letter dated November 14, 2018 with (‘NVS’) a grace period of two years for the customers to claim their outstanding balances. TTL Mobile Private Limit- 100.00% 100.00% ed (‘TTL Mobile’, formerly NVS has been incorporated to provide non voice known as ‘Virgin Mobile services which does not require license. NVS has not India Private Limited’) commenced any operations till date. Tata Teleservices (Maha- 48.30% 48.30% rashtra) Limited (‘TTML’) TTL Mobile was promoted jointly by Virgin Investments Associate Mauritius Limited (‘VMIL’) and TTSL as a 50: 50 Joint ATC Telecom Infrastruc- 11.63% 11.63% Venture. TTSL and TTML have not renewed the ture Private Limited Consultancy Agreement with TTL Mobile beyond (‘ATC’) (Refer note 21) March 31, 2014 and TTL Mobile currently has no business operations. Shares held by VMIL in TTL Mobile TTSL has Access Service License to operate in 17 were transferred to TTSL on November 10, 2017 as circles and National Long Distance (‘NLD’) license to a result of which TTL Mobile became a wholly owned provide the NLD services within India. TTSL is focused subsidiary of TTSL. on providing various wireline voice, data and managed telecom services. TTSL is a public company domiciled As at March 31, 2020, Tata Sons Private Limited, the in India and is incorporated under the provisions of holding company owned 74.50% of the TTSL’s equity the Companies Act applicable in India. The registered share capital. These consolidated financial statements office of the Company is located at Jeevan Bharti, 10th have been approved by Board of Directors on June 2, floor, 124 Connaught Circus, New Delhi – 110 001. All 2020. the entities of the Group are domiciled in India and are registered in India. The Commercial Papers of TTSL are 1.2 Demerger of Consumer Mobile Business listed on NSE in India. The Scheme of Arrangement amongst Bharti Airtel TTML is a licensed telecommunications services Limited (‘BAL’) and Bharti Hexacom Limited (‘BHL’) provider. TTML presently holds Unified Licenses (BAL and BHL together referred to as ‘Bharti’) and TTSL with Access Service authorization for Mumbai and and amongst Bharti Airtel Limited and Tata Teleservices Maharashtra Licensed Service Area and Internet (Maharashtra) Limited (‘TTML’), and their respective Services authorization for ISP Category ‘A’ – National shareholders and creditors (‘Scheme’) for transfer of service area. TTML is focused on providing various the Consumer Mobile Business (‘CMB’) of TTML and wireline voice, data and managed telecom services. TTSL to Bharti were sanctioned respectively by National TTML became a subsidiary of TTSL w.e.f. October 17, Company Law Tribunal (‘NCLT’), New Delhi by an order 160 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

dated January 30, 2019 and by NCLT, Mumbai by an (RPS) of BAL of face value Rs.100 each and 500 order dated December 4, 2018 . Period of 30 days RPS of BHL of face value Rs.100 each in proportion allowed to file the Scheme of TTSL with Registrar of to their shareholding on the effective date. Companies (ROC) had been extended from time to time till June 25, 2019. Department of Telecommunications • All (and not each) CCPS Holders of TTSL have (‘DoT’) issued approval subject to certain conditions received 10 RPS of BAL of face value Rs.100 each on April 10, 2019 to TTSL, TTML and Bharti, some of and 10 RPS of BHL of face value Rs.100 each in which were subsequently been stayed/modified by proportion to their shareholding on the effective Telecom Disputes Settlement and Appellate Tribunal date. (‘TDSAT’) vide its interim order dated April 24, May 2 and May 6, 2019. TDSAT pending final hearing of the • All (and not each) OCPS Holders of TTSL have petitions filed by Bharti directed DoT to take on record received 10 RPS of BAL of face value Rs.100 each the demerger subject to fulfilment of modified conditions and 10 RPS of BHL of face value Rs.100 each in and also allowed Bharti to operationalize spectrum and proportion to their shareholding on the effective to take consequential actions. TTSL, TTML and Bharti date. have reported compliance with such conditions to DoT vide letter dated May 22, 2019. NCLT, vide its order Pursuant to the Scheme and related agreements entered dated June 12, 2019, approved July 1, 2019 as the between TTML and BAL, assets and liabilities pertaining Appointed Date under the TTML Scheme. As per TTSL to CMB undertaking of TTML have been transferred to Scheme both TTSL and TTML Schemes would become BAL. As per TTML Scheme: effective on the same day. On June 24 and 25, 2019, Bharti, TTSL and TTML filed NCLT orders with the ROC • Equity Shareholders of TTML have received 1 Delhi and Mumbai with the Appointed Date of July 1, BAL Equity share against 2014 shares held on the 2019. TTSL, TTML and Bharti informed DoT vide letter effective date dated June 26, 2019 of NCLT orders and filing of those with ROC Delhi and Mumbai and further informed that • All (and not each) Redeemable Preference Shares the merger of CMB of TTSL and TTML to Bharti has (RPS) Holders of TTML have received 10 RPS of been completed with an Appointed and Effective Date BAL of face value Rs.100 each in proportion to their of July 1, 2019 and all statutory formalities towards shareholding on the effective date. operationalizing the demerger of the CMB of TTSL and TTML and consequent merger/transfer of the said CMB Considering the significant operational and financial of TTSL and TTML into Bharti have been completed with interdependencies of different business units, an Appointed and Effective Date of July 1, 2019. DoT management continues to identify the Cash Generating appealed against TDSAT orders in Hon’ble Supreme Unit (CGU) at the Company level. Accordingly, the Court which did not interfere in the interim orders and disclosure in relation to discontinued operations are not directed TDSAT to finally hear the matter by end of applicable. February 2020. Subsequently, on February 6, 2020, DoT subject to outcome of the pending Bharti petitions in Indemnification: TDSAT and any appeal against the judgments has taken Pursuant to the Scheme and other related agreements the demerger on record. executed between TTSL, TTML and Bharti, the Group has transferred certain assets and liabilities, including Both the TTSL and TTML Schemes became effective on contingent liabilities, which are under indemnification. As July 1, 2019. agreed between the Group and Bharti, all indemnified liabilities and obligations shall be deemed to have been Pursuant to the Scheme and related agreements borne entirely by Group and not by Bharti, and any entered between TTSL and Bharti, assets and liabilities payment default in relation to such obligation by the pertaining to CMB undertaking of TTSL have been Group shall be governed by the relevant agreements. transferred to Bharti. As per TTSL Scheme: In relations to assets, Bharti shall promptly on receipt of any payments in relation to the indemnified assets • All (and not each) Equity Shareholders of TTSL (including any interest payments received thereof) have received 500 Redeemable Preference Shares from the third parties pay to the Group such amounts TELESERVICES LIMITED 161

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

(net of any cost and taxes incurred in relation to such The Group believes that it has taken into account all the indemnified assets). possible impact of known events arising from COVID-19 pandemic in the preparation of these consolidated 1.3 Going concern financial statements. However, the impact assessment of COVID-19 is a continuing process given the uncertainties The accumulated losses of the Group as of March 31, associated with its nature and duration. 2020, have exceeded its paid-up capital and reserves. The Group has incurred net loss for the year ended 1.5 During the month of March, 2020, the Group has March 31, 2020 and its current liabilities exceeded its received an anonymous letter alleging irregularities in current assets as at that date. The Group is in the process procurement of some materials. The Group immediately of monetization of certain residual assets, proceeds appointed an external agency to conduct forensic of which will be primarily utilised towards reduction of investigation, which is in progress. Based on the current residual debt and other financial obligations. The Group status of the ongoing investigation, robust procurement has obtained a support letter from its Promoter indicating processes and robust internal control procedures, the that the Promoter will take necessary actions to organize Group believes that it is unlikely that there is a material for any shortfall in liquidity during the period of 12 months misstatement in consolidated financial statements. from the balance sheet date. 2. Significant accounting policies Based on the above, the Group is confident of its ability to meet the funds requirement and to continue its business 2.1 Basis of preparation of consolidated financial as a going concern and accordingly, the consolidated statements financial statements have been prepared on that basis. These consolidated financial statements comply in all 1.4 COVID-19 pandemic material aspects with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Since telecommunication services were identified as an Act, 2013 (the ‘Act’) [Companies (Indian Accounting essential service (vide the Ministry of Home Affairs order Standards) Rules, 2015 (as amended)] and other No.40-3/2020 dated March 24, 2020), the Group has relevant provisions of the Act. been providing services to its customers during the lock down period without any major disruptions. With most, These consolidated financial statements have been if not all, of our customers across industries shifting to prepared on the historical cost basis, except for certain a work-from-home model, we have provided them with assets and liabilities which are measured at fair values collaboration and remote working solutions to ensure at the end of each reporting period, as explained in the their business continuity. However, since our voice and accounting policies below. Historical cost is generally data connectivity solutions and the underlying physical based on the fair value of the consideration given in circuits typically terminate at customer office locations, exchange for goods and services. Fair value is the price we have seen relatively low usage of voice and data on that would be received to sell an asset or paid to transfer these circuits. a liability in an orderly transaction between market participants at the measurement date. The Group has performed assessment and believes that there is no material impact of COVID-19 situation These consolidated financial statements are presented in these consolidated financial statements. The Group in Indian Rupees (“INR”) and all values are rounded to has also made a detailed assessment of its liquidity the nearest crores, except when otherwise indicated. position for the next 12 months from the balance sheet date. Further, there is no material impact foreseen on 2.2 Principles of Consolidation revenue and operating cashflow of the Group. The Group will continue to monitor any material changes to The consolidated financial statements comprise the future economic conditions. financial statements of the Company and its subsidiaries as at March 31, 2020. Control is achieved when the 162 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Group is exposed, or has rights, to variable returns from like transactions and events in similar circumstances, its involvement with the investee and has the ability to appropriate adjustments are made to that group affect those returns through its power over the investee. member’s financial statements in preparing the Specifically, the Group controls an investee if and only if consolidated financial statements to ensure conformity the Group has: with the group’s accounting policies.

• Power over the investee (i.e. existing rights that give The financial statements of all subsidiaries and associate it the current ability to direct the relevant activities are prepared for the same reporting period as the Group of the investee) and wherever necessary, adjustments are made to bring the accounting policies in line with those of the Group. • Exposure, or rights, to variable returns from its Consolidation procedure: involvement with the investee, and (a) Combine like items of assets, liabilities, equity, • The ability to use its power over the investee to income, expenses and cash flows of the parent with affect its returns those of its subsidiaries. For this purpose, income and expenses of the subsidiary are based on the Generally, there is a presumption that a majority of voting amounts of the assets and liabilities recognised rights result in control. To support this presumption and in the consolidated financial statements at the when the Group has less than a majority of the voting acquisition date. or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it (b) Offset ( eliminate) the carrying amount of the has power over an investee, including: parent’s investment in each subsidiary and the parent’s portion of equity of each subsidiary. • The contractual arrangement with the other vote Business combinations policy explains how to holders of the investee account for any related goodwill.

• Rights arising from other contractual arrangements (c) Eliminate in full intra-group assets and liabilities, equity, income, expenses and cash flows relating to • The Group’s voting rights and potential voting rights transactions between entities of the group (profits or losses resulting from intra-group transactions that are • The size of the group’s holding of voting rights recognised in assets, such as inventory and property, relative to the size and dispersion of the holdings of plant and equipment, are eliminated in full). Intra- the other voting rights holders group losses may indicate an impairment that requires recognition in the consolidated financial statements. The Group re-assesses whether or not it controls an Ind AS12 Income Taxes applies to temporary investee if facts and circumstances indicate that there differences that arise from the elimination of profits are changes to one or more of the three elements of and losses resulting from intra-group transactions. control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases (d) Non-controlling interest share of net profit / (loss) when the Group loses control of the subsidiary. Assets, for the year of consolidated subsidiaries is identified liabilities, income and expenses of a subsidiary acquired and adjusted against the loss after tax of the group. or disposed of during the year are included in the consolidated financial statements from the date the Profit or loss and each component of other comprehensive Group gains control until the date the Group ceases to income (OCI) are attributed to the equity holders of the control the subsidiary. parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having Consolidated financial statements are prepared using a deficit balance. When necessary, adjustments are uniform accounting policies for like transactions and made to the financial statements of subsidiaries to other events in similar circumstances. If a member of bring their accounting policies in line with the Group’s the group uses accounting policies other than those accounting policies. All intra-group assets and liabilities, adopted in the consolidated financial statements for equity, income, expenses and cash flows relating TELESERVICES LIMITED 163

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

to transactions between members of the Group are All other assets are classified as non-current. eliminated in full on consolidation. When a liability meets any of the following criteria it A change in the ownership interest of a subsidiary, without is treated as current: a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: (i) It is expected to be settled in normal operating cycle • Derecognises the assets (including goodwill) and liabilities of the subsidiary (ii) It is held primarily for the purpose of trading

• Derecognises the carrying amount of any non- (iii) It is due to be settled within twelve months controlling interests after the reporting period, or

• Derecognises the cumulative translation differences (iv) There is no unconditional right to defer the recorded in equity settlement of the liability for at least twelve months after the reporting period • Recognises the fair value of the consideration received All other liabilities are classified as non-current.

• Recognises the fair value of any investment The operating cycle is the time between the retained acquisition of assets for processing and their realisation in cash and cash equivalents. The Group • Recognises any surplus or deficit in profit or loss has identified twelve months as its operating cycle.

• Reclassifies the parent’s share of components b. Foreign Currencies previously recognised in OCI to profit or loss or retained earnings, as appropriate, as would be Functional and Presentation Currency: required if the Group had directly disposed of the related assets or liabilities Items included in the financial statements of each of the Group’s entities are measured using the 2.3 Summary of significant accounting policies currency of the primary economic environment in which the entity operates (‘the functional currency’). a. Current vs Non-Current Classification The consolidated financial statements are presented in Indian rupee (INR), which is Group’s The Group presents assets and liabilities in the functional and presentation currency. balance sheet based on current/non-current classification. When an asset meets any of the Initial Measurement: following criteria it is treated as current: Transactions in foreign currencies on initial (i) Expected to be realised or intended to be sold recognition are recorded at the spot exchange rate or consumed in normal operating cycle between the functional currency and the foreign currency on the date of the transaction. However, (ii) Held primarily for the purpose of trading for practical reasons, the Group uses an average rate if the average approximates the actual rate at (iii) Expected to be realised within twelve months the date of the transaction. after the reporting period, or Subsequent Measurement: (iv) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability At each balance sheet date, foreign currency for at least twelve months after the reporting monetary items are reported using the closing period exchange rate. Exchange differences that arise on 164 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

settlement of monetary items or on restatement at the entity discontinues recognising its share of each balance sheet date of the Group’s monetary further losses. Additional losses are recognised items at the closing rate are recognised as income only to the extent that the Group has incurred legal or expenses in the period in which they arise or constructive obligations or made payments on behalf of the associate. If the associate subsequently Non-monetary items which are carried at historical reports profits, the entity resumes recognising its cost denominated in a foreign currency are share of those profits only after its share of the profits reported using the exchange rate at the date of the equals the share of losses not recognised. transaction. Non-monetary items measured at fair value in a foreign currency are translated using the The aggregate of the Group’s share of profit or exchange rates at the date when the fair value was loss of an associate is shown on the face of the determined. The gain or loss arising on translation statement of profit and loss. of non-monetary items is recognised in line with the gain or loss of the item that gave rise to the translation After application of the equity method, the Group difference (translation differences on items whose determines whether it is necessary to recognise an gain or loss is recognised in other comprehensive impairment loss on its investment in its associate. At income or the statement of profit and loss is also each reporting date, the Group determines whether recognised in other comprehensive income or the there is objective evidence that the investment in statement of profit and loss respectively). the associate is impaired. If there is such evidence, the Group calculates the amount of impairment as c. Investment in subsidiaries and associates the difference between the recoverable amount of the associate and its carrying value, and then An entity is termed as a subsidiary if the Group recognises the loss as ‘Share of profit of associates’ controls the entity. Control is achieved when the in the statement of profit or loss. Group is exposed, or has rights, to variable returns from its involvement with the investee and has the The Group has accounted for its investment in ability to affect those returns through its power over subsidiaries and associates at cost less, impairment, the investee. if any as per Ind AS 36. Refer note 2.3(l) for further details on impairment of non-financial assets. An associate is an entity over which the Group has significant influence. Significant influence is the Refer note 2.3(v) - ‘Non current assets (or disposal power to participate in the financial and operating group) held for sale’ for accounting policy on investments policy decisions of the investee, but is not control or in associate classified as assets held for sale. joint control over those policies. d. Revenue The Group’s investments in its associate (other than those classified as assets held for sale) are Effective April 1, 2018, the Group adopted Ind AS accounted for using the equity method. Under the 115, ‘Revenue from Contracts with Customers’ basis equity method, the investment in an associate is the cumulative effect method applied retrospectively initially recognised at cost. The carrying amount of to the contracts that were not completed as of April the investment is adjusted to recognise changes 1, 2018 (being date of initial application). The effect in the Group’s share of net assets of the associate on adoption of the said standard was insignificant since the acquisition date. Goodwill relating to the on these consolidated financial statements. associate is included in the carrying amount of Revenue is recognised upon transfer of control of the investment and is not tested for impairment promised products or services to customer at the individually. consideration which the Group has received or expects to receive in exchange of those products If an entity’s share of losses of an associate equals or or services, net of any taxes / duties, discounts exceeds its interest in the associate (which includes and process waivers. Revenue is recognised as any long term interest that, in substance, form part and when each distinct performance obligation is of the Group’s net investment in the associate), satisfied. TELESERVICES LIMITED 165

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Service revenues mainly pertain to usage, f. Interconnect revenues and costs (Access subscription and activation charges for voice, charges) data, messaging and value added services. It also includes revenue from interconnection / roaming The Telecom Regulatory Authority of India (TRAI) charges for usage of the Group’s network by other issued Interconnection Usage Charges Regulation operators for voice, data, messaging and signalling 2003 (‘IUC regime’) effective May 1, 2003 and services. The Group recognises revenue from these subsequently amended the same from time to time. services as they are provided. Usage charges are Under the IUC regime, with the objective of sharing recognised based on actual usage. Subscription of call/Short Message Services (‘SMS’) revenues charges are recognised over the estimated customer across different operators involved in origination, relationship period or subscription pack validity transit and termination of every call/SMS, the period, whichever is lower. Revenues in excess of Group pays interconnection charges (prescribed as invoicing are classified as unbilled revenue which rate per minute of call time) and per SMS for all is grouped under other current financial assets outgoing calls and SMS originating in its network whereas invoicing/collection in excess of revenue to other operators. The Group receives certain are classified as Unearned revenue which is grouped interconnection charges from other operators for all under other current and non-current liabilities. calls and SMS terminating in its network.

Service revenue from activation and installation for Accordingly, interconnect revenues are recognized certain customers, and associated acquisition costs as those on calls/SMS originating in another telecom are amortised over the period of agreement/ lock in operator network and terminating in the Group’s period since the date of activation of service. network. These are recognised upon transfer of control of services being transferred over time. The Group has entered into certain multiple- Interconnect cost is recognized as charges incurred element revenue arrangements which involve on termination of calls/SMS originating from the the delivery or performance of multiple products, Group’s network and terminating on the network of services or rights to use assets. At the inception of other telecom operators. The interconnect revenue the arrangement, all the deliverables therein are and costs are recognized in the consolidated evaluated to determine whether they represent financial statements on a gross basis and included distinct performance obligations, and if so, they in service revenue and access charges in the are accounted for separately. Total consideration statement of profit and loss, respectively. related to the multiple element arrangements is allocated to each performance obligation based on g. License fees and Spectrum fees their standalone selling prices. The license entry fee/spectrum fees has been For accounting policy of interconnect revenues, recognized as an intangible asset and is amortized refer note 2.3(f). on straight line basis over the remaining license period from the date when it is available for use e. Other Income in the respective circles/spectrum blocks. License (i) Interest income entry fee/spectrum fees includes interest on funding of license entry fee/spectrum fees and bank The interest income is recognised using the guarantee commission up to the date of spectrum Effective Interest Rate (EIR) method. For available for use in the respective circles. Fees paid further details, refer note 2.3(u) on financial for migration of the original licenses to the Unified instruments. License and license fees for National Long Distance (NLD) services is amortized over the remaining (ii) Dividend income period of the license of 20 years for the respective circles from the date of migration to Unified license/ Dividend income is recognised when the payment of the license fees on straight line basis. Group’s right to receive the payment is established. 166 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Fees paid for obtaining in-principle approval to use The Group offsets tax assets and liabilities if and alternate technology under the existing Unified only if it has a legally enforceable right to set off license has been recognized as an intangible asset current tax assets and current tax liabilities and the and is amortized from the date of approval over the current tax assets and current tax liabilities relate to balance remaining period of the Unified license on income taxes levied by the same tax authority. straight line basis for the respective circles. Deferred tax Revenue sharing fee Deferred tax is recognised on temporary Revenue sharing fee on license and spectrum is differences between the carrying amounts of computed as per the licensing agreement at the assets and liabilities in the consolidated financial prescribed rate and is expensed as license fees statements and the corresponding tax bases used and spectrum charges in the statement of profit and in the computation of taxable profit. Deferred tax loss in the year in which the related revenue from assets are generally recognised for all deductible providing unified access services and national long temporary differences, the carry forward of any distance services are recognized. unused tax losses, to the extent that it is probable that taxable profits will be available against which An additional revenue share towards spectrum those deductible temporary differences can be charges is computed at the rate specified by the utilised. Such deferred tax assets and liabilities Department of Telecommunications (DoT) of the are not recognised if the temporary difference Adjusted Gross Revenue (‘AGR’), as defined in the arises from the initial recognition (other than in a License Agreement, earned from the customers. business combination) of assets and liabilities in a These costs are expensed in the statement of Profit transaction that affects neither the taxable profit nor and Loss in the year in which the related revenues the accounting profit. are recognized. Deferred tax liabilities are recognised for all taxable h. Taxes temporary differences, except:

Current income tax • When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a Current income tax assets and liabilities are transaction that is not a business combination and, measured at the amount expected to be recovered at the time of the transaction, affects neither the from or paid to the taxation authorities. Current tax accounting profit nor taxable profit or loss. is based on the taxable profit for the year which may differ from ‘profit before tax’ as reported in the • In respect of taxable temporary differences statement of profit and loss because of items of associated with investments in subsidiaries, income or expense that are taxable or deductible associates and interests in joint ventures, when in other years and items that are never taxable the timing of the reversal of the temporary or deductible. The tax rates and tax laws used to differences can be controlled and it is probable that compute the amount are those that are enacted the temporary differences will not reverse in the or substantively enacted, at the reporting date. foreseeable future. Current income tax relating to items recognised outside profit or loss is recognised outside profit The carrying amount of deferred tax assets is reviewed or loss (either in other comprehensive income at each reporting date and reduced to the extent that or in equity). Current tax items are recognised in it is no longer probable that sufficient taxable profit will correlation to the underlying transaction either in be available to allow all or part of the deferred tax asset Other Comprehensive Income (OCI) or directly in to be utilised. Unrecognised deferred tax assets are re- equity. assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. TELESERVICES LIMITED 167

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Deferred tax assets and liabilities are measured at the the carrying amount of the asset and are recognised tax rates that are expected to apply in the year when in the statement of profit and loss account on the date the asset is realised or the liability is settled, based of retirement or disposal. Assets are depreciated to on tax rates (and tax laws) that have been enacted or the residual values on a straight-line basis over the substantively enacted at the reporting date. estimated useful lives. The assets’ residual values and useful lives are reviewed at each financial year end or Current and deferred tax are recognised in profit or loss, whenever there are indicators for review, and adjusted except when they relate to items that are recognised prospectively. in other comprehensive income or directly in equity, in which case, the current and deferred tax are also Freehold land is not depreciated. recognised in other comprehensive income or directly in equity respectively. Buildings constructed on leasehold land are depreciated based on the useful life specified in Schedule II to the Deferred tax assets and deferred tax liabilities are offset Companies Act, 2013, where the lease period of land is if a legally enforceable right exists to set off current tax beyond the life of the building. In other cases, buildings assets against current tax liabilities and the deferred constructed on leasehold lands are amortised over the taxes relate to the same taxable entity and the same primary lease period of the lands. taxation authority. The useful lives of the assets are based on technical Deferred tax relating to items recognised outside profit or estimates approved by the Management, and are lower loss is recognised outside profit or loss in correlation to than or same as the useful lives prescribed under the underlying transaction either in other comprehensive schedule II to the Companies Act, 2013 in order to reflect income or directly in equity. the period over which depreciable assets are expected to be used by the Group. i. Property, plant and equipment (‘PPE’) Estimated useful lives of assets are as follows: Property, plant and equipment and capital work in progress is stated at cost of acquisition or construction, Particulars Useful life net of accumulated depreciation and accumulated (in years) impairment losses, if any. Such cost includes purchase As per price, the cost of replacing part of the plant and Group equipment and directly attributable cost of bringing the Plant and Machinery asset to its working condition for the intended use. When significant parts of plant and equipment are required to - Network Equipment 12 be replaced at intervals, the Group depreciates them - Air- Conditioning Equipment 6 separately based on their specific useful lives. - Generators 6 - Electrical Equipments 4-6 Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as - Office Equipments 3-5 appropriate, only when it is probable that future economic Buildings 60 benefits associated with the item will flow to the Group Furniture and Fixtures 3-6 and the cost can be measured reliably. All other repair Vehicles 5 and maintenance costs are recognised in the statement of profit and loss account as incurred. The present value Leasehold Improvements 9 of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset j. Investment property if the recognition criteria for a provision are met. Property that is held for long term rental yields or for capital Gains and losses arising from retirement or disposal appreciation or both, and that is not occupied by the Group of property, plant and equipment are determined as is classified as investment property. Investment property is the difference between the net disposal proceeds and measured initially at it’s cost, including related transaction 168 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

cost and where applicable borrowing cost. Subsequent l. Impairment of non-financial assets expenditure is capitalised to the assets carrying value only when it is probable that future economic benefits Non-financial assets which are subject to depreciation associated with the expenditure will flow to the Group or amortization are reviewed for impairment, whenever and the cost of the item can be measured reliably. All events or changes in circumstances indicate that the other repairs and maintenance cost are expensed when carrying amount of such assets may not be recoverable. incurred. When part of an investment property is replaced, If any such indication exists, the recoverable amount of the carrying amount of the replaced part is derecognised. the asset is estimated in order to determine the extent Investment properties are depreciated using the straight of the impairment loss (if any). When it is not possible to line method over the estimated useful lives. Investment estimate the recoverable amount of an individual asset, properties generally have a useful life of 60 years. the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. k. Intangible assets Recoverable amount is the higher of fair value less costs Intangible assets acquired separately are measured on of disposal and value in use. In assessing value in use, initial recognition at cost. Subsequently, intangible assets the estimated future cash flows are discounted to their are carried at cost less any accumulated amortisation present value using a pre-tax discount rate that reflects and accumulated impairment losses.The useful lives current market assessments of the time value of money of intangible assets are assessed as either finite or and the risks specific to the asset. In determining fair indefinite. There are no intangible assets assessed with value less costs of disposal, recent market transactions indefinite useful life. are taken into account. If the recoverable amount of an asset is estimated to be less than its carrying amount, an Intangible assets with finite lives are amortised over impairment loss is recognised by reducing the carrying the useful economic life and assessed for impairment amount of the asset to its recoverable amount. whenever there is an indication that the intangible asset may be impaired. When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the Computer software is amortised over 3 years. revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the Indefeasible Right to Use (‘IRU’) taken for optical fiber carrying amount that would have been determined had and ducts, by the Group are capitalized as intangible no impairment loss been recognised for the asset (or assets at the amounts paid for acquiring the right and cash- generating unit) in prior years. A reversal of an are amortized on straight line basis, over the period of impairment loss is recognised immediately in profit or lease term. loss.

The amortisation period and the amortisation method for an m. Borrowing Cost intangible asset with a finite useful life are reviewed at least at the end of each year. Changes in the expected useful life Borrowing costs directly attributable to the acquisition are considered to modify the amortisation period or method or construction of a qualifying asset, including interest and are treated as changes in accounting estimates. The attributable to the funding of license fees/spectrum amortisation expense on intangible assets with finite lives fees up to the date the asset is available for use, are is recognised in the statement of profit and loss. capitalised as a part of the cost of that asset.

For accounting policy related to license entry fees/ All other borrowing costs are expensed in the period in spectrum fees, refer note 2.3(g). which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with Gains or losses arising from de-recognition of an the borrowing of funds. Interest income earned on the intangible asset are measured as the difference between temporary investment of specific borrowings pending the net disposal proceeds and the carrying amount of their expenditure on qualifying assets is deducted from the asset and are recognised in the statement of profit or the borrowing costs eligible for capitalisation. loss when the asset is derecognised. TELESERVICES LIMITED 169

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) n. Leases Lease Policy followed by the group from April 1, 2019 (Ind AS 116) Transition to Ind AS 116 Ministry of Corporate Affairs (“MCA”) through Companies (Indian Accounting i) Right-of-use assets Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment The group recognises a right-of-use asset and a lease Rules, has notified Ind AS 116 Leases which replaces liability at the lease commencement date except for the existing lease standard, Ind AS 17 Leases and other short term leases which are less than 12 months and interpretations. Ind AS 116 sets out the principles for the low value leases. recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a The right-of-use asset is initially measured at cost single, on-balance sheet lease accounting model for comprises the following - lessees. a) the initial amount of the lease liability The Group has adopted Ind AS 116, effective annual b) any initial direct costs incurred less any lease reporting period beginning April 1, 2019 and applied incentives received. the standard to its leases, retrospectively, with the cumulative effect of initially applying the standard, The right-of-use assets is subsequently measured at recognised on the date of initial application (April 1, cost less any accumulated depreciation, accumulated 2019) (modified retrospective approach). Accordingly, impairment losses, if any and adjusted for any the Group has not restated comparative information, remeasurement of the lease liability. The right-of-use instead, the cumulative effect of initially applying this assets is depreciated using the straight-line method from standard has been recognised as an adjustment to the commencement date over the shorter of lease term the opening balance of retained earnings as on April 1, or useful life of right-of-use asset. The estimated useful 2019. lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. Right Lease Policy followed by the group till March 31, of-use assets are tested for impairment whenever there 2019 (Ind AS 17) is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the Group as a lessee statement of profit and loss.

Leases of assets under which the lessor effectively retains ii) Lease liabilities all the risks and rewards of ownership are classified as operating leases. Operating lease payments are Lease liabilities include the Net present value of the recognized as an expense in the statement of profit and following lease payment: loss on a straight-line basis over the lease term except where escalation in payments are structured to increase a. Fixed payments, including in-substance fixed in line with expected general inflation. payments;

IRU taken for dark fiber, duct and embedded electronics b. Variable lease payments that depend on an are treated as finance lease (purchase of intangible index or a rate, initially measured using the assets), where the IRU term substantially covers the index or rate as at the commencement date. estimated economic useful life of the asset and the routes are explicitly identified in the agreement. The c. Using the practical expedient maintenance cases where the estimated economic useful life does charges are also included in the lease not significantly represent the life of the asset, the IRU payments as it is not practical to separate is treated as operating lease provided the routes are maintenance cost from the lease rent. (In any explicitly identified. agreement, where rent and maintenance are separately mentioned or identifiable, then such maintenance charges are not considered as a part of lease payments). 170 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

d. The exercise price of a purchase option if the is a further reduction in the measurement of the group is reasonably certain to exercise that lease liability, the Group recognises any remaining option, and amount of the re-measurement in statement of profit and loss. e. Payment of penalties for terminating the lease, if the group is reasonably certain to exercise iii) Short-term leases and leases of low-value that option. assets

The lease liability is initially measured at the present The group applies the short-term lease recognition value of the lease payments that are not paid at exemption to its short-term leases (i.e., those the commencement date, the lease payment are leases that have a lease term of 12 months or less discounted using the interest rate implicit in the from the commencement date and do not contain lease. If the rate cannot be readily determined, a purchase option). Lease payments on short-term which is generally the case for lease in the group, leases are recognised on a straight-line basis as an the lessee’s incremental borrowing rate is used, expense in Profit or loss over the lease term. being the rate that the individually lessess would have to pay to borrow fund necessary to obtain an Group as a Lessor asset on similar value to the right-of-use asset in a similar economic environment with similar terms, Lease income from operating leases where the security and condition. Generally, the group uses group is a lessor is recognised in income on a its incremental borrowing rate as the discount straight-line basis over the lease term. Initial direct rate. Lease payments also include an extension, costs incurred in obtaining an operating lease are purchase and termination option payments, if added to the carrying amount of the underlying asset the group is reasonably certain to exercise such and recognised as expense over the lease term on options. the same basis as lease income. The respective leased assets are included in the balance sheet Lease liability and ROU asset have been separately based on their nature. The group did not need to presented in the Balance Sheet and lease payments make any adjustments to the accounting for assets have been classified as financing cash flows. held as lessor as a result of adopting Ind AS 116.

In calculating the present value of lease payments, In IRU granted for dark fiber, duct and embedded the group uses its incremental borrowing rate at the electronics are treated as finance lease (sale of lease commencement date because the interest intangible assets), where the IRU term substantially rate implicit in the lease is not readily determinable. covers the estimated economic useful life of the After the commencement date, the amount of lease asset and the routes are explicitly identified in the liabilities is increased to reflect the accretion of agreement. The cases where the IRU term does interest and reduced for the lease payments made. not significantly represent the estimated useful life In addition, the carrying amount of lease liabilities of the asset, the IRU is treated as operating lease. is remeasured if there is a modification, a change in the lease term, a change in the lease payments o. Inventories (e.g., changes to future payments resulting from a change in an index or rate used to determine such Inventories are valued at the lower of cost and net lease payments) or a change in the assessment of realizable value. Cost is determined on a weighted an option to purchase the underlying asset. average basis and includes all applicable overheads in bringing the inventories to their present location and The Group recognises the amount of the re- condition. measurement of lease liability due to modification as an adjustment to the right-of-use asset and Net realizable value is the estimated selling price in the statement of profit and loss depending upon the ordinary course of business, less estimated costs to nature of modification. Where the carrying amount make the sale. of the right-of-use asset is reduced to zero and there TELESERVICES LIMITED 171

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) p. Trade Receivables: s. Employee benefits

Trade Receivables are recognized initially at fair value i. Post-employment obligation and subsequently measured at amortised cost using the effective interest method less provision for impairment. The Group has schemes of retirement benefits for provident fund and gratuity q. Trade and Other Payables: 1. Provident fund with respect to employees These amounts represent liabilities for goods and covered with the Government administered services provided to the Group prior to the end of financial fund is a defined contribution scheme. The year which are unpaid. Trade and other payables are contributions to the government administered presented as current liabilities unless payment is not fund are charged to the statement of profit and due within 12 months after the reporting period. They loss for the year when the contributions are due are recognized at their fair value and subsequently for the year as and when employee renders measured at amortised cost using the effective interest services. Also, TTSL makes contributions to method. the Tata Teleservices Provident Fund Trust which is treated as defined benefit plan. TTSL r. Provisions has an obligation to make good the shortfall, if Provisions are recognised when the Group has a any, between the return from the investments present obligation (legal or constructive) as a result of of the trust and the notified interest rate. The a past event, it is probable that an outflow of resources shortfall/excess between the present value embodying economic benefits will be required to settle of fund assets and the present value of the the obligation and a reliable estimate can be made of obligation are determined based on actuarial the amount of the obligation. The expense relating to a valuation obtained at the end of each year provision is presented in the statement of profit and loss as per the Projected Unit Credit Method and net of any reimbursement. accounted accordingly. TTML makes Provident Fund, Superannuation Fund and Employee If the effect of the time value of money is material, State Insurance Scheme contributions which provisions are discounted using a current pre-tax rate are defined contribution plans, for qualifying that reflects, when appropriate, the risks specific to the employees. Under the schemes, TTML is liability. When discounting is used, the increase in the required to contribute a specified percentage provision due to the passage of time is recognised as a of the payroll costs to fund the benefits. finance cost. 2. Gratuity liability as per the Gratuity Act, 1972 Asset Retirement Obligation (“ARO”) is provided for and The Payment of Gratuity (Amendment) Act, arrangements where the Group has a binding obligation 2010, is defined benefit plan and is provided to restore the said location/premises at the end of for on the basis of an actuarial valuation made the period in a condition similar to inception of the at the end of each year as per the Projected arrangement. The restoration and decommissioning Unit Credit Method. The contribution towards costs are provided at the present value of expected costs gratuity is made to Life Insurance Corporation to settle the obligation using estimated cash flows and of India (‘LIC’) and Tata AIA Life Insurance are recognised as part of the cost of the particular asset. Company Limited. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning Re-measurements, comprising of actuarial gains liability. The unwinding of the discount is expensed as and losses and the return on plan assets (excluding incurred and recognised in the statement of profit and amounts included in net interest on the net defined loss as a finance cost. The estimated future costs of benefit liability), are recognised immediately in decommissioning are reviewed annually and adjusted the balance sheet with a corresponding charge or as appropriate. Changes in the estimated future costs credit to other comprehensive income in the period or in the discount rate applied are added to or deducted in which they occur. Remeasurements are not from the cost of the asset. reclassified to profit or loss in subsequent periods. 172 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Net interest is calculated by applying the discount Fair value is the price that would be received to sell an rate to the net defined benefit liability or asset. The asset or paid to transfer a liability in an orderly transaction Group recognises the following changes in the net between market participants at the measurement date. defined benefit obligation as an expense in the The fair value measurement is based on the presumption statement of profit and loss: that the transaction to sell the asset or transfer the liability takes place either: • Service costs comprising current service costs; and • In the principal market for the asset or liability, or

• Net interest expense or income • In the absence of a principal market, in the most advantageous market for the asset or liability. Actuarial gains/losses are immediately taken to the statement of Other Comprehensive Income and are The principal or the most advantageous market must be not deferred. accessible by the Group.

ii. Short-term and other long-term employee The fair value of an asset or a liability is measured using benefits the assumptions that market participants would use when pricing the asset or liability, assuming that market A liability is recognised for benefits accruing to participants act in their economic best interest. employees in respect of wages and salaries and annual leave in the period the related service A fair value measurement of a non-financial asset takes is rendered at the undiscounted amount of the into account a market participant’s ability to generate benefits expected to be paid in exchange for that economic benefits by using the asset in its highest and service. best use or by selling it to another market participant that would use the asset in its highest and best use. Liabilities recognised in respect of short- term employee benefits are measured at the The Group uses valuation techniques that are appropriate undiscounted amount of the benefits expected to in the circumstances and for which sufficient data are be paid in exchange for the related service. available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of Liabilities recognised in respect of other long- unobservable inputs. term employee benefits are measured at the present value of the estimated future cash outflows All assets and liabilities for which fair value is measured expected to be made by the Group in respect of or disclosed in the consolidated financial statements are services provided by employees upto the reporting categorized within the fair value hierarchy, described as date. follows, based on the lowest level input that is significant to the fair value measurement as a whole: iii. Compensated absences Level 1 - Quoted (unadjusted) market prices in active Liability for compensated absences is in accordance markets for identical assets or liabilities with the rules of the Group. Short term compensated absences are provided based on estimates. Long Level 2 - Valuation techniques for which the lowest level term compensated absences are provided based input that is significant to the fair value measurement is on actuarial valuation obtained at the end of each directly or indirectly observable year as per the Projected Unit Credit Method. Level 3 - Valuation techniques for which the lowest level t. Fair value measurement input that is significant to the fair value measurement is unobservable The Group measures financial instruments such as derivatives and certain investments, at fair value at each For assets and liabilities that are recognised in the balance sheet date. balance sheet on a recurring basis, the Group determines TELESERVICES LIMITED 173

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

whether transfers have occurred between levels in the A financial asset that meets the following two hierarchy by re-assessing categorization (based on conditions is measured at amortized cost (net of the lowest level input that is significant to the fair value any write down for impairment) unless the asset is measurement as a whole) at the end of each reporting designated at fair value through profit or loss under period. the fair value option

For the purpose of fair value disclosures, the Group • Business model test has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset The objective of the Group’s business model is to or liability and the level of the fair value hierarchy as hold the financial asset to collect the contractual explained above. cash flows (rather than to sell the instrument prior to its contractual maturity to realize its fair value The Group uses valuation techniques that are appropriate changes). in the circumstances and for which sufficient data are available to measure its fair value, maximising the use • Cash flow characteristics test of relevant observable inputs and minimizing the use of unobservable inputs. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely u. Financial Instruments payments of principal and interest on the principal amount outstanding. Even if an instrument meets A financial instrument is any contract that gives rise to the two requirements to be measured at amortized a financial asset of one entity and a financial liability or cost or fair value through other comprehensive equity instrument of another entity. income, a financial asset is measured at fair value through profit or loss if doing so eliminates or i) Financial assets significantly reduces a measurement or recognition inconsistency (sometimes referred to as an Initial recognition and measurement ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing All financial assets are recognised initially at the gains and losses on them on different bases. fair value plus, in the case of financial assets not recorded at fair value through profit or loss, All other financial asset is measured at fair value transaction costs that are attributable to the through profit or loss. acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit All equity investments, other than investments in and loss are expensed in profit or loss. subsidiaries, associates and joint ventures, are measured at fair value in the balance sheet, with Subsequent measurement changes in the value recognised in the statement of profit and loss, except for those equity investments For purposes of subsequent measurement financial for which the entity has elected to present changes assets are classified in two broad categories: in the values in ‘other comprehensive income’.

• Financial assets at fair value If an equity investment is not held for trading, an • Financial assets at amortized cost irrevocable election is made at initial recognition to measure it at fair value through other comprehensive Where assets are measured at fair value, gains and income with only dividend income recognised in the losses are either recognised in the statement of statement of profit and loss. Once the selection is profit and loss (i.e. fair value through profit or loss), made, there will be no recycling of the amount from or recognised in other comprehensive income (i.e. other comprehensive income to statement of profit fair value through other comprehensive income). and loss. 174 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

De-recognition Expected credit losses are measured through a loss allowance at an amount equal to: A financial asset (or, where applicable, a part of a financial asset or part of a Group of similar financial • the 12-month expected credit losses (expected assets) is primarily derecognised (i.e. removed from credit losses that result from those default events the Group’s statement of financial position) when: on the financial instrument that are possible within 12 months after the reporting date); or • The rights to receive cash flows from the asset have expired, or • full lifetime expected credit losses (expected credit losses that result from all possible default • The Group has transferred its rights to receive events over the life of the financial instrument). cash flows from the asset or has assumed an obligation to pay the received cash flows in full The Group follows ‘simplified approach’ for without material delay to a third party under a recognition of impairment loss allowance on: ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks • Trade receivables and unbilled revenue; and and rewards of the asset, or (b) the Group has • All lease receivables neither transferred nor retained substantially all the risks and rewards of the asset, but has Under the simplified approach, the Group does not transferred control of the asset track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECL’s at When the Group has transferred its rights to receive each reporting date, right from its initial recognition. cash flows from an asset or has entered into a

pass-through arrangement, it evaluates if and to The Group uses a provision matrix to determine what extent it has retained the risks and rewards impairment loss allowance on the portfolio of trade of ownership. When it has neither transferred nor receivables and unbilled revenue. The provision retained substantially all of the risks and rewards of matrix is based on its historically observed default the asset, nor transferred control of the asset, the rates over the expected life of the trade receivable Group continues to recognise the transferred asset to and is adjusted for forward looking estimates. At the extent of the Group’s continuing involvement. In every reporting date, the historical observed default that case, the Group also recognises an associated rates are updated and changes in the forward- liability. The transferred asset and the associated looking estimates are analysed. liability are measured on a basis that reflects the rights and obligations that the Group has retained. For recognition of impairment loss on other financial assets and risk exposure, the Group determines that Continuing involvement that takes the form of a whether there has been a significant increase in the guarantee over the transferred asset is measured credit risk since initial recognition. If credit risk has at the lower of the original carrying amount of the not increased significantly, 12-month ECL is used to asset and the maximum amount of consideration provide for impairment loss. However, if credit risk that the Group could be required to repay. has increased significantly, lifetime ECL is used. If in a subsequent period, credit quality of the instrument Impairment of financial assets improves such that there is no longer a significant The Group assesses impairment based on expected increase in credit risk since initial recognition, then credit losses (ECL) model to the following: the Group reverts to recognising impairment loss allowance based on 12-month ECL. • Financial assets measured at amortised cost; For assessing increase in credit risk and impairment • Financial assets measured at Fair value loss, the Group combines financial instruments through other comprehensive income on the basis of shared credit risk characteristics (FVTOCI); with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis. TELESERVICES LIMITED 175

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

ii) Financial liabilities or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Initial recognition and measurement statement of profit and loss.

All financial liabilities are recognised initially at fair Preference shares, which are mandatorily value and, in the case of loans and borrowings and redeemable on a specific date, are classified as payables, net of directly attributable transaction liabilities. The dividends on these preference shares costs. are recognised in profit or loss as finance costs.

Subsequent measurement The fair value of the liability portion of an Optionally Convertible Non-Cumulative Preference Shares/ The measurement of financial liabilities depends on Debentures is determined using a market instrument their classification, as described below: rate for an equivalent instrument. This amount is recorded as a liability on an amortised cost basis • Financial liabilities at amortised cost until extinguished on conversion or redemption. The remainder of the proceeds is attributable to the • Financial liabilities at fair value through profit or equity portion of the compound instrument. This is loss include financial liabilities held for trading recognised and included in shareholders’ equity, and financial liabilities designated upon initial net of income tax effects, and not subsequently re- recognition as at fair value through profit or measured. loss. A Compulsory Convertible Non-Cumulative Financial liabilities are classified as held for trading Preference Shares (CCPS) issued by the Group if they are incurred for the purpose of repurchasing is a financial instrument that contains both a in the near term. This category also includes financial liability and an equity component. CCPS derivative financial instruments entered into by also contain a hybrid element which may be an the Group that are not designated as hedging embedded derivative. On the issue of the CCPS, instruments in hedge relationships as defined by the Group fair values the financial liability and Ind AS 109. Separated embedded derivatives are embedded derivative components and account also classified as held for trading unless they are it separately at their fair values. The difference designated as effective hedging instruments. between the transaction price and the fair values is accounted as equity. Subsequently, the financial Gains or losses on liabilities held for trading are liability component is recognized at amortized cost recognised in the statement of profit and loss. while the embedded derivative is recognized at fair value through profit or loss. Certain CCPS issued Financial liabilities designated upon initial by the Group are entirely equity in nature and are recognition at fair value through profit or loss are recognised and included in Shareholder’s Equity. designated at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. Financial guarantee contracts

Loans and borrowings Financial guarantee contracts issued by the Group are those contracts that require a payment to be After initial recognition, interest-bearing loans made to reimburse the holder for a loss it incurs and borrowings are subsequently measured at because the specified debtor fails to make a amortized cost using the Effective Interest Rate payment when due in accordance with the terms (EIR) method. Gains and losses are recognised in of a debt instrument. Financial guarantee contracts the statement of profit and loss when the liabilities are recognised initially as a liability at fair value. are derecognized. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per Amortised cost is calculated by taking into account impairment requirements of Ind AS 109 and the any discount or premium on draw down and fees amount recognised less cumulative amortisation. 176 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

De-recognition The effective portion of the gain or loss on the hedging instrument is recognised in Other Comprehensive A financial liability is derecognised when the Income (OCI) in the cash flow hedge reserve, while obligation under the liability is discharged or any ineffective portion is recognised immediately in cancelled or expires. When an existing financial the statement of profit and loss. liability is replaced by another from the same lender on substantially different terms, or the terms of an If the hedging instrument expires or is sold, existing liability are substantially modified, such terminated or exercised without replacement an exchange or modification is treated as the de- or rollover (as part of the hedging strategy), or if recognition of the original liability and the recognition its designation as a hedge is revoked, or when of a new liability. The difference in the respective the hedge no longer meets the criteria for hedge carrying amounts is recognised in the statement of accounting, any cumulative gain or loss previously profit and loss, unless it is in the nature of equity recognised in OCI remains separately in equity contribution by parent. until the forecast transaction occurs or the foreign currency firm commitment is met. iii) Offsetting of financial instruments The Group classifies a hedge as cash flow hedge Financial assets and financial liabilities are offset when hedging the exposure to variability in cash and the net amount is reported in the balance flows that is either attributable to a particular risk sheet if there is a currently enforceable legal right associated with a recognised asset or liability or a to offset the recognised amounts and there is an highly probable forecast transaction or the foreign intention to settle on a net basis, to realise the currency risk in an unrecognized firm commitment. assets and settle the liabilities simultaneously. The legally enforceable right must be enforceable in v. Non-current assets (or disposal group) held for the normal course of business and in the event of sale default, insolvency or bankruptcy of the Group or the counterparty. Non-current assets (or disposal groups) are classified as held for sale if their carrying amount iv) Derivative financial instruments and hedge will be recovered principally through a sale accounting transaction rather than through continuing use and a sale is considered highly probable. They are The Group enters into derivative contracts to measured at the lower of their carrying amount and hedge foreign currency/price risk on unexecuted fair value less cost to sell, except for assets such as firm commitments and highly probable forecast deferred tax assets, assets arising from employee transactions. Such derivative financial instruments benefit, financial assets and contractual right under are initially recognised at fair value on the date on insurance contract which are specifically exempt which a derivative contract is entered into and are from this requirement. subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value An impairment loss is recognized for any initial or is positive and as financial liabilities when the fair subsequent write-down of the asset (or disposal group) value is negative. to fair value less costs to sell. A gain is recognized for any subsequent increase in fair value less costs to sell Any gains or losses arising from changes in of an asset (or disposal group), but not in excess of the the fair value of derivatives are taken directly to cumulative impairment loss previously recognised. A statement of profit and loss, except for the effective gain or loss not previously recognised by the date of portion of cash flow hedges, which is recognised the sale of a noncurrent asset (or disposal group) is in other comprehensive income and presented recognised at the date of de-recognition. as a separate component of equity which is later reclassified to statement of profit and loss when the Non-current assets (including those that are part of hedge item affects profit or loss. a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest TELESERVICES LIMITED 177

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

and other expenses attributable to the liabilities of a face of the statement of profit and loss. The Group disposal group classified as held for sale continue measures EBITDA on the basis of profit/ (loss) from to be recognised. continuing operations.

Non-current assets classified as held for sale and aa. Contingent Liabilities the assets of a disposal group classified as held for sale are presented separately from the other assets A contingent liability is a possible obligation that arises in the balance sheet. The liabilities of a disposal from past events whose existence will be confirmed by the group classified as held for sale are presented occurrence or non-occurrence of one or more uncertain separately from other liabilities in the balance sheet. future events beyond the control of the Group or a present obligation that is not recognized because it is not probable w. Cash and cash equivalents that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare Cash and cash equivalents in the balance sheet cases where there is a liability that cannot be recognized comprise cash at banks and on hand and short-term because it cannot be measured reliably. The Group deposits with an original maturity of three months or does not recognize a contingent liability but discloses its less, which are subject to insignificant risk of changes existence in the consolidated financial statements. in value. For the purpose of the statement of cash flows, ab. Onerous Contracts cash and cash equivalents consist of cash and short- term deposits, as defined above, net of outstanding bank An onerous contract is a contract in which the overdrafts (including cash credit) as they are considered unavoidable costs of meeting the obligations under the an integral part of the Group’s cash management. contract exceed the economic benefits expected to be received under it. x. Loss per share ac. Exceptional Items Basic loss per share is calculated by dividing the net loss for the year attributable to equity shareholders by the When items of income or expense are of such nature, weighted average number of equity shares outstanding size and incidence that their disclosure is necessary to during the year. For the purpose of calculating diluted explain the performance of the Group for the year, the earnings per share, the net profit or loss for the year Group makes a disclosure of the nature and amount of attributable to equity shareholders and the weighted such items separately under the head “exceptional items.” average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity ad. Contributed equity shares. Equity shares are classified as equity. Incremental costs y. Segment reporting directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. The Group’s chief operating decision makers look at the ae. New and amended standards adopted by the Group financials and the Group as a whole without segregating into any components for the purpose of allocating The Group has applied the following standards and resources and assessing performance. Accordingly, the amendments for the first time for their annual reporting Group has not identified any operating segments to be period commencing April 1, 2019. reported. 1. Ind AS 116, Leases z. Measurement of Earnings/Loss Before Interest, Tax, 2. Amendment to Ind AS 12 Income Taxes Depreciation and Amortization (EBITDA/ LBITDA) 3. Amendment to Ind AS 19 Employee Benefits 4. Amendment to Ind AS 23 Borrowing Costs The Group has elected to present earnings before 5. Amendment to Ind AS 28 Investments in Associate finance cost, finance income, profit on sale of current and Joint Ventures investments, exceptional items and depreciation and 6. Amendment to Ind AS 109 Financial Instruments amortization (EBITDA) as a separate line item on the 178 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

The Group had to change its accounting policies as a ii) Useful lives of property, plant and equipment result of adopting Ind AS 116. This is disclosed in note 33. The other amendments listed above did not have The Group reviews the useful life of property, any impact on the amounts recognised in prior periods plant and equipment at the end of each reporting and are not expected to significantly affect the current or period. This reassessment may result in change in future periods. depreciation expense in future periods. af. Standards issued but Not yet effective iii) Expected Credit Loss on Trade Receivables and Unbilled Revenue Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the existing standards. Trade receivables do not carry any interest and are There is no such notification which would have been stated at their nominal value as reduced by provision applicable from April 1, 2020. for impairment. The Group uses a provision matrix to 2.4 Significant accounting estimates and assumptions determine impairment loss allowance on the portfolio of trade receivables and unbilled revenue. The provision The estimates and judgements used in the preparation matrix is based on its historically observed default rates of the said consolidated financial statements are over the expected life of the trade receivable and is continuously evaluated by the Group, and are based on adjusted for forward looking estimates. Individual trade historical experience and various other assumptions and receivables are written off when management deems factors (including expectations of future events), that them not to be collectible (Refer note 9). may have a financial impact on the Group and that are believed to be reasonable under existing circumstances. iv) Contingent Liabilities and provisions The estimates and underlying assumptions are reviewed The contingent liability is a possible obligation that on an ongoing basis. Revisions to accounting estimates arises from past events whose existence will be are recognized in the period in which the estimate is confirmed by the occurrence or non-occurrence of one revised if the revision affects only that period, or in the or more uncertain future events beyond the control period of the revision and future periods if the revision of the Group. The Group evaluates the obligation affects both current and future periods through Probable, Possible or Remote model (‘PPR’). In making the evaluation for PPR, the Group take In the following areas the management of the Group has into consideration the Industry perspective, legal made critical judgements and estimates: and technical view, availability of documentation/ agreements, interpretation of the matter, independent i) Impairment assessment of Property, Plant and opinion from professionals (specific matters) etc. Equipment which can vary based on subsequent events. The Group provides the liability in the books for probable An impairment exists when the carrying value of an cases, while possible cases are shown as Contingent asset or cash generating unit (‘CGU’) exceeds its Liability. The remote cases are not disclosed in recoverable amount. Recoverable amount is the the consolidated financial statements. Contingent higher of its fair value less costs to sell and its value assets are neither recognised nor disclosed in the in use. The value in use calculation is based on a consolidated financial statements. discounted cash flow model. In calculating the value in use, certain assumptions are required to be made v) Provision for foreseeable loss on long term contracts in respect of highly uncertain m a t t e r s , including management’s expectations of growth in Provision for foreseeable losses on long term EBITDA, long term growth rates; and the selection of contracts is primarily on account of various contracts discount rates to reflect the risks involved. with IP vendors which became onerous due to closure of IP sites before the agreed lock in period. An onerous Also, Judgement is involved in determining the contract is a contract in which the unavoidable costs CGU and impairment testing. of meeting the obligations under the contract exceed the economic benefit expected to be received under it. TELESERVICES LIMITED 179

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

vi) Going concern measurement of right-of-use assets and liabilities. The Group uses significant judgement in assessing The Group prepares the consolidated financial the lease term and the applicable discount rate. statement on a Going Concern basis in view of financial The Group determines the lease term as the non- support from promoter company and assuming cancellable period of a lease, together with both the cash flows generation from the continuation of periods covered by an option to extend the lease operations, outflow for capital expenditure and the if the Group is reasonably certain to exercise repayment obligations of debt and interest for the next that option; and periods covered by an option to twelve months. In calculating the cash flow generation terminate the lease if the Group is reasonably certain from the business, certain assumptions are required not to exercise that option. . In assessing whether to be made in respect of highly uncertain matters, the Group is reasonably certain to exercise an option including management’s expectations of earnings, to extend a lease, or not to exercise an option to interest cost and capex outflow to reflect the risks terminate a lease, it considers all relevant facts and involved. The Group also make certain assumptions circumstances that create an economic incentive for regarding the continuation of credit from lenders. the Group to exercise the option to extend the lease, or not to exercise the option to terminate the lease. vii) Defined benefit plans (gratuity benefits) The Group revises the lease term if there is a change in the relevant facts and circumstances. Estimates The cost of the defined benefit gratuity plan and the are required to determine the appropriate discount present value of the gratuity obligation are determined rate used to measure lease liabilities. using actuarial valuations. An actuarial valuation involves making various assumptions that may differ The Group cannot readily determine the interest rate from actual developments in the future. These include implicit in the lease, therefore, it uses its incremental the determination of the discount rate, future salary borrowing rate (IBR) to measure lease liabilities. increases and mortality rates. Due to the complexities The IBR is the rate of interest that the Group would involved in the valuation and its long-term nature, have to pay to borrow over a similar term, and with a defined benefit obligation is highly sensitive to a similar security, the funds necessary to obtain an changes in these assumptions. All assumptions are asset of a similar value to the right-of-use asset in a reviewed at each reporting date {Refer note 32(e)}. similar economic environment.

viii) Fair value measurement and valuation x) Classification and Measurement of Assets Held for Sale Some of Group’s assets and liabilities are measured at fair value for financial reporting purposes. In estimating TTSL and TTML had entered into a Scheme of the fair value of an asset and liabilities, the Group uses Arrangement for transfer of its Consumer Mobile market – observable data to the extent it is available. Business (CMB) to Bharti. Pending requisite approvals as at March 31, 2019, the Group had Where Level 1 inputs are not available, the Group classified the assets and liabilities relating to CMB engages third party qualified valuers to perform the (disposal group) as ‘held for sale’ in accordance valuation. with Ind AS 105 – ‘Non-Current Assets Held for Sale Information about the valuation techniques and and discontinued operations’ in the consolidated inputs used in determining the fair value of various financial statements. assets and liabilities are disclosed in note 2.3(t) and 38. The application of Ind AS 105 involves significant management judgements in respect of identification ix) Leases of assets and liabilities related to the disposal group and assessment/ re-assessment of fair value of The Group evaluates if an arrangement qualifies assets and liabilities included in the disposal group to be a lease as per the requirements of Ind AS as at reporting date. 116. The application of Ind AS 116 requires Group to make judgements and estimates that affect the 180 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

3. Property, plant and equipment (PPE)

Gross Block Assets held for Additions As at Asset Group As at sale (Incl. other during the Disposal March 31, April 01, 2019 adjustments) year 2020 (Refer note 1.2) Freehold land 11.29 - - - 11.29 Buildings 61.39 - - - 61.39 Plant and equipments 7,118.07 383.78 (28.83) 17.14 7,490.16 Furniture and Fixtures 85.52 - (1.59) - 83.93 Vehicles 0.22 0.02 - - 0.24 Leasehold Improvements 51.97 - (4.35) - 47.62 Total 7,328.46 383.80 (34.77) 17.14 7,694.63

Accumulated Depreciation Net Block Assets held Impairment loss for sale As at As at As at Asset Group For the recognised in (Incl. other April 01, Disposal March 31, March 31, year statement of adjustments) 2019 2020 2020 Profit and loss (Refer note 1.2) Freehold land ------11.29 Buildings 3.99 1.12 - - - 5.11 56.28 Plant and 4,983.65 474.66 2.73 (28.33) 0.46 5,433.17 2,056.99 equipments Furniture and 85.14 0.23 - (1.59) - 83.78 0.15 Fixtures Vehicles 0.21 - - - - 0.21 0.03 Leasehold 33.29 9.07 - (4.35) - 38.01 9.61 Improvements Total 5,106.28 485.08 2.73 (34.27) 0.46 5,560.28 2,134.35

Gross Block Assets held for sale Additions As at Asset Group As at (Incl. other during the Disposals March 31, April 1, 2018 adjustments) year 2019 (Refer note 1.2) Freehold land 283.89 - - (272.60) 11.29 Buildings 107.35 0.22 - (46.18) 61.39 Plant and equipments 7,920.18 319.08 (194.14) (927.05) 7,118.07 Furniture and Fixtures 120.64 0.07 (25.46) (9.73) 85.52 Vehicles 0.22 - - - 0.22 Leashold Improvements 69.36 0.18 (8.91) (8.66) 51.97 Total 8,501.64 319.55 (228.51) (1,264.22) 7,328.46

TELESERVICES LIMITED 181

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Accumulated Depreciation Net Block Assets held Impairment for sale As at loss As at As at Asset Group For the (Incl. other April 1, recognised in Disposals March March 31, year adjustments) 2018 statement of 31, 2019 2019 (Refer note Profit and loss 1.2) Freehold land - - 223.09 - (223.09) - 11.29 Buildings 12.99 0.78 29.79 - (39.58) 3.98 57.41 Plant and equipments 5,268.46 552.81 336.30 (190.79) (983.13) 4,983.65 2,134.42 Furniture and Fixtures 119.47 0.70 0.07 (25.42) (9.68) 85.14 0.38 Vehicles 0.21 - - - - 0.21 0.01 Leashold 36.31 13.38 0.51 (8.62) (8.29) 33.29 18.68 Improvements Total 5,437.44 567.67 589.76 (224.83) (1,263.77) 5,106.27 2,222.19 a) For details of assets pledged refer note 17 b) Refer to note 34 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

4. Right of Use Assets

Gross Block Asset Group As at Ind AS 116 Addition during As at Disposal April 01, 2019 adjustment the year March 31, 2020 Indefeasible Rights of Use (‘IRU’) * 639.22 - 36.88 - 676.10 Network Sites - 602.56 144.62 (97.13) 650.05 Buildings - 64.14 - (0.01) 64.13 Total 639.22 666.70 181.50 (97.14) 1,390.28

Accumulated Depreciation Net Block As at As at As at Asset Group Ind AS 116 For the April 01, Disposal March 31, March 31, adjustment year 2019 2020 2020” Indefeasible Rights of Use (‘IRU’) * 468.76 - 33.29 - 502.05 174.05 Network Sites - - 140.39 (7.03) 133.36 516.69 Buildings - - 14.28 - 14.28 49.85 Total 468.76 - 187.96 (7.03) 649.69 740.59

*As per IND AS 116, ‘IRU’ which was previously considered under Intangible assets is now considered as a part of ROU assets. (Refer note 33) 182 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

5. CAPITAL WORK IN PROGRESS

As at As at Asset Group March 31, 2020 March 31, 2019 Assets Under Construction 4.79 33.15 Other Capital Inventory* 86.05 61.25 Total 90.84 94.40

*Other capital inventory mainly comprises of network equipment

6. Investment Property

Gross Block Asset Group As at Addition As at April 01, 2019 during the year March 31, 2020 Building 32.19 - 32.19 Total 32.19 - 32.19

Accumulated Depreciation Net Block Asset Group As at As at As at For the year April 01, 2019 March 31, 2020 March 31, 2020 Building 10.89 0.50 11.39 20.80 Total 10.89 0.50 11.39 20.80

Gross Block Asset Group As at Addition As at April 1, 2018 during the year March 31, 2019 Buildings 32.19 - 32.19 Total 32.19 - 32.19

Accumulated Depreciation Net Block Asset Group As at As at As at For the year April 1, 2018 March 31, 2019 March 31, 2019 Buildings 10.39 0.50 10.89 21.30 Total 10.39 0.50 10.89 21.30 a. Information regarding Income and expenditure of investment property

March 31, March 31, 2020 2019 Rental income derived from investment properties 9.21 7.63 Direct operating expenses (including repairs and maintenance) generating rental (5.43) (4.76) income Profit arising from investment properties before depreciation and indirect expenses 3.78 2.87 Less : Depreciation (0.50) (0.50) Profit arising from investment properties before indirect expenses 3.28 2.37 TELESERVICES LIMITED 183

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) b. Fair value of investment • Capitalized income projection based upon a property’s estimated net market income, and a The fair value of investment property as on March 31, capitalization rate derived from an analysis of 2020 is Rs.176.21 crores (March 31, 2019- Rs.164.6 market evidence. crores). The Group conducts independent valuation of properties at least annually. The best evidence of fair The fair value of investment properties have been value is current prices in an active market for similar determined by certified valuers. The main inputs used properties. Where such information is not available, the are location and locality, facilities and amenities, quality Group considers information from a variety of sources of construction, residual life of building, business including: potential, supply of demand, local nearby enquiry and market feedback of investigation. All resulting fair value • Current Prices in an active market for properties of estimates for investment properties are included in Level different nature or recent prices of similar properties 3. in less active market, adjusted to reflect those differences.

• Discounted cash flow projection based on reliable estimates of future cash flows.

7. INTANGIBLE ASSETS

Gross Block Assets held Addition Asset Group As at for sale As at during the Disposal April 01, 2019 (Incl. other March 31, 2020 year adjustments) * License Entry fees - - - 25.00 25.00 Computer Software 29.54 0.10 - - 29.64 Total 29.54 0.10 - 25.00 54.64

Accumulated Amortisation Net Block Impairment Assets held loss As at for sale As at As at Asset Group For the recognised April 01, Disposal (Incl. other March 31, March 31, year in statement 2019 adjustments) 2020 2020 of profit and * loss License Entry fees - 3.09 - (3.31) 16.85 16.63 8.37 Computer 29.51 0.07 - - - 29.58 0.06 Software Total 29.51 3.16 - (3.31) 16.85 46.21 8.43

*Reclassified from Asset classified as held for sale

184 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Gross Block Assets held Addition Asset Group As at for sale As at during the Disposal April 1, 2018 (incl. other March 31, 2019 year adjustments) Indefeasible Right to Use (IRU) 638.61 0.61 - - 639.22 Computer Software 40.86 0.01 (0.01) (11.32) 29.54 Total 679.47 0.62 (0.01) (11.32) 668.76

Accumulated Amortisation Net Block Assets held As at As at As at Asset Group For the for sale April 1, Disposal March 31, March 31, year (incl. other 2018 2019 2019 adjustments) Indefeasible Right to Use (IRU) 430.32 38.44 - - 468.76 170.46 Computer Software 40.72 0.12 (0.01) (11.32) 29.51 0.03 Total 471.04 38.56 (0.01) (11.32) 498.27 170.49

The opening balance of gross block and accumulated depreciation of intangible assets as at April 1, 2019 has been restated due to change in accounting policy. As per IND AS 116, ‘IRU’ which was previously considered under Intangibles is now considered as a part of ROU assets (Refer note 33).

8. Investments

As at As at March 31, March 31, 2020 2019 Non - Current Investments (Investment at fair value through profit and loss) (Nos. in crores) Andhra Pradesh Gas Power Corporation Limited (Unquoted) 4.06 4.06 0.03 (March 31, 2019 - 0.03) Equity Shares of Rs.10 each fully paid up Renew Wind Energy (Karnataka) Private Limited (Unquoted) 0.05 0.05 0.0005 (March 31, 2019 - 0.0005) Equity Shares of Rs.100 each fully paid up Green Infra Wind Farms Limited (Unquoted) 0.03 0.03 0.003 (March 31, 2019 - 0.003) Equity Shares of Rs.10 each fully paid up Total (a) 4.14 4.14 Non - Current Investments (Investment at amortised cost) Bharti Airtel Limited (Quoted) 16.27 - 0.05 (March 31, 2019 - Nil) Equity Shares of Rs. 5 each fully paid up Bharti Airtel Limited (Unquoted) - - 0.000001 (March 31, 2019 -- Nil) Preference Shares of Rs.100 each fully paid up* Total (b) 16.27 - Total (a+b) 20.41 4.14

* figures are below rounding off norm adopted by the Group TELESERVICES LIMITED 185

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

As at As at March 31, March 31, 2020 2019 Current Investments Investments in Mutual Fund (Quoted) (measured at FVPTL) 3.14 1,206.40 3.14 1,206.40

As at As at March 31, March 31, 2020 2019 Aggregate book value of quoted investment – at cost 19.04 1,197.11 Aggregate book value of quoted investment – at market value 23.81 1,206.40

March 31, 2020 March 31, 2019 Mutual Fund Amount Amount Units (in Mn) Units (in Mn) (In Crs) (In Crs) HDFC Liquid Fund - Direct Plan - Growth - - 0.73 279.83 Tata Liquid Fund Direct Plan- Growth 0.01 3.14 2.79 817.03 ICICI Prudential Liquid - Growth - - 4.00 109.54 Total 0.01 3.14 7.52 1,206.40 a) The investment in Andhra Pradesh Gas Power 9. Trade receivables Corporation Limited (APGPCL) entitles the Group to tariff benefit on 1 MW of power drawn from APGPCL. As at As at March 31, March 31, b) The investment in Green Infra Wind Farms Limited 2020 2019 (GIWFL) entitles the Group to tariff benefit on power Considered Good - - - drawn from GIWFL. Secured Considered Good - 333.13 359.39 c) The investment in Renew Wind Energy (Karnataka) Unsecured Private Limited (RWEPL) entitles the Group to procure Having significant - - 2.4 MW of power for its own use. increase in credit risk Credit impaired 139.46 208.44 d) Pursuant to the Scheme of Arrangement to transfer the Less: Loss allowance (192.83) (267.07) CMB undertaking of TTML to BAL, (TTML Scheme), Less: Assets classified as - (92.29) TTSL received the following as consideration: held for sale 279.76 208.47 • 1 BAL equity share for every 2014 equity shares held in TTML; and No trade or other receivable are due from directors or other officers of the Group either severally or jointly with • 10 BAL Redeemable Preference Shares (RPS) to any other person. all (and not each) TTML RPS holder Nor any trade or other receivable are due from firms or The said consideration received under TTML Scheme private companies respectively in which any director is a has been measured on initial recognition at Rs.16.27 partner, a director or a member. crores, being the fair value of BAL shares as on the Effective date of TTML Scheme (July 1, 2019). 186 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Trade receivables are non-interest bearing and are 10. Cash and Cash equivalents generally on terms of 18 to 90 days. As at As at The Group has used a practical expedient by computing March 31, March 31, the expected credit loss allowance for trade receivables 2020 2019 based on a provision matrix. The provision matrix Cash on hand - 0.01 takes into account historical credit loss experience and adjusted for forward-looking information. The expected Cheques on hand 0.31 3.01 credit loss allowance is based on the ageing of the days Balance with Banks: the receivables are due and the rates as given in the i) in Current Accounts 200.05 256.80 provision matrix. ii) On Escrow Accounts 0.03 - ii) in Fixed Deposit with - 450.22 Ageing of Receivables original maturity less Particulars As at As at than three months March 31, March 31, iv) in Cash credit accounts 75.60 - 2020 2019 275.99 710.04 Not due 63.43 52.33 Fixed deposits with banks earn interest at floating rates 0-90 days past due 110.69 180.22 based on daily bank deposit rates. Short-term deposits 91-180 days past due 105.14 89.30 are made for varying periods of time between seven > 180 days 193.33 245.98 days and three months, depending on the immediate Total 472.59 567.83 cash requirements of the Group, and earn interest at the respective short-term deposit rates. Ageing of expected credit loss allowance Particulars As at As at Balance in escrow account can be used only for the March 31, March 31, settlement of customer balance of MMP as per Reserve 2020 2019 Bank of India guidelines on pre-paid payment instruments. Not due - - 11. Bank balances other than above 0-90 days past due 21.52 38.60 91-180 days past due 10.16 54.95 As at As at > 180 days 161.15 173.52 March 31, March 31, Total 192.83 267.07 2020 2019 Deposit with original 0.10 0.03 Movement in expected credit loss allowance maturity more than 12 Particulars As at As at months and maturing March 31, March 31, within 12 months 2020 2019 Deposit with original 32.05 30.16 Balance at the beginning 267.07 384.76 maturity more than 3 of the year months but less than 12 Movement in expected 1.04 (108.05) months credit loss allowance Bank deposits in escrow 3.33 3.80 on trade receivables accounts* calculated at lifetime 35.48 33.99 expected credit losses Transferred to Bharti (80.60) - The Group has pledged short-term deposits of Rs.32.08 (Refer note 1.2) crores as on March 31, 2020, (Rs.29.96 crores as on March 31, 2019) to fulfil collateral requirements. Other movement 5.32 (9.64) Balance at the end of 192.83 267.07 *These deposits can be used only for the settlement of the year customer balance of MMP as per Reserve Bank of India guidelines on pre-paid payment instruments. TELESERVICES LIMITED 187

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

12. Loans and other financial assets

Non - Current Portion Current Portion As at As at As at As at March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Loans Considered good – Secured - - - - Considered good – Unsecured - - 798.91 - Having significant increase in credit risk - - - - Credit impaired - - - - Less: Loss allowance ------798.91 - Other Financial Assets Premises and other deposits (at amortized cost) Considered good – Secured - - - - Considered good – Unsecured 40.00 35.80 23.06 18.82 Having significant increase in credit risk - - - - Credit impaired 16.47 14.58 2.97 2.82 Less: Loss allowance (16.47) (14.58) (2.97) (2.82) Unsecured, considered good Unbilled revenue - - 192.91 267.32 Fixed deposit with maturity more than 12 months 0.28 0.36 - - Interest receivable - - 0.08 0.11 Insurance claims receivable 1.87 - 0.19 - Other receivables from third party - - 57.33 - 42.15 36.16 273.57 286.25 42.15 36.16 1,072.48 286.25 a. There are no amounts due by directors of the Group or by firms or private companies respectively in which any director is a partner or a director or a member. b. Security deposits represent amount paid for lease of premises and network sites and others. 188 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

13. Other assets

Non - Current Portion Current Portion As at As at As at As at March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Unsecured, considered good: Capital advances 3.58 8.52 - - Prepaid expenses 73.56 94.59 35.53 35.41 Advance to suppliers - - 22.93 4.82 Balance with government authorities 307.29 483.37 540.56 215.53 Advances to employees - - 0.42 0.46 Advance paid under dispute* {net of provision for 496.28 201.86 1.54 1.64 contingencies Rs.7.23 crores (March 31, 2019 Rs.4.01 crores)} Other Advances - - 0.10 0.30 Unsecured, considered doubtful: Capital advances - 3.17 - - Advance to suppliers - - 7.71 10.89 Other advances - - - 0.13 Advance paid under dispute (net of provision) - - 0.05 0.05 Balance with government authorities 0.15 0.15 19.04 19.30 Less : Provision for doubtful advances (0.15) (3.32) (26.80) (30.37) 880.71 788.34 601.08 258.16

* includes amounts paid towards indemnification (Refer note 1.2)

14. Equity share capital

As at As at March 31, March 31, 2020 2019 Authorised Share Capital (Nos. in crores) 5,263.00 (March 31, 2019 - 3,763.00) Equity Shares of Rs.10 each 52,630 37,630 63.00 (March 31, 2019 - 63.00) Compulsory Convertible Non-Cumulative Preference 6,300 6,300 Shares (CCPS) of Rs.100 each 462.20 (March 31, 2019 - 462.20 preference shares of Rs.100 each 46,220 46,220 Total Authorised Share Capital 1,05,150 90,150 Issued, Subscribed and Fully Paid Equity capital (Nos. in crores) 670.45 (March 31, 2019 - 577.5) Equity Shares of Rs.10 each, fully paid up 6,704.51 5,775.03 6,704.51 5,775.03

TTSL had its Annual General Meeting on September 27, 2019, where the shareholders approved increase in Authorised Share Capital by creating additional 1,500 crores Equity shares of Rs.10 each aggregating to Rs.15,000 crores, consequent to which the authorised share capital of TTSL is Rs.105,150 crores. TELESERVICES LIMITED 189

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) a. Reconciliation of Shares Outstanding at the beginning and at the end of the year

As at As at March 31, 2020 March 31, 2019 No. Crores Rs in Crores No. Crores Rs in Crores Equity Shares At the beginning of the year 577.50 5,775.03 577.50 5,775.03 Issued during the year 92.95 929.48 - - Outstanding at the end of the year 670.45 6,704.51 577.50 5,775.03 On August 7, 2019, TTSL issued 92.95 crores Equity Shares of Rs.10 each to Tata Sons Private Limited by way of rights issue. b. Details of shareholding holding more than 5% shares in TTSL

As at As at March 31, 2020 March 31, 2019 No. Crores % holding in No. Crores % holding in the class the class Equity shares of Rs 10 each fully paid Tata Sons Private Limited (TSPL) 499.49 74.50% 406.54 70.40% Tata Communication Limited 59.82 8.92% 59.82 10.36% Aranda Investments (Mauritius) Pte.Limited 30.39 4.53% 30.39 5.26% Tata Industries Limited 33.85 5.05% 33.85 5.86%

On October 31, 2017, NTT DOCOMO Inc. (DOCOMO) has transferred its entire shareholding of 124.90 crores shares in TTSL to Tata Sons Private Limited (TSPL) and its designated nominees and accordingly, DOCOMO has ceased to hold any shares in TTSL and as a result of which TTSL became a direct subsidiary of TSPL. c. Terms / rights attached to equity shares

The Company has one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. d. The Company during the preceding 5 years:

I. has not allotted equity shares pursuant to contracts without payment received in cash. II. has not issued equity shares by way of bonus shares. III. has not bought back any equity shares. 190 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) e. Shares held by holding company and/or their subsidiaries/associates

Equity Shares (All nos. in crores)

As at As at March 31, 2020 March 31, 2019 Tata Sons Private Limited, the holding company 499.49 (March 31, 2019 - 406.54) Equity shares of Rs.10 each fully paid 4,994.87 4,065.39 Tata Communication Limited, Subsidiary of Tata Sons Private Limited 59.82 (March 31, 2019 - 59.82) Equity shares of Rs.10 each fully paid 598.21 598.21 The Tata Power Company Limited, Associate of Tata Sons Private Limited 1.66 (March 31, 2019 - 1.66) Equity shares of Rs.10 each fully paid 16.62 16.62 Tata Industries Limited, Joint venture of Tata Sons Private Limited 33.85 (March 31, 2019 - 33.85) Equity shares of Rs.10 each fully paid 338.51 338.51 Tata Steel Limited, Associate of Tata Sons Private Limited 8.74 (March 31, 2019 - 8.74) Equity shares of Rs.10 each fully paid 87.43 87.43 Tata Capital Financial Services Limited, Subsidiary of Tata Sons Private Limited 6.23 (March 31, 2019 - 6.23) Equity shares of Rs.10 each fully paid 62.25 62.25 Tata Chemicals Limited, Associate of Tata Sons Private Limited 0.13 (March 31, 2019 - 0.13) Equity shares of Rs.10 each fully paid 1.29 1.29 Tata Investment Corporation Limited, Subsidiary of Tata Sons Private Limited 0.57 (March 31, 2019 - 0.57) Equity shares of Rs.10 each fully paid 5.68 5.68 6,104.86 5,175.38 f. Reconciliation of the Compound Financial Instrument

As at As at March 31, 2020 March 31, 2019 No. Crores Rs in Crores No. Crores Rs in Crores a) 0.1% Compulsory Convertible Non- Cumulative Preference Shares* At the beginning of the year 62.24 6,224.49 62.24 6,224.49 Add: Issued during the year - - - - Outstanding at the end of the year 62.24 6,224.49 62.24 6,224.49 b) 0.1% Optionally Convertible Non- Cumulative Preference Shares* At the beginning of the year 23.00 2,300.00 23.00 2,300.00 Add: Issued during the year - - - - Outstanding at the end of the year 23.00 2,300.00 23.00 2,300.00 c) 0.1% Optionally Convertible Debentures* At the beginning of the year 117.41 11,740.64 125.00 12,500.00 Add: Issued during the year 20.00 2,000.00 151.61 15,160.64 Less: Converted during the year (86.96) (8,696.28) (159.20) (15,920.00) Outstanding at the end of the year 50.45 5,044.36 117.41 11,740.64

*Refer note 16 for terms of issue and conversion TELESERVICES LIMITED 191

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

15. Instruments entirely equity in nature

As at As at March 31, 2020 March 31, 2019 No. Crores Rs in Crores No. Crores Rs in Crores Opening balance 159.20 15,920.00 - - Add: Issued during the year 0.1% compulsory convertible non- cumulative 136.96 13,696.28 159.20 15,920.00 preference shares of Rs.100 each Closing balance 296.16 29,616.28 159.20 15,920.00 a. Issued, Subscribed and Fully Paid compulsory convertible non-cumulative preference shares (Nos. in crores)

As at As at March 31, 2020 March 31, 2019 296.16 (March 31, 2019 - 159.20) Compulsory Convertible Non-cumulative 29,616.28 15,920.00 Preference Shares of Rs.100 each, fully paid up 29,616.28 15,920.00 b. Details of shareholding holding more than 5% shares in TTSL

As at As at March 31, 2020 March 31, 2019 No. Crores % holding in No. Crores % holding in the class the class Compulsory Convertible Non-cumulative Preference Shares of Rs 100 each, fully paid up Tata Sons Private Limited 296.16 100% 159.20 100% c. Shares held by holding company

Compulsory Convertible Non-Cumulative Preference Shares (All nos. in crores)

As at As at March 31, 2020 March 31, 2019 Tata Sons Private Limited, the holding company 296.16 (March 31, 2019 - 159.20) Compulsory Convertible Non-Cumulative 29,616.28 15,920.00 Preference Shares of Rs.100 each, fully paid up 29,616.28 15,920.00

Terms/Rights attached to Compulsory Convertible Non-Cumulative Preference Shares i) TTSL has issued 0.1% Optionally Convertible Debentures (‘OCD’) – series II, aggregating 276.60 crores of Rs.100 each to Tata Sons Private Limited and Panatone finvest limited on various dates between December 22, 2017 and January 10, 2019. For more details on the terms of OCD, refer “Terms of conversion/ redemption of Optionally Convertible Debentures” in Note 16. Pursuant to the contractual arrangement and on request of Tata Sons Private Limited , 159.20 crores OCDs are converted and new 159.20 crores 0.1 % Compulsory Convertible non-cumulative Preference Shares (‘CCPS’) of Rs.100 each were allotted through various tranches during the previous year, which was approved by the 192 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Board of Directors on January 10, 2019 and March 6, Refer “Terms and rights of new CCPS issued” mentioned 2019. The Company has classified the CCPS allotted below. on conversion of OCD as instruments entirely equity in nature. Terms and rights of CCPS issued:

On June 30, 2019, the Company issued 86.96 crores I. CCPS would be compulsorily converted in to such Compulsory Convertible Non-Cumulative Preference number of equity shares of Rs.10 each, at face value Shares (Series 9-Tranche 3 CCPS) to Tata Sons Private at the option of the CCPS holder at any time after 1 day Limited of Rs 100 each. Pursuant to the contractual from the date of allotment of CCPS but not later than 36 arrangement and on request of Tata Sons Private Limited, months from the date of allotment. 86.96 crores OCDs are converted and new 86.96 crores 0.1 % Compulsory Convertible non-cumulative Preference II. CCPS carry a non-cumulative right to receive dividend Shares (‘CCPS’) of Rs.100 each are allotted. The @ 0.1%. Company has classified the CCPS alloted on conversion as instruments entirely equity in nature. III. The holders of CCPS –

Refer “Terms and rights of new CCPS issued” mentioned a) carry a preferential right vis-à-vis the holders of below. equity shares of the Company with respect to payment of dividend and repayment in case of a ii) On May 18, 2019, the Company issued 9.29 crores winding up or repayment of capital; Compulsory Convertible Non-Cumulative Preference b) would not be entitled to participate in the surplus Shares (Series 8-Tranche 1 CCPS) to Tata Sons Private funds; Limited of Rs 100 each. c) would not be entitled to participate in the surplus On August 7, 2019, the Company issued 40.71 crores assets and profits, on winding up, which may Compulsory Convertible Non-Cumulative Preference remain after the entire capital has been repaid. Shares (Series 8-Tranche 2 CCPS) to Tata Sons Private Limited of Rs 100 each. 16. Other Equity

As at As at March 31, 2020 March 31, 2019 a) Equity component of Compound Financial Instruments Balance as per the last financial statements 6,064.42 5,023.48 Add : Optionally convertible debentures Issued during the year (Refer note 489.77 3,945.26 C below) Add : Equity portion on extension of CCPS (Refer note A below) 732.74 - Less: Optionally convertible debentures converted during the year (Refer (1,690.23) (2,904.32) note C below) Closing Balance 5,596.70 6,064.42 The equity portion of compound financial instruments, is on account of dividend/interest percentage being lower than effective market rate and is recorded in Shareholders equity. b) Securities Premium account Balance as per the last financial statements 12,304.47 13,211.00 Adjustment on account of Equity method of accounting discontinued for - (906.53) investment in associate (ATC) Closing Balance 12,304.47 12,304.47 Securities premium reserve is used to record the premium on shares. The reserve is utilised in accordance with the provisions of the Companies Act , 2013. TELESERVICES LIMITED 193

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

As at As at March 31, 2020 March 31, 2019 c) (Deficit) in the statement of profit and loss Balance as per last financial statements (53,292.19) (51,165.17) Add: Cumulative effect on opening retained earnings on adoption of Ind AS (103.16) - 116 Add: Cumulative effect on opening retained earnings on adoption of Ind AS - (11.63) 115 Add: Adjustment for share in associate (ATC) - (40.44) Add: Loss for the year (11,139.32) (2,317.88) Add: Other comprehensive loss arising from measurement of defined (4.12) (5.52) benefit obligation Add: Adjustment for Non controlling Interest in TTML (574.96) (524.26) Add: Adjustment on account of Equity method of accounting discontinued - 772.71 for investment in associate (ATC) (65,113.75) (53,292.19) Retained earnings are the profits that the Group has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings includes re-measurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available to the Group. d) Cash flow/Cost of hedge reserve Balance as per last financial statements (1.76) - Other comprehensive loss for the year (15.94) (1.76) Closing Balance (17.70) (1.76) The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flow hedge reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss. e) CCPS Application money pending allotment Balance as per last financial statement 929.48 - Add: Received during the year 4,070.52 929.48 CCPS alloted during the year (5,000.00) - Closing Balance - 929.48 f) Capital Reserve on Consolidation* 898.73 898.73 *Capital Reserve arising on business combination of entities under common control (TTML) g) Capital reserve Balance as per last financial statement - (267.00) Loss on dilution of shareholding in associates - 77.32 Adjustment for Assets held for sale - 189.68 Closing Balance - - h) Debenture Redemption reserve Balance as per last financial statement - 20.49 Loss on dilution of shareholding in associates - (5.93) Adjustment for share in associates - 5.63 Adjustment for Assets held for sale - (20.19) Closing Balance - - 194 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

As at As at March 31, 2020 March 31, 2019 i) General Reserves Balance as per last financial statement - - Adjustment for share in associates - 35.02 Adjustment for Assets held for sale - (35.02) Closing Balance - - j) Other Equity Balance as per last financial statement - 67.55 Loss on dilution of shareholding in associates - (19.56) Adjustment for share in associates - 4.50 Adjustment for Assets held for sale - (52.49) Closing Balance - - Total Other Equity (46,331.55) (33,096.85)

A. Terms of conversion of Compulsory Convertible dated March 1, 2019, the period of conversion was extended Non-Cumulative Preference Shares up to September 30, 2019, with an option to CCPS holder for conversion at any time after one day notice. (i) TTSL issued 10.25 crores and 9.95 crores Compulsory Convertible Non-Cumulative Preference Shares (Series Further, during the current year, based on request from 2 CCPS) to Tata Sons Private Limited of Rs 100 each on holder of Series 2 CCPS and approval from the Board March 31, 2015 and May 28, 2015 respectively. Series vide Circular resolution no. 220 dated September 27, 2 CCPS carry a non-cumulative right to receive dividend 2019, the period of conversion has been extended up to @ 0.1%. September 30, 2021, with an option to CCPS holder for conversion at any time after one day notice. Each Series 2 CCPS shall be converted at the option of the investor at any time after 3 months from the date of (ii) On October 19, 2016, TTSL issued 22.01 crores allotment of Series 2 CCPS, but not later than 36 months Compulsory Convertible Non-Cumulative Preference from the date of allotment i.e. March 31, 2018 and May Shares (Series 3 CCPS) to Tata Sons Private Limited 28, 2018. of Rs 100 each. Series 3 CCPS carry a non-cumulative right to receive dividend @ 0.1% p.a. Each Series 2 CCPS shall be compulsorily converted into such number of equity shares at the higher of:- Each Series 3 CCPS shall compulsorily be converted into equity share at the option of the investor at any I. Fair market value determined as on the date of time after 3 months from the date of allotment of Series conversion subject to cap of Rs 19 per equity 3 CCPS but not later than 36 months from the date of shares or allotment i.e. October 19, 2019. II. Rs 10 per equity share (being the face value of shares) Each Series 3 CCPS shall be compulsorily converted into such number of equity shares at the higher of:- Based on request from holder of Series 2 CCPS and approval from the Board vide Circular resolution no. 209 I. Fair market value determined as on the date of dated December 26, 2017, the period of conversion was conversion of shares or extended up to March 31, 2019, with an option to CCPS II. Rs 10 per equity share (being the face value of holder for conversion at any time after one day notice. equity shares)

Further based on request from holder of Series 2 CCPS and During the current year, based on request from holder approval from the Board vide Circular resolution no. 219 of Series 3 CCPS and approval from the Board vide Circular resolution no. 220 dated September 27, 2019, TELESERVICES LIMITED 195

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

the period of conversion has been extended up to The interest cost on CCPS for the year is Rs.349.42 October 18, 2021, with an option to CCPS holder for crores (March 31, 2019 – Rs 212.73 crores). conversion at any time after one day notice. As at March 31, 2020, TTSL has accounted for derivative iii) On April 26, 2017, TTSL issued 20.04 crores Compulsory asset of Rs.5,952.50 crores (March 31, 2019 – Rs Convertible Non-Cumulative Preference Shares (Series 5,940.59 crores) on the CCPS based on the fair market 4 CCPS) to Tata Sons Private Limited of Rs 100 each. valuation as at that date and accounted for the gain on Series 4 CCPS carry a non-cumulative right to receive derivative part of CCPS as Rs.11.91 crores (March 31, dividend @ 0.1% p.a. 2019 – Rs.307.34 crores) in the statement of profit and loss for the year ended March 31, 2020. Each Series 4 CCPS shall compulsorily be converted into equity share at the option of the investor at any B. Terms of conversion/ redemption of Optionally time after 3 months from the date of allotment of Series Convertible Non-Cumulative Preference Shares 4 CCPS but not later than 36 months from the date of allotment i.e. April 26, 2020. On November 7, 2017, TTSL issued 23 crores Optionally Convertible Non-Cumulative Preference Shares – Each Series 4 CCPS shall be compulsorily converted into such number of equity shares at the higher of:- Series I (‘OCPS’) of a face value of Rs.100 each at par to Tata Sons Private Limited. These OCPS carry a non- I. Fair market value determined as on the date of cumulative right to receive dividend @ 0.1% p.a. conversion of shares or II. Rs 10 per equity share (being the face value of Each Series I OCPS shall optionally be converted into equity shares) such number of equity shares at the option of the investor at any time after 3 months from the date of allotment of CCPS (Series 2, Series 3 and Series 4) has been Series I OCPS but not later than 36 months from the considered as compound financial instrument and date of allotment i.e. November 7, 2020. OCPS shall has been separated into three components basis the be redeemed at par, if the holder does not exercise the conversion will be exercised at the time of maturity of conversion option. each CCPS series: Each Series I OCPS shall be optionally converted into a. the derivative financial asset/liability such number of equity shares at the higher of:- b. the equity component c. the debt component I. Fair market value determined as on the date of conversion of shares or Basis the above, the value of equity, debt and derivative II. Rs 10 per equity share (being the face value of financial asset of CCPS (Series 2, Series 3, and Series 4) equity shares) as at March 31, 2020 and March 31, 2019 is as follows: OCPS (Series I) has been considered as compound March 31, March 31, financial instrument and has been separated into two 2020 2019 components: Equity Component of 1,893.17 1,160.43 CCPS (Includes equity a. the equity component portion on extension of b. the debt component CCPS Rs.732.74 crores) Basis the above, the value of equity and debt of OCPS Liability Component of 5,652.01 6,035.33 (Series I) as at March 31, 2020 and March 31, 2019 is as CCPS follows: Derivative financial assets 5,952.50 5,940.59 of CCPS 196 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

March 31, March 31, VII. On January 10, 2019, TTSL issued 18.56 crores 2020 2019 0.1 % Optionally Convertible Debentures Series II of Rs.100 each to Tata Sons Private Limited. Equity Component of 612.34 612.34 Out of above, 2.12 crores Optionally Convertible OCPS Debentures are converted in during the year ended Liability Component of 2,161.44 1,949.16 March 31, 2020. OCPS VIII. On August 7, 2019, TTSL issued 20 crores 0.1% The interest cost on OCPS (Series I) for the year is Optionally Convertible Debentures Series III of Rs.212.28 crores (March 31, 2019 – Rs 190.28 crores) Rs.100 each to Tata Sons Private Limited.

C. Terms of conversion/ redemption of Optionally Each OCD shall be converted into equity share at the Convertible Debentures option of the investor at any time after one day from the date of allotment of OCD but not later than 36 months Optionally Convertible Debentures: from the date of allotment. OCD shall be redeemed at par, if the holder does not exercise the conversion option. I. On December 22, 2017, TTSL issued 125 crores 0.1 % Optionally Convertible Debentures Series II Each OCD shall be optionally converted into such of Rs.100 each to Tata Sons Private Limited. Entire number of equity shares of Rs.10 each Optionally Convertible Debentures were converted in previous year ended March 31, 2019. OCD (Series II and Series III) has been considered as compound financial instrument and has been separated II. On August 10, 2018, TTSL issued 71.05 crores into two components: Optionally Convertible Debentures of Rs.100 each to Tata Sons Private Limited. Out of above, 9.20 crores a. the equity component Optionally Convertible Debentures were converted b. the debt component in previous year ended March 31, 2019. Further 61.85 crores Optionally Convertible Debentures are Basis the above, the value of equity and debt component converted during the year ended March 31, 2020. of OCD (Series II) as at March 31, 2020 and March 31, 2019 is as follows: III. On August 10, 2018, TTSL issued 25 crores 0.1% Optionally Convertible Debentures Series II of March 31, March 31, Rs.100 each to Tata Sons Private Limited. Entire 2020 2019 Optionally Convertible Debentures were converted in previous year ended March 31, 2019. Equity Component of OCD 7,685.83 7,196.06 Decrease in Equity (4,594.64) (2,904.41) IV. On May 11, 2018, TTSL issued 14 crores 0.1% Component on account of Optionally Convertible Debentures of Rs.100 Series II extinguishment of OCD each to Panatone Finvest Limited (Fellow Subsidiary). Liability Component of OCD 4,236.50 9,206.59

V. On October 4, 2018, TTSL issued 5.89 crores The interest cost on OCD for the year is Rs.525.97 0.1% Optionally Convertible Debentures of Rs.100 crores (March 31, 2019 – Rs 1,498.40 crores). Series II each to Tata Sons Private Limited. Entire Optionally Convertible Debentures are converted Note: during the year ended March 31, 2020. As the interest rate of OCD/CCPS/OCPS is lower than market rate, these have been considered as compound VI. On October 4, 2018, TTSL issued 17.10 crores financial instruments and have been separated into 0.1% Optionally Convertible Debentures Series II equity component and liability component as per Ind AS of Rs.100 each to Tata Sons Private Limited. Entire 32. Interest on liability component of OCD/CCPS/OCPS Optionally Convertible Debentures are converted has been recognised by applying effective interest rate during the year ended March 31, 2020. (EIR) ranging from 7.46% to 10.36% p.a. TELESERVICES LIMITED 197

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

17. Financial Liabilities - Borrowings (at amortised cost)

Long term borrowings

Non - Current Portion Current Portion As at As at As at As at March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Secured: Term Loan Indian rupee loan from banks 957.91 1,185.35 1,478.91 - Foreign currency loan from banks 1,301.72 - - - Unsecured: Deferred payment liability for spectrum acquired - 3,007.98 - 902.89 through auction Interest accrued but not due on borrowings - - 1.42 0.16 Liability component of compound financial instruments (Nos. in crores) 50.44 (March 31, 2019 – 117.40) 0.1% Optionally 4,236.50 9,206.59 - - convertible debentures - of Rs.100 each 62.24 (March 31, 2019 – 62.24) 0.1% 3,652.55 1,931.56 1,999.45 4,103.77 Compulsory convertible preference shares of Rs. 100 each 23.00 (March 31, 2019 – 23.00) 0.1% Optionally - 1,949.16 2,161.44 - convertible preference shares Rs. 100 each 10,148.68 17,280.64 5,641.22 5,006.82 Less: Liabilities directly associated with assets - (786.06) - - classified as held for sale Amount disclosed under the head “”Other - - (5,641.22) (5,006.82) financial Liabilities”” (refer note 18) 10,148.68 16,494.58 - -

Financial Liabilities - Short term borrowings

As at As at March 31, March 31, 2020 2019 Secured Vendor financing 7.60 30.60 Unsecured: Indian rupee loan from banks 2,800.00 2,300.00 Commercial Paper 6,258.32 12,475.85 Less: Liabilities directly associated with assets classified as held for sale - 4,308.40 9,065.92 10,498.05 198 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Undrawn borrowing facilities: The Company has availed the moratorium of three months granted by Reserve Bank of India (vide At March 31, 2020, the Group has undrawn committed circular DOR.No.BP.BC.47/21.04.048/2019-20 dated borrowing facilities of Rs.701.34 crores (Rs.817.59 crores March 27, 2020) on payment of term loan installments as at March 31, 2019) towards working capital limits expiring falling due between March 1, 2020 and May 31, 2020 within a year and renewable at discretion of the banks. ii. Foreign Currency loans from banks Compliance with Loan Covenants: Medium Term Loan ( FCNR-B) from ICICI Bank As at March 31, 2020, Group has met financial covenant (sub-limit of Rupee term loan covered in point i requirement as per the respective borrowing arrangement above) is secured by way of first pari-passu charge with the lenders. on the fixed and current assets of the Group’s enterprise, fixed wireline and broad band division Long term Borrowings excluding intangible assets and current and future investments in associate and subsidiary company a. Secured loans and joint ventures of the Group. The maturity date of loan from ICICI Bank is April 8, 2021. As on March 31, 2020 Terms of repayment:- i. Indian rupee loans from banks - Loan from bank is repayable in 2 years in Medium Term Loan outstanding from IndusInd Bank single instalment from the date of drawdown and ICICI Bank are secured by way of first pari-passu charge on the fixed (under immovable property, - The maturity date of loan from ICICI Bank is only a Turbhe property is offered) and current April 8, 2021 assets of the Group’s enterprise, fixed wireline and broad band division excluding intangible assets Interest rate :- and current and future investments in associate and subsidiary companies and joint ventures of the - Interest on the ICICI Bank Loan is on USD Group. 3M LIBOR + 3.05% which has been hedged against Coupon only Swap(CoS) Terms of repayment:- The Company has availed the moratorium of two - Loan from bank is repayable in 2 years by a months granted by Reserve Bank of India (vide bullet repayment from the date of drawdown circular DOR.No.BP.BC.47/21.04.048/2019-20 dated March 27, 2020) on payment of term loan installments - The maturity date of loan from IndusInd Bank falling due between April 1, 2020 and May 31, 2020. are March 27, 2021 and March 29, 2021 respectively and for ICICI Bank is April 8, 2021. Refer note 3 and 7 for carrying amount of property, plant and equipment and intangible assets pledged Interest rate:- as security by the Group.

- Interest on the IndusInd Bank loan is on floating As on March 31, 2019 basis based on overnight MIBOR+an agreed spread, this floating rate has been hedged with Indian rupee loans from banks IRS at a fixed rate. Medium Term Loan outstanding from IndusInd Bank - Interest on the ICICI Bank Loan is on MCLR- is secured by way of first pari-passu charge on all the 1Yr + 0.8% fixed and current assets of the Group’s enterprise, fixed wireline and broad band division excluding intangible TELESERVICES LIMITED 199

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

assets and current and future investments in associate Vendor financing and subsidiary company and joint ventures of the Group. The balance outstanding as on March 31, 2019 Terms of repayment:- comprises of Suppliers Credit with Nil interest rate. b. Short term Borrowings - Unsecured - Loan from bank is repayable in 2 years in single instalment from the date of drawdown As on March 31, 2020

- The maturity date of loan from IndusInd Bank is Commercial paper March 29, 2021 i) Terms of repayment:- Interest rate :- - Commercial papers are fully repayable - Interest on the IndusInd Bank loan is on floating within 8 to 364 days from the date of basis based on overnight MIBOR+an agreed Commercial Paper issuance spread, this floating rate has been hedged with IRS at a fixed rate. ii) Interest rate:- b. Unsecured loans - Interest rate for commercial papers is in As on March 31, 2020 the range of 7.00% to 9.00% p.a.

For terms related to liability component of Compound Short Term Loan Financial Instruments refer note 16. The Group has availed unsecured Short Term loan As on March 31, 2019 from bank.

For terms related to liability component of Compound i) Terms of repayment:- Financial Instruments refer note 16 - Loan from bank is repayable at the end of Short Term Borrowings one year from the date of drawdown

a. Secured loans - The maturity date of loan from Standard Chartered Bank is February 17, 2021. As on March 31, 2020 ii) Interest rate:- Stipulated securities for the loans are first pari- passu charge on the movable assets of the Group - Rate for Initial 3 months from drawdown - 3 months T-Bill + 2.45% Vendor financing - Rate for balance period – 1 month SBI The balance outstanding as on March 31, 2020 MCLR + 0.5% comprises of Suppliers Credit with Nil interest rate. The Company has availed the moratorium of two As on March 31, 2019 months granted by Reserve Bank of India (vide Stipulated securities for the loans are first pari circular DOR.No.BP.BC.47/21.04.048/2019- passu charge on the movable assets of the Group 20 dated March 27, 2020) on payment of all term loan instalments falling due between April 1, 2020 and May 31, 2020. 200 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

As on March 31, 2019 Short Term Loan

Commercial paper The Group has availed unsecured Short Term loan from bank. i) Terms of repayment:- i) Terms of repayment:- - Commercial papers are fully repayable within 26 to 90 days from the date of - Loan from bank is repayable after 6 Commercial Paper issuance months from the date of drawdown.

ii) Interest rate:- ii) Interest rate:- - Interest rate for loan is 9.10% p.a. - Interest rate for commercial papers is in the range of 8.50% to 8.95% p.a.

18. Other financial liabilities ( Current)

As at As at March 31, March 31, 2020 2019 Current maturities of long-term debt (Refer note 17) 1,478.91 902.89 Interest accrued but not due on borrowings (Refer note 17) 1.42 0.16 Payables on purchase of fixed assets 32.08 43.86 Security deposit from customers 23.73 18.49 Advance from distributors 7.28 6.51 Liability component of Compound Financial Instruments (Refer note 17) 4,160.89 4,103.77 Other payables to third party 0.39 - 5,704.70 5,075.68

19. Provisions

Non - Current Portion Current Portion As at As at As at As at March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Provision for contingencies* {net of amount paid - - 6,277.48 65.16 Rs.5,349.61 crores (March 31, 2019 Rs.391.16 crores)} {Refer note 32(a)} Provision for employee benefits: i) For Provident fund ({Refer note 32(e)} - - 11.56 8.42 ii) For Gratuity ({Refer note 32(e)} - - 11.82 6.51 iii) For Leave encashment ({Refer note 32(e)} - - 10.84 11.09 iv) For Employee incentives - - 31.54 36.09 Provision for asset retirement obligation (site 10.45 9.62 - - restoration cost) {Refer note 32(c)} Provision for foreseeable losses on long term - - 370.80 188.99 contracts {Refer note 2.4(v) and 32(b)} Other Provisions* {Refer note 32(d)} - - 52.64 - 10.45 9.62 6,766.68 316.26 * includes provision towards indemnification (Refer note 1.2) TELESERVICES LIMITED 201

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

20. Other liabilities

Non - Current Portion Current As at As at As at As at March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Advance from customers - - 55.57 65.28 Unearned Income 151.50 159.23 122.61 123.86 Advance received pursuant to the Scheme and - - - 919.80 related agreements (Refer Note 1.2) Statutory liabilities - - 58.96 63.40 Other payables to third party - - 0.07 - 151.50 159.23 237.21 1,172.34

21. Assets classified as held for sale

As at As at March 31, March 31, 2020 2019 (i) Assets classified as held for sale a) Related to Company’s CMB (refer note 1.2) Property, plant and equipment - 1,493.66 Capital work-in-progress - 4.81 Intangible assets - 4,359.89 Trade receivables - 92.29 Other non-current assets - 594.96 Loans and advances - 59.06 Other current assets - 973.22 Subtotal- Assets held for sale - 7,577.89 b) Investment in associate ATC Telecom Infrastructure Pvt Limited (Unquoted) 2,220.07 2,220.07 10.28 (March 31, 2019 - 10.28) Equity Shares of Rs 10 each fully paid up Total assets classified as held for sale 2,220.07 9,797.96 (ii) Liabilities directly associated with assets classified as held for sale related to CMB (refer note 1.2) Non current financial liabilities - borrowings - 786.06 Current financial liabilities - borrowings - 4,308.40 Trade and other payables - 783.46 Other current financial liabilities - 31.83 Other current liabilities - 63.30 Short term provisions - 685.05 Total liabilities directly associated with - 6,658.10 assets classified as held for sale 202 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Investment in Associate Investment in Associate

ATC Telecom Infrastructure Private Limited (‘ATC’) (erstwhile As at As at VIOM Networks Limited (‘VIOM’) March 31, March 31, 2020 2019 As at April 19, 2018, the Group’s shareholding in ATC got diluted to 24.63% from 32.86% (as at March 31, 2018) on account ATC Telecom Infrastructure Pvt - 5,996.43 of issuance of shares by ATC to other shareholders pursuant Limited (Unquoted) to the scheme of amalgamation approved by NCLT between Nil (March 31, 2019 -Nil) Equity ATC and its fellow subsidiaries. The Group has recorded loss Sharesof Rs 10 each fully paid up on dilution of Rs.267.83 crores, calculated by comparing the [refer note (b) below] carrying value of disposed interest to its remaining interest in Loss on dilution of shareholding - (267.83) increased net worth of ATC on restructuring, and disclosed the (deemed disposal) same as exceptional item in the statement of profit and loss for Add: Share of Profit and - 33.97 the year ended March 31, 2019. Reserves upto date of classification as held for sale Further, the Group, after taking approval from the board of Impairment on classification as - (1,061.59) directors in its meeting dated August 14, 2018 and October held for sale 24, 2018 to sell its entire stake in ATC, exercised the first put option to sell 11.48 crores shares at Rs.216 per share Sale - (2,480.92) as per the terms of shareholders agreement (as amended) Classified as asset held for sale - (2,220.06) dated October 21, 2015. Accordingly, with effect from October Total - - 24, 2018, the Group has classified the investment in ATC as ‘asset held for sale’ and recorded it at lower of its carrying 22. REVENUE FROM OPERATIONS amount and fair value less costs to sell, and recorded an impairment loss of Rs.1,061.59 crores and disclosed the For the For the same as an exceptional item in the statement of profit and loss year ended year ended for the year ended March 31, 2019. Post approval by DoT, the March 31, March 31, shares were sold on March 27, 2019 for a cash consideration 2020 2019 of Rs.2,480.02 (net of expenses of Rs.0.90 crores). Telecommunication services As at March 31, 2020, the carrying amount of the Group’s Service revenue 2789.69 3,842.65 remaining investment of 11.63% stake in equity share capital Sale of traded goods 0.65 2.23 of ATC is Rs 2,220.07 crores. Other Operating Revenue While the investment in ATC is classified as assets held for Income from rendering of 55.01 60.09 sale as at March 31, 2020, the Group continues to have services significant influence over ATC as it has power to participate in Infrastructure sharing 20.07 108.27 the financial and operational policy of ATC. 2865.42 4,013.24

TELESERVICES LIMITED 203

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Disaggregation of Revenue Revenue recognised in Year ended Year ended relation to contract liabilities March 31, March 31, Revenue from operations Year ended Year ended 2020 2019 March 31, March 31, Revenue recognised during 2020 2019 the year that was included in Revenue from subscribers 2,628.19 3,386.25 the contract liability balance at Revenue from operators # 137.15 427.95 the beginning of the year Other Revenue* 94.27 193.12 Revenue recognised that 114.49 491.73* was included in the contract Total Revenue as per 2,859.61 4,007.32 liability balance at the Financial Statement beginning of the period * Other Revenue excludes IRU Lease deferment of Rs.5.81 This includes impact of transitioning to Ind AS 115 crores which is covered under Ind AS 116 (March 31, 2019 Rs.5.92 crores) Performance obligations As at As at # Revenue from operators comprises of revenue from in respect of long term March 31, March 31, Interconnect Usages and Roaming charges (including Intra contracts 2020 2019 circle Roaming) Aggregate amount of 90.15 96.39 transaction value allocated to Contract Assets and Liabilities long term contracts that are partially or fully pending to be A contract asset is recorded when revenue is recognized in fulfilled as at reporting date advance of the right to bill and receive consideration (i.e., additional services must be performed or a performance The Group expects that around 37% of the performance obligation must be satisfied in order to bill and receive obligations pending in respect of these long term contracts consideration). The contract asset will decrease as services will be recognised as revenue during the next reporting period are billed. When consideration is received in advance of the with balance in future reporting periods thereafter. delivery of services, a contract liability is recorded. Reductions in the contract liability will be recorded as we satisfy the Discount is offered to subscribers based on the tariff opted performance obligations. by the subscribers. No discount is offered other than plan. Accordingly, discount is part of the contract price. Revenue is Contracts Assets and As at As at recognised net of Discount and which is as per the contract Liabilities March 31, March 31, price. 2020 2019 Deferred customer contract acquisition costs Contract Assets Unbilled Revenue (refer note 12) 192.91 267.32 Costs to acquire customer contracts are generally deferred Contract Liabilities and amortized over the estimated economic life of the Unearned Income (refer note 20) 274.11 346.39* contracts, subject to an assessment of the recoverability of such costs. For contracts with an estimated amortization *These amounts include liabilities held for sale (Refer note 21) period of less than one year, acquisition costs are expensed immediately. The closing balance of assets recognised from the costs incurred in respect of long-term contracts amounts to Rs.56.39 (March 31, 2019 - Rs.51.20 crores) as at March 31, 2020. During the year, in respect of such long-term contracts, the company recognised Rs.24.86 Crores (March 31, 2019 - Rs.16.45 crores) as acquisition cost in the Statement of Profit and Loss. 204 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

23. OTHER INCOME 25. OPERATING & OTHER EXPENSES

For the For the For the For the year ended year ended year ended year ended March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Other Income Power and Fuel Provision/Liability no longer 0.32 158.38 Network 208.68 346.05 required written back Others - - Miscellaneous income 12.37 24.20 208.68 346.05 12.69 182.58 Other gains and losses Rent Foreign exchange gain, net - 11.30 Network 12.75 899.32 Gain on financial assets - 3.73 Others 29.45 20.38 mandatorily measured at fair 42.20 919.70 value through profit or loss Interconnection and other 511.16 1,347.78 Gain on discontinuation of 11.36 - access costs lease as per IND AS 116 (Refer Note 33) License fees and spectrum 194.20 241.99 charges Gain on disposal of property, 1.57 - plant and equipment/ written Other Operating Expenses off (net) Customer acquisition costs 42.21 62.32 12.93 15.03 Cost of goods sold 5.54 12.00 25.62 197.61 Information technology 129.62 148.25

solutions 24. EMPLOYEE BENEFIT EXPENSES Managed service charges 17.95 68.96 For the For the Leaseline and bandwidth 172.78 160.55 year ended year ended charges March 31, March 31, Telecalling charges 41.39 77.74 2020 2019 Repairs and maintenance: Salaries and bonus 272.65 323.41 - Annual maintenance 57.59 80.43 Contribution to provident and 9.94 15.35 charges other funds - Building 11.20 13.08 Gratuity ({Refer note 32(e)} 3.70 6.44 - Plant and machinery - 362.36 300.79 Staff welfare expenses 20.07 26.22 network 306.36 371.42 - Plant and machinery - 34.33 9.00 others - Others 12.18 31.95 Port charges 32.39 18.59 919.54 983.66 Other expenses Professional and legal fees 70.68 87.69 Advertisement and business 48.40 42.68 promotion expenses TELESERVICES LIMITED 205

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

For the For the 27. FINANCE COST year ended year ended March 31, March 31, For the For the 2020 2019 year ended year ended Commission, incentives and 91.73 129.74 March 31, March 31, content cost 2020 2019 Travel and conveyance 15.44 20.45 Interest expense: Insurance 12.70 14.09 - On loans from banks/financial 902.96 1,439.84 institutions Rates and taxes 11.70 4.33 - On other loans 27.90 511.16 Bad debt written off 0.13 108.97 - On unwinding of asset 0.83 0.94 Impairment loss/(reversal) on 1.04 (108.05) retirement obligation financial assets - On liability component 1,087.83 1,901.41 Miscellaneous expenses 58.94 90.37 of Compund Financial 310.76 390.27 Instruments Other losses Interest expenses on lease 73.47 - - Foreign exchange loss (net) 2.04 - liability as per IND AS 116 - Loss on financial assets 9.28 - (Refer Note 33) mandatorily measured at fair Guarantee commission 12.08 8.36 value through profit or loss Other Finance charges 68.29 31.01 - Loss on property, plant and - 12.73 Unwinding of borrowing cost 16.50 18.00 equipment sold / written off Unwinding impact on provision - 82.04 (net) for foreseeble loss 11.32 12.73 2,189.86 3,992.76 2,197.86 4,242.18 28. FINANCE INCOME 26. DEPRECIATION AND AMORTISATION EXPENSES

For the For the For the For the year ended year ended year ended year ended March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Interest income on: Depreciation on property, plant 485.08 567.67 - Income tax refund 12.27 10.60 and equipment - Bank deposits 0.55 0.13 Amortisation of intangible 3.16 38.56 assets Unwinding impact as per IND 10.75 11.15 AS 109 on security deposits at Depreciation on investment 0.50 0.50 amortised cost property Unwinding impact on loan given 57.00 - Depreciation on right of use 187.96 - assets 80.57 21.88

676.70 606.73

206 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

29. EXCEPTIONAL ITEMS (NET) as partial reversal of impairment recorded during the year ended March 31, 2018 and disclosed the same as For the For the an exceptional item for the year ended March 31, 2020. year ended year ended March 31, March 31, d. The Hon’ble Supreme Court (‘SC’) pronounced its 2020 2019 Judgement on October 24, 2019 (‘Judgement’), Change in the value of (11.91) (307.34) dismissing the appeals of operators and allowing derivative financial asset [refer Department of Telecommunication’s (DoT) appeal in note (a) below] respect of the definition of Gross Revenue (GR) and Adjusted Gross Revenue (‘AGR’) as defined in the Restructuring cost [refer note 572.49 93.07 License Agreement. (b) below] Impairment reversal of CMB (668.01) (2,353.87) Over the years, the Group received multiple provisional assets [refer note (c) below] assessment orders for the same period from DoT Additional provision for LF/SUC 10,672.13 - towards License Fees (‘LF’), calculated as a percentage [refer note (d) below] of AGR. These were based on DoT’s assessments and Settlement of cases opted 38.14 - also after audits conducted by CAG or Special Auditors under LDRS [refer note (e) appointed by DoT. CAG audit has been completed upto below] financial year 2016-17, though some reports are yet to Loss on dilution of - 267.83 be submitted and Special Audit has been completed shareholding in associate upto financial year 2010-11. DoT has appointed a (ATC) (refer note 21) Special Auditor in July 2019 to carry out Special Audit Impairment of investment in - 1,061.59 from financial year 2011- 12 till financial year 2017-18. associate (ATC) (refer note 21) Loss on disposal of CMB [refer 91.27 - As assessment is an exercise decentralized at note (f) below] Circles, the assessment is done at the circles level for Provision for disputed service 7.05 - different years. Based on the assessment at Circles, tax demands demand is issued by DoT centrally, which also stands Interest on GST liability 3.23 - issued for different years for different circles. DoT has towards LF/SUC payment to issued guidelines/clarifications on February 3, 2020 DoT for re-verification of deduction claims in respect of 10,704.39 (1,238.72) disallowances made during the assessment at Circles. a. As at March 31, 2020, Group has accounted for During the quarter ended September 30, 2019, the derivative asset on the CCPS based on the fair market Group made additional provision of Rs.9,706 crores valuation as at that date and accounted for the gain on as an initial estimate towards LF and Spectrum Usage CCPS derivative component as Rs.11.91 crores in the Charges (SUC), including interest, penalty and interest statement of profit and loss for the year ended March 31, on penalty, as applicable, on account of the judgement 2020 (Rs.307.34 crores for the year ended March 31, and disclosed the same as an exceptional item. This 2019). provision excluded demands based on disallowances that are allowable on production of necessary documents b. The Group has recognised restructuring cost of regarding interconnect and roaming charges. It also Rs.572.49 crores for the year ended March 31, 2020 excluded certain discrepancies identified by Group in (Rs.93.07 crores for the year ended March 31, 2019). the said LF and SUC demands raised by DoT on specific The amount accrued also includes adjustment on matters of fact, for which written representations have account of settlement of certain contracts. been made to the DoT in the past. c. As at June 30, 2019, the Group had reviewed the DoT vide letter dated November 13, 2019 directed all recoverable amount of its CMB assets based on fair the telecom licensees to undertake self-assessment and value less costs to sell and recorded Rs.668.01 crores make payment of LF and other dues within three months (Rs.2,353.87 crores for the year ended March 31, 2019) in accordance with the Judgment. The Group and TELESERVICES LIMITED 207

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

other operators filed review petitions in SC challenging exceptional item. imposition of penalty and interest thereon. These Accordingly, the provisions pertaining to AGR matter as petitions were dismissed. The Group and other operators on March 31, 2020 stand at Rs.10,399.97 crores and have filed modification applications in the SC seeking disclosed as provision for contingencies. The amount modification of Supplementary Order dated October 24, was provisioned in compliance with the accounting 2019 to allow the Group and DoT to conduct the exercise standards, strictly without prejudice to the Group’s legal for ascertaining and payment of the amounts due under rights, claims, remedies and contentions available under the Judgment. These applications were mentioned for law. The Group does not admit, acknowledge or confirm listing before the SC on January 21, 2020 and the SC any liability towards the same and the fact that some had ordered listing of these applications before the amount is being provisioned does not affect or dilute the bench which gave the Judgment. On February 14, 2020, Group’s defense against the enforcement of the said LF the SC passed an order and listed the applications of and SUC demands by DoT in any way. Also, refer note the operators for March 17, 2020, which took place on 34(i)(b) and 34(ii)(b) of contingent liability. March 18, 2020. e. Settlement of cases opted by the Group under Legacy DoT raised a consolidated demand in Dec 2019 for Dispute Resolution Scheme (LDRS)- Rs.38.14 crores Rs.16,612.04 crores towards LF, SUC, interest, penalty for the year ended March 31, 2020. and interest on penalty. The demand also includes additions on account of CCA disallowances and f. As on the Effective date of the Scheme (July 1, 2019), discrepancies which are yet to be rectified by DoT. the Group has charged Rs.91.27 crores in the statement of profit and loss in compliance with Ind AS provisions on Based on self-assessment, the Group made a payment account of the following: of Rs 2,197.37 crores on February 17, 2020. The Group in good faith and by way of abundant caution, had also I. Pursuant to the loan agreement dated June 29, made additional ad-hoc payment of Rs 2,000 crores 2019 executed between TTML and TTSL, TTML has on March 2, 2020 to cover reconciliation and verification borrowed Rs.825 crores from TTSL as per terms differences with DoT, if any. A modification petition has and conditions mentioned in the said agreement been filed by DoT in the SC on March 16, 2020 with and measured the loan at its fair value and classified respect to giving 20 year period for recovery of LF it between debt amounting to Rs.748.23 crores and dues and to cease the interest after a particular date. equity amounting to Rs.76.77 crores. As at June 30, As on date, the matter is still not heard. On March 18, 2019, the carrying value of the debt component of 2020, SC held that no exercise of self-assessment/re- the loan was Rs.749.41 crores at amortised cost assessment of the dues, which were placed before the using the EIR (Effective Interest Rate) method. SC is permitted and the said dues need to be deposited, On July 1, 2019, pursuant to the TTML Scheme of as ordered in the judgement. However, the prayer of demerger of CMB, out of the said loan of face value DoT to allow it to recover the dues over 20 year period Rs.825 crores, face value of loan amounting to is pending and the Court has indicated that it would Rs.818.06 crores (amortised cost Rs.743.11 crores) consider such prayer of DoT to recover the dues over a has been transferred on the same terms by TTML to longer period on the next date. BAL and the differential amount of Rs.74.95 crores Further, during the quarter ended March 31, 2020, (being adjustment arising out of Rs.76.77 crores the Group has evaluated the AGR obligations and recognised as equity on initial recognition), has reassessed the estimates as a result of more information been disclosed as an exceptional item for the year or experience gained to reflect the current best estimate. ended March 31, 2020. In evaluating the estimate, the Group has taken into consideration the industry perspective and legal opinion II. Equity shares of BAL received by the shareholders on certain legal issues from Senior Counsel. During the of TTML pursuant to the TTML Scheme of demerger quarter ended March 31, 2020, the Group has made of CMB has been recognised as distribution made by net additional provision of Rs 966.13 crores towards TTML to its Shareholders and has been measured at LF, SUC, Interest, Penalty and Interest of Penalty as Rs.33.68 crores, being the fair value of BAL shares applicable, and the same has been disclosed as an as on July 1, 2019, the Effective date of the Scheme, 208 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

as against the fair value of BAL shares considered 31. The Group has certain dues to suppliers registered under as per the TTML Scheme (Rs.50 crores) and the Micro, Small and Medium Enterprises Development Act, differential amount of Rs.16.32 crores being fair value 2006 (‘MSMED Act’). The disclosures pursuant to the adjustment of the consideration to the Shareholders said MSMED Act are as follows: of TTML has been disclosed as an exceptional item for the year ended March 31, 2020. SN Particulars March 31, March 31, 2020 2019 30. Loss per share 1 Principal amount due 8.03 5.37 to suppliers registered Basic Loss per share amounts are calculated by under the MSMED Act dividing the loss for the year attributable to owners of and remaining unpaid as the company by the weighted average number of Equity at year end shares outstanding during the year. 2 Interest due to suppliers 0.57 0.10 The following reflects the income and share data used in registered under the the basic loss per share computations: MSMED Act and remaining unpaid as at year end Units March 31, March 31, 2020 2019 3 Principal amounts paid - - Profit/(loss) Rs. in (11,139.70) (2,318.11) to suppliers registered from continuing Crores under the MSMED Act, operations beyond the appointed day during the year end. Profit/(loss) from Rs. in 0.38 0.23 discontinued Crores 4 Interest paid, other than - - operations under Section 16 of Profit/(loss) for the Rs. in (11,139.32) (2,317.88) MSMED Act, to suppliers year after tax Crores registered under the MSMED Act, beyond the Weighted average Nos. in 637.69 577.50 appointed day during the number of shares Crores year. outstanding Nominal value of 10.00 10.00 5 Interest paid, under - - Equity Shares (in Rs.) Section 16 of MSMED Act, to suppliers registered Loss Per Share under the MSMED Act, Basic from in Rs. (17.47) (4.01) beyond the appointed day continuing during the year operations Basic from in Rs. - - 6 Interest due and payable - - discontinued towards suppliers operations registered under MSMED Act, for payments already Basic from in Rs. (17.47) (4.01) made continuing and discontinued 7 Further interest remaining - - operations due and payable for earlier years Diluted loss per share

The effect of CCPS (Series 2, Series 3, Series 4, Series 8 and Series 9) and OCPS (Series I) and OCD (Series II and Series III) has been anti-dilutive; hence, there is no change in basic and diluted loss per share. TELESERVICES LIMITED 209

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

32. Movement in Provisions a. Provision for contingencies:

The following table sets forth the movement in the provision for contingencies:

Description As at Provision Payments As at April 1, 2019 made/ adjusted March 31, 2020 (reversed) against during the provision year Provision for contingencies 65.16 10,679.18 (4,466.86) 6,277.48

Description As at April 1, Provision Payments As at 2018 made/ adjusted March 31, 2019 (reversed) against during the provision year Provision for contingencies 1,027.82 (962.66) - 65.16

Provision for contingencies is primarily towards the outstanding claims / litigations against the Group. As at March 31, 2020, the Group has evaluated the obligation through Probable, Possible and Remote (PPR) model and reassessed the estimates as a result of more information or experience gained and independent opinion from senior legal counsel, to reflect the current best estimate, the Group has reversed during the year ended March 31, 2019 provision of Rs.1,002.97 crores made in earlier years towards certain regulatory matters. In making the evaluation for PPR, the Group has taken into consideration the Industry perspective, legal and technical view, availability of documentation/ agreements, recent court judgements, interpretation of the matter, independent opinion from professionals (specific matters) etc. Also, refer note 29(d). b. Provision for foreseeable loss on long term contracts:

The following table sets forth the movement in the provision for foreseeable loss on long term contracts.

Description As at Provision Transfer to Utilisation/ As at April 1, 2019 during the Bharti Airtel (Reversal) March 31, 2020 year (Refer note 1.2) Provision for foreseeble loss on 835.27 303.38 (583.61) (184.24) 370.80 long term contracts

Description As at Provision Transfer to Utilisation/ As at April 1, 2018 during the Bharti Airtel (Reversal) March 31, 2019 year (Refer note 1.2) Provision for foreseeble loss on 3,395.24 544.49 - (3,104.46) 835.27* long term contracts

*Out of total provision for contingencies of Rs.835.27 crores, provision of Rs.646.28 crores has been classified as liabilities directly associated with assets classified as held for sale. 210 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) c. Provision for Asset retirement obligation (ARO):

The provision for ARO is the expected cost to dismantle and remove the infrastructure equipment from the site and the expected timing of these costs. Discount rates are determined based on the government bond rate of a similar period as the liability.

Description As at Unwinding of As at April 1, 2019 interest March 31, 2020 Provision for asset retirement obligation (site restoration cost) 9.62 0.83 10.45

Description As at April 1, Unwinding of As at 2018 interest March 31, 2019 Provision for asset retirement obligation (site restoration cost) 8.68 0.94 9.62 d. Other Provisions:

The following table sets forth the movement in the other provision.

Description As at Provision As at April 1, 2019 towards March 31, 2020 indemnification (Refer note 1.2) Other Provisions - 52.64 52.64 e. Gratuity and other post-employment benefit plans Summary of components of net benefit cost is as follows:

The Group offers the following employee benefit March 31, March 31, schemes to its employees: 2020 2019 i. Gratuity (included as part of Note 24 Employee Service cost 2.83 5.10 benefits expense) Interest cost 2.21 3.50 Interest (Income) on plan (1.34) (2.16) ii. Compensated absences (included as part of Note assets 24 Employee benefits expense) Net gratuity cost 3.70 6.44 iii. Provident fund (included as part of Note 24 Net gratuity cost as per note 3.70 6.44 Employee benefits expense) 24

iv. Contributions to other funds The current service cost, interest cost and expected return on plan assets for the year are included in the ‘Employee (i) Gratuity benefits expenses’ line item in the statement of profit and loss. The re-measurement on the defined benefit liability is The Group has defined benefit gratuity plan. Every included in other comprehensive income. employee who has completed five years or more gets the gratuity on departure at 15 days salary i.e. last drawn salary for each completed year of service. The scheme is funded with an insurance Group in the form of a qualifying insurance policy. TELESERVICES LIMITED 211

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Re-measurement effects recognised in Other Comprehensive Income (OCI):

March 31, March 31, 2020 2019 Actuarial gain due to demographic assumption changes in Defined benefit obligation (DBO) 0.02 (0.31) Actuarial (gain)/loss due to financial assumption changes in DBO 0.98 (0.51) Actuarial loss due to experience on DBO 0.70 0.08 Return on plan assets greater than discount rate (0.59) (2.42) Total acturial loss/(gain) included in OCI 1.11 (3.16)

The change in benefit obligation and funded status of the gratuity plan for the year ended March 31, 2020 is as follows:

March 31, March 31, 2020 2019 Change in Defined benefit obligation Defined benefit obligation at the beginning of the year 40.26 56.79 Service cost 2.83 5.10 Interest cost 2.21 3.50 Acquisition/Business Combination/Divestiture (8.23) (0.22) Benefits paid (9.94) (24.11) Benefit payments directly by employer - (0.06) Actuarial gain - Demographic assumptions 0.02 (0.31) Actuarial (gain)/loss - Financial 0.98 (0.51) Actuarial (gain)/loss - Experience 0.70 0.08 Defined benefit obligation at the end of the year 28.83 40.26

Change in fair value of plan assets Fair value of plan assets at beginning of year 25.02 40.52 Expected return on plan assets 1.34 2.16 Actual contribution - 4.03 Benefits paid (9.94) (24.11) Actuarial gain 0.59 2.42 Fair value of plan assets at end of year 17.01 25.02 Actual return on plan assets 1.93 4.58 212 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Reconciliation of Net asset/(liability) recognised in the The assumptions used in accounting for the gratuity plan Balance sheet for the year are as below:

March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Present value of defined benefit 28.83 40.26 Discount rate 5.50% 6.70% obligation Expected return on plan 5.50% 6.70% Fair value of plan assets 17.01 25.02 assets (as declared by LIC) Funded status [Surplus / (11.82) (15.24) Attrition Rate 28.00% 35.00% (Deficit)] Salary increase rate 6.00% 6.00% Net liability recognised in the 11.82 15.24* Retirement age 60 years 60 years Balance Sheet Life Expectantion ( years) IALM IALM (2006-08) (2006-08) *Out of net gratuity liability of Rs.15.24 crores as at March 31, Ultimate Ultimate 2019, net gratuity liability of Rs.8.73 crores has been classified Estimate of amount of 7.98 14.32 as liabilities directly associated with assets classified as held contribution in the immediate for sale. next year

The expected rate of return on plan assets is determined after considering several applicable factors such as the composition of the plan assets, investment strategy, market scenario, etc. In order to protect the capital and optimise returns within acceptable risk parameters, the plan assets are well diversified.

The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.

The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

Experience adjustments

Gratuity Year ended Year ended Year ended Year ended Year ended March 31, March 31, March 31, March 31, March 31, 2020 2019 2018 2017 2016 Present value of DBO 28.83 40.26 56.51 62.65 51.22 Fair value of plan assets 17.01 25.02 30.70 51.36 47.83 Funded status [Surplus / (Deficit)] (11.82) (15.24) (25.81) (11.29) (3.39) Experience (gain) / loss adjustments 0.71 0.07 (3.48) 10.42 (0.90) on plan liabilities Experience gain / (loss) adjustments 0.59 2.42 (0.36) 3.02 0.98 on plan assets

Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and mortality. The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. TELESERVICES LIMITED 213

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Change in March 31, March 31, The estimates of future salary increases, considered in assumptions 2020 2019 actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and Discount rate -1% 0.81 0.85 demand in the employment market. +1% (0.85) (0.89) Salary -1% (0.71) (0.90) (ii) Compensated absences increase rate +1% 0.66 0.85 The compensated absences cover the Group`s liability The above sensitivity analysis is based on a change in an for earned leave. assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some Total compensated absences provision as on March 31, of the assumptions may be correlated. When calculating 2020 is Rs.10.84 crores (Rs.15.22 crores as on March the sensitivity of the defined benefit obligation to significant 31, 2019, out of which Rs.4.13 crores has been classified actuarial assumptions the same method (present value of as liabilities directly associated with assets classified as the defined benefit obligation calculated with the projected held for sale) is presented as short-term provision, since unit credit method at the end of the reporting period) has the Group does not have an unconditional right to defer been applied as when calculating the defined benefit liability settlement for any of these obligations. Provision for recognised in the balance sheet. The sensitivity analysis compensated absences has been made on the basis of presented above may not be representative of the actual actuarial valuation carried out as at the balance sheet change in the defined benefit obligation as it is unlikely that date. the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. (iii) Provident fund

There was no change in the methods and assumptions used Provident fund with respect to employees covered with the in preparing the sensitivity analysis from prior years. Government administered fund is a defined contribution scheme for which TTSL has made contribution of Rs. The major categories of plan assets are as below: 2.27 crores (March 2019 – Rs.3.47 crores) during the current year. Also, TTSL makes contributions to the Tata Teleservices Provident Fund Trust which is treated Major categories of plan March 31, March 31, as defined benefit plan and for which TTSL has made assets as a percentage to 2020 2019 contribution of Rs. 5.68 crores (March 2019 – Rs.8.52 total assets: crores) during the current year. Government of India Securities 100% 100% (funded with LIC of India & Summary of TTSL provident fund plan is as follows: TATA AIA) March 31, March 31, The following payments are expected contributions to 2020 2019 the defined benefit plan in future years: Components of net benefit cost March 31, March 31, Service cost 6.92 9.78 2020 2019 Within the next 12 months 7.98 14.32 Interest cost 19.50 22.25 Between 1 to 2 years 7.02 11.24 Expected return on plan assets (20.28) (23.46) Between 3 to 5 years 14.58 20.22 Net cost 6.14 8.57

Between 6 to 10 years 11.21 10.23

The average duration of the defined benefit plan obligation at the end of the reporting period is 3 years (March 31, 2019 - 2 years). 214 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Re-measurement effects recognised in Other Net asset / (liability) recognised in the Balance Sheet Comprehensive Income (OCI): Fund balance March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Defined benefit obligation (290.12) (311.17) Movement in Present Value of (21.05) 311.17 DBO Fair value of plan assets 278.56 302.75 Movement in Fair value of plan 24.19 (302.78) Funded status asset/(liability) (11.56) (8.42) assets Net Liability recognized in (11.56) (8.42) Total actuarial loss/(gain) 3.14 8.39 the Balance Sheet included in OCI The change in benefit obligation and funded status of the The assumptions used in accounting for the Provident Provident Fund plan for the year ended March 31, 2020 is Fund Plan for the year are as below: as follows: March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Discount rate 5.50% 6.70% Change in benefit obligation Expected return on Plan Assets 8.62% 8.71% Benefit obligation at the 311.17 352.10 (Internal Rate of Return on the beginning of the year portfolio of plan assets, given Service cost 6.92 9.78 below) Interest cost 19.50 22.25 Attrition rate 28.00% 35.00% Benefits paid (40.29) (62.50) Actuarial (gain)/loss - 0.45 (0.87) Interest rate guarantee 8.50% 8.65% for st Demographic assumptions 1 year Actuarial (gain) - Financial (0.58) (0.02) and 8.55% Actuarial loss - Experience 5.09 3.11 thereafter Employee contributions 9.50 14.15 Retirement age 60 years 60 years Settlements (21.65) (26.83) Life Expectation (years) IALM IALM Benefit obligation at the end 290.12 311.17 (2006-08) (2006-08) of the year Ultimate Ultimate

March 31, March 31, The expected rate of return on plan assets is determined 2020 2019 after considering several applicable factors such as the Change in fair value of plan composition of the plan assets, investment strategy, market assets scenario, etc. In order to protect the capital and optimise Fair value of plan assets at 302.75 363.79 returns within acceptable risk parameters, the plan assets beginning of year are well diversified. Expected return on plan assets 20.28 23.46 Employer Contribution 5.71 8.52 The discount rate is based on the prevailing market yields of Employee contribution 9.50 14.15 Government of India securities as at the balance sheet date Benefits paid (40.29) (62.50) for the estimated term of the obligations. Asset gain/(loss) (5.06) 5.53 The estimate of future salary increases considered, takes into Settlements (21.65) (26.83) account the inflation, seniority, promotion, increments and Less: Impairment of certain 7.32 (23.37) other relevant factors. plan assets Fair value of plan assets at 278.56 302.75 end of year Actual return on plan assets 15.22 28.99 TELESERVICES LIMITED 215

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Experience Adjustment

Fund balance March 31, March 31, March 31, March 31, March 31, 2020 2019 2018 2017 2016 Present Value of DBO 290.12 311.17 352.10 361.93 359.08 Fair value of plan assets 278.56 302.75 363.79 390.83 372.41 Funded status [Surplus/(Deficit)] (11.56) (8.42) 11.69 28.90 13.33 Experience (gain) / loss adjustments 5.09 3.11 4.44 (1.02) 14.61 on plan liabilities Experience gain / (loss) adjustments (5.06) 5.53 (13.18) 8.52 14.31 on plan assets

A quantitative sensitivity analysis for significant assumption as at March 31, 2020 is as shown below:

Particulars Effect on fund obligation Change in March 31, March 31, assumptions 2020 2019 Discount rate +0.5% (0.58) (0.51) -0.5% 0.64 0.56 Interest rate guarantee +0.5% 7.70 6.42 -0.5% (4.86) (4.57)

The above sensitivity analyses are based on a change in an Major Categories of Plan assets as a percentage of total assumption while holding all other assumptions constant. In assets: practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of Major categories of plan March 31, March 31, the defined benefit obligation to significant actuarial assumptions assets as a percentage to 2020 2019 the same method (present value of the defined benefit obligation total assets calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the Government of India 21.47% 20.20% defined benefit liability recognised in the balance sheet. The securities/Gilt Mutual Funds sensitivity analysis presented above may not be representative of State Government Securities 31.38% 27.74% the actual change in the defined benefit obligation as it is unlikely PSU Bonds 33.14% 35.80% that the change in assumptions would occur in isolation of one Private Sector Bonds/Equity/ 14.01% 16.25% another as some of the assumptions may be correlated. Mutual Funds There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other The following payments are expected contributions to relevant factors, such as supply and demand in the employment the defined benefit plan in future years: market. Further, the estimated amount of contributions expected to be paid to the plan during the year ending March 31, 2020 is March 31, March 31, Rs.5.71 crores (March 31, 2019 – Rs.8.52 crores). 2020 2019 Within the next 12 months 57.61 81.71 (iv) Contribution to other funds Between 1 to 2 years 44.25 58.16 The Group makes Provident fund, Superannuation Fund, Between 3 to 5 years 93.54 101.69 Employee State Insurance Scheme and Labor Welfare Between 6 to 10 years 95.79 74.77 fund contributions which are defined contribution plans, 216 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

for qualifying employees. The Group recognised Rs.1.95 (ii) Practical Expedients applied crores for the year ended March 31, 2020 (Rs.2.29 crores for the year ended March 31, 2019), Rs.NIL for the year The Group also applied the following practical ended March 31, 2020 (Rs.0.93 crores for the year ended expedients: March 31, 2019) for Superannuation Fund contributions, Rs.0.04 crores for the year ended March 31, 2020 (Rs.0.13 a) Applying a single discount rate to a portfolio of crores for the year ended March 31, 2019) for Employee leases with reasonably similar characteristics. State Insurance Scheme contributions and Rs.NIL for the year ended March 31, 2020 (Rs.0.01 crores for the year b) Accounting for operating leases with a remaining ended March 31, 2019) for Labor Welfare fund contribution lease term of less than 12 months as at April 1, in the Statement of Profit and Loss. The contributions 2019 as short-term leases. payable to these plans by the Group are at rates specified c) Using hindsight in determining the lease term where in the rules of the schemes. the contract contains options to extend or terminate the lease. 33. Change in Accounting Policy (i) Impact on Consolidated Financial Statements - d) Excluding leases for which the underlying asset is Lessee Accounting of low value.

As indicated in note 2.3 (n) above, The Group has e) Not to separate non-lease components from adopted Ind AS 116, effective annual reporting period lease components, and instead account for each beginning April 1, 2019 and applied the standard to its lease component and any associated non-lease leases, retrospectively, with the cumulative effect of components as a single lease component. initially applying the standard, recognised on the date of initial application (April 1, 2019) (modified retrospective The Group also elected to use the transition practical approach). The reclassification and the adjustment arising expedient to not reassess whether a contract is, or from the new leasing rules are therefore recognised contains a lease at April 1, 2019. Instead, the group in opening balance sheet on April 1, 2019. The new applied the standard only to contracts that were Accounting policies are disclosed in note 2.3 (n). previously identified as leases applying Ind AS 17 and appendix C to Ind AS 17. The Group has lease contracts for Network Sites and Buildings. Before the adoption of Ind AS 116, the group (iii) Measurement of Lease Liabilities classified each of its leases (as lessee) at the inception date as either a finance lease or an operating lease. Refer Reconciliation: to note 2.3 (n) Leases for the accounting policy prior to April 1, 2019. Particulars Amount Lessor accounting under Ind AS 116 is substantially Off-Balance sheet lease obligations as of 1,219.36 unchanged from Ind AS 17. Lessors will continue to March 31, 2019 classify leases as either operating or finance leases Effect from discounting at the incremental 198.23 using similar principles as in Ind AS 17. Therefore, Ind borrowing rate as at April 1, 2019 AS 116 did not have an impact for leases where the Discounted using the Lessee incremental 1,021.13 group is the lessor. Borrowing rate at the date of Initial application On adoption of IND AS 116, The group recognised right-of- Less: Current leases with lease term of 12 235.98 use assets and lease liabilities for those leases previously months or less classified as operating leases under IND AS 17, except Less: Variable Lease Payments 20.08 for short-term leases and leases of low-value assets. Lease liabilities as at April 1, 2019 765.07 Lease liabilities were recognised based on the present Non-lease components (if any) (net of - value of the remaining lease payments, discounted discount) using the incremental borrowing rate at the date of initial Lease liabilities due to initial application 765.07 application. of Ind AS 116 as at April 1, 2019 TELESERVICES LIMITED 217

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

The lease liabilities were discounted using the The Net impact on retained earnings on April 1, 2019 was incremental borrowing rate of the Group as at April 1, decrease of Rs.115.72 crores. 2019. The weighted average discount rate used for recognition of lease liabilities was 9.5% The group has reclassified IRU of Rs.639.23 crores and Security deposits of Rs.17.35 crores to ROU asset as on April Leases previously classified as finance leases 1, 2019.

The impact of change in accounting policy on account of The group did not change the initial carrying amounts adoption of Ind AS 116 is as follows: of recognised assets and liabilities at the date of initial application for leases previously classified as finance Particulars Amount leases (i.e., the right-of-use assets and lease liabilities Decrease in Intangible Asset by (639.23) equal the lease assets and liabilities recognised under Decrease in Financial Assets (Security (17.35) Ind AS 17). The requirements of Ind AS 116 were applied Deposit) by to these leases from April 1, 2019. The carrying value of this asset was reclassified in ROU. Increase in lease liability by (765.07) Increase in ROU assets (due to Ind AS 116 649.35 (iv) Measurement of ROU assets calculation) by Increase in ROU assets (due to 656.58 The right-of-use assets for most leases were recognised reclassification of Security Deposit and based on the carrying amount as if the standard had Intangible assets) by always been applied, apart from the use of incremental The Net impact on retained earnings (115.72) borrowing rate at the date of initial application. In some leases, the right-of-use assets were recognised based (vi) Disclosure pertaining to Leases as per IND AS 116 on the amount equal to the lease liabilities, adjusted for any related prepaid and accrued lease payments A Background of leasing activity: previously recognised. The Group has lease contracts for various Network Sites, buildings and dark fibre (IRU). The Group is using Network (v) Adjustment recognized in the balance sheet on April Sites for transmission and for in-door network coverage 1, 2019 purpose. The buildings taken on lease are used as offices. The average lease period for the sites is 4 years with an Particulars Increase/ average escalation of 3-5% per annum. The average lease (Decrease) period for buildings is 2-3 years with an average escalation By of 3-5%. Generally, the Group is restricted to sublet the Assets sites taken on lease.

Right of use assets 1,305.93 B Lease liabilities: Intangible Asset (639.23) Set out below are the carrying amounts of lease liabilities Other Financial Assets (Prepayments) (17.35) Total assets 649.35 Amount Liabilities As at April 1, 2019 765.07 Other Financial Liabilities 765.07 Additions 144.50 Total liabilities 765.07 Deletion (96.87) Retained earnings (115.72) Accretion of interest 73.47 Increase in Cash inflow from operating 207.26 Payments (207.26) activities Modification Adjustment (1.42) Increase in Cash outflow from financing (207.26) As at March 31, 2020 677.49 activities on account of lease payments Current 141.29 Non current 536.20

218 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

For maturity analysis of lease liabilities as on March 31, G Additional information on extension and termination 2020 refer note 40. option

C Total cash outflow Under IND AS 116, lease term is defined as non- cancellable period together with any renewal option or The group has a total cash flows for leases of Rs.484.83 termination option with lessee if it is reasonably certain crores in 2019-20. out of which the amount paid against to exercise the option. Both these options with the Group interest component is Rs.73.47 crores and against are only considered for the purpose of determination principal is Rs.133.79 crores for the sites considered of lease term and the options with lessor is ignored. for ROU and Lease Liability calculation, the balance Most of the lease contracts have an option of extension payment is made for short term leases and variable rent. and termination on mutual concession. The Group reassesses whether it is reasonably certain to exercise D Amount recognised in Statement of Profit and Loss the options if there is a significant event or significant for year ended 2019-20 change in circumstances within its control. Generally, the Group assesses at lease commencement whether it is Particulars Amount reasonably certain to exercise the options. The Group assesses the probability of options basis the review of Increase in finance cost by 73.47 the network design and the technology and business Increase in depreciation expense by 154.67 plans. Gain on discontinuation of Lease 11.36 included in other income 34. Commitments and contingencies

E Future cash outflows A. Rental expense relating to operating leases recognised in the Statement of Profit and Loss: Future cash 1 year 1 to 5 Over Total outflows not or years 5 Particulars April 1, reflected in the less years 2018 to measurement of March 31, lease liabilities 2019 Future variable 7.04 23.30 - 30.34 Network sites and others 919.70 lease payments B. Future minimum lease payments under non- The average escalation rate of 5% is used to calculate cancellable operating leases: the future variable payments Particulars As at Additional information pertaining to variable lease March 31, payments 2019 The group has lease contracts for Network sites where (i) Due not later than one year 261.68 a part of the total rent is variable. The additional rent (ii) Due later than one year and not 867.88 paid during the year is Rs.6.70 Crores. later than 5 years

(iii) Due later than 5 years 89.80 F Additional information on short term and low value leases Total 1,219.36

Group had leases of a building, network sites and CMB The agreements are executed for a period ranging from sites which are short term i.e. lease term of less than 6 months to 15 years with a renewable clause and in one year. These leases were short term lease and the many cases also provide for termination at will by either Group elected not to recognise right to use assets and party giving a prior notice period ranging between 30 to lease liabilities for these leases. The lease payment of 180 days. Escalation ranges from 2% - 3% per annum such leases are directly debited to Statement of Profit depending upon the terms of the agreement with each and Loss. vendor. TELESERVICES LIMITED 219

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

C. Commitments and contingencies

S. Description March 31, March 31, No. 2020 2019 (a) Capital Commitment Estimated value of contracts remaining to be executed on capital account and not 219.42 122.98 provided for (net of advances) (b) Other Commitments Indemnity given to others 102.26 102.26 (c) Contingent Liabilities Claims against the Company not acknowledged as debts - TTSL {refer note 34(i)} 2,292.39 6,261.45 - TTML {refer note 34(ii)} 1,156.33 1,778.82 - TTL Mobile (Income tax matters) 8.43 9.99 3,778.83 8,275.50

(i) Taxes, duties and other demands of TTSL

Claims against the Company not acknowledged as debts*

S. Description March 31, March 31, N. 2020 2019 1 BSNL walky ADC [Refer para (a) below] 137.64 124.96 2 Revenue Share - License Fees (LF) [Refer note 29(d)] - 3,263.66 3 SUC demands [refer para (b) below] 683.13 1,300.69 4 SMS Termination charges demanded by other operators [refer para (c) below] 268.83 268.83 5 DoT demands for EMF [refer para (d) below] 15.21 14.43 6 UASL rollout obligation (refer para (e) below) 175.40 175.40 7 Subscriber verification demand from Term Cell (refer para (f) below) 214.07 210.80 8 BSNL claims for interconnection [refer para (g) below] 51.08 51.08 9 Port Charges demanded to other operators 245.50 235.34 10 Service Tax demands 65.04 144.76 11 Sales Tax/VAT demands 37.78 33.19 12 Entry Tax demands 82.63 77.88 13 Entertainment Tax demands 21.04 21.04 14 Income tax demands 161.16 161.73 15 Other miscellaneous demands/claims 133.88 177.66 Total 2,292.39 6,261.45

*includes contingent liabilities towards indemnification (Refer Note 1.2) 220 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Unless otherwise stated below the management believes that, The total demands as at March 31, 2020 are Rs 651.04 based on legal advice, the outcome of these contingencies crores (March 31, 2019 Rs 651.04 crores) including will be favourable and that a loss is not probable, further interest of Rs 294.55 crores (March 31, 2019 – Rs outflow of economic resources is not probable in either case: 294.55 crores). As at March 31,2020, TTSL has made on account payment under protest of Rs 570.30 crores a. Bharat Sanchar Nigam Limited (‘BSNL’) raised demands (March 31, 2019 – Rs 570.30 crores) against the total of Rs.651.04 crores (March 31, 2019- Rs.651.04 crores) demands. including interest of Rs.294.55 crores (March 31, 2019- Rs.294.55 crores) on January 15, 2005 with effect from As at March 31, 2020, TTSL has provided Rs.570.30 November 14, 2004 stating that ‘fixed wireless’ services crores (March 31, 2019 – Rs 570.30 crores) and excluded provided by the TTSL under the brand name “WALKY” the demand in respect of Gujarat circle of Rs.44.88 had mobility features and should be treated as mobile for crores (March 31, 2019 – Rs.44.88 crores). The balance the purpose of Interconnect Usage Charges Regulations amount of Rs.35.85 crores (March 31, 2019 – Rs.35.85 and Access Deficit Charge (‘ADC’) was payable on crores) together with accumulated interest on unpaid such calls. Hon’ble Telecom Dispute and Settlement amount of Rs.101.79 crores (March 31, 2019 – Rs.89.11 Appellate Tribunal (‘TDSAT’) negated the TTSL petition. crores) aggregating Rs.137.64 crores (March 31, 2019 TTSL filed an appeal before the Hon’ble Supreme – Rs.124.96 crores) has been disclosed as Contingent Court, which confirmed that ADC was payable on fixed Liability. wireless service vide order dated April 30, 2008. As there were claims and counter-claims between the TTSL and b. As disclosed in Note 29(d) on AGR matter under BSNL, the senior counsel of BSNL offered and Hon’ble exceptional items, TTSL has evaluated the obligation Supreme Court directed that quantification of amounts through Probable, Possible and Remote (PPR) model payable to each other be made by Hon’ble TDSAT. and reassessed the estimates as a result of more information or experience gained and independent Hon’ble TDSAT vide its various interim orders had opinion on certain legal issues from senior legal counsel, directed that BSNL and TTSL to exchange relevant to reflect the current best estimate, TTSL has considered information and reconcile the differences. On April 15, Penalty and Interest on penalty on SUC amounting to 2010, Hon’ble TDSAT confirmed BSNL demands for Rs.683.13 crores, as Contingent Liability. period up to August 25, 2005 and has given it liberty to lodge its claim for a further period up to February 28, c. Bharti raised invoices/demands on TTSL for period since 2006 without quantification. As TDSAT in its aforesaid June 2009 in respect of SMS terminating on its network judgment has not considered the directions of Hon’ble based on the interconnection agreement between TTSL Supreme Court vide judgment dated April 30, 2008 to and the operator. TTSL disputed on the ground that the reconcile claims/ counter claims and quantify amounts charges are not reasonable and is discriminatory. TDSAT payable by parties to each other, TTSL has filed an vide its order dated August 30, 2012, directed TTSL appeal in Hon’ble Supreme Court against TDSAT order to pay these charges. On October 17, 2012, TTSL’s of April 15, 2010 which has been admitted by the Hon’ble appeal against the said judgment was admitted by the Supreme Court on July 23, 2010. TTSL has also moved Hon’ble Supreme Court, but directed TTSL to pay the an application for interim relief against the Hon’ble above amount on a condition that any amounts paid by TDSAT order, which is pending. During 2015-16, TTSL TTSL would be refunded back with interest in the event has filed petition in the Hon’ble Supreme Court with the matter is adjudged in TTSL’s favour. Total amount respect to the matter for claiming the refund of excess payable to the operator (net of access charges receivable payment made to BSNL. The matter will be listed for by TTSL) amounts to Rs.422.05 crores (March 31, hearing in due course of time. Based on the legal advice 2019 – Rs.422.05 core) which has been fully provided available with TTSL, the penalty clause invoked by BSNL by TTSL. Amount paid under dispute as at December does not apply and TTSL is entitled to seek refund of the 31, 2019 amounts to Rs.387.81 crores (March 31, excess ADC amount paid to BSNL along with interest. 2019 – Rs.387.81 crores). Other operators have raised TTSL has received favorable order by TDSAT in respect claims for SMS termination amounting to Rs.268.83 of Gujarat circle on April, 4, 2019 basis which TTSL has crores (March 31, 2019 - Rs 268.83 crores), which were reduced Contingent liability by Rs 44.88 crores including challenged in TDSAT by TTSL. During the year 2015-16, accumulated interest on unpaid amount. TDSAT has pronounced judgement with respect to SMS TELESERVICES LIMITED 221

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

termination charges. TTSL believes that the amounts challenged the demand in TDSAT. TDSAT has stayed adjudged as payable by TDSAT are not tenable in the the demand and restrained DOT from taking coercive absence of any contractual arrangements with these action. TTSL based on the data available and internal operators for SMS termination and has filed the appeal assessment, believes that the demand will be quashed against the judgment in Hon’ble Supreme Court and the and hence, disclosed the demand as contingent liability. matter will be heard in due course. Accordingly, these TTSL has also challenged the Demand Notice dated claims have been disclosed as Contingent Liabilities. 16.09.2019 vide TP No. 80 of 2019, whereby DoT has sought liquidated damages amounting to Rs.28.30 d. TTSL has received show cause notice (‘SCN’) and crores (while Rs.21 crores have been claimed for delay demands from DoT for radiation and certain procedural in meeting first phase of roll-out obligation within the issues (non–submission/late submission of Electro specified time, Rs.7.30 crores have been claimed in Magnetic Field (‘EMF’) radiation self certificate, etc) respect of the second phase roll-out obligation) for amounting to Rs.664.18 crores (March 31, 2019: alleged default in complying with the first phase and Rs.662.31 crores). TTSL has responded to all SCN and second phase roll-out obligations in respect of dual demands stating the facts and made a provision Rs.2.01 (second) technology spectrum for Kerala, Odisha and crores pertaining to radiation related demands and UP (W) circles. TDSAT vide orders dated 09.10.2019 SCN. TTSL filed Telecom Petition no. 16 of 2015 to set stayed the operation of the impugned demands. aside Demand notice of Rs.0.80 crores dated May 02, 2014, alleging deviation of EMF exposure norms of self f. DoT has issued instruction to TERM Cell in each certificates in Rajasthan Circle. TTSL also challenged Licensed Service Area to conduct monthly audit to Demand Notice dated April 11, 2016 in Karnataka Circle checkcompliance levels of subscriber verification norms. alleging delay in submission of self certificates. The DoT has also issued circulars to impose penalty for matter is currently stayed, Industry had filed a set of non-compliances to its instructions observed during the four petitions in TDSAT challenging the issue of penalty monthly audits. Total penalty raised to TTSL on account for missing/improper/absent signage’s on the cell sites of subscriber verification norms is Rs.214.07 crores as (Petition No 223 of 2014); against testing fee (Petition at March 31, 2020 Some of these penalties have been No 500 of 2014), penalty for sharing operators to submit challenged by TTSL in various High Courts and TDSAT. fresh Self-Certificate on up-gradation (Petition No 199 Based on legal opinion that the circulars are contrary of 2015) and penalty to all sharing operators due to to Section 20A of the Indian Telegraph Act, 1885, as non-compliance on EMF exposure (Petition No 133 the circulars prescribe penalties in excess of those of 2015) and TDSAT has granted a stay. TDSAT had prescribed under the Telegraph Act, TTSL has disclosed allowed petition nos. 500 of 2014, 271 of 2013 in favour the said demands as Contingent Liability. of the Operators and partially allowed Petition no. 133 of 2015 in favour of the Operators including TTSL. Two Household Direct Exchange Lines (RDELs) installed in joint petitions (out of 5) in TDSAT challenging the issue Rajasthan circle during the period 2005-2010 and raised of (i) penalty for missing/improper/absent signages on penalty demands aggregating to Rs.426.88 crores on the cell sites (Petition No. 223 of 2014) and (ii) penalty TTSL. TTSL has challenged these demands before for sharing operators to submit fresh self-certificate on TDSAT, where it has an interim stay in its favour. Based up-gradation (Petition No 199 of 2015) are pending on legal advice, TTSL has considered the said demand adjudication. TDSAT has directed DoT not to take any as remote in nature. coercive measures for enforcement of the impugned demand notices/invocation of bank guarantee in the g. BSNL, in 2001, issued letters to TTSL and other above two petitions. Based on TDSAT judgments, TTSL operators seeking unilateral increase in interconnection has reassessed its position and revised contingent access charges. TTSL along with other operators filed a liability to Rs.15.21 crores (March 31, 2019: Rs.14.43 petition before TDSAT. TDSAT held the matter in favor crores). of TTSL. BSNL filed an appeal in the Hon’ble Supreme Court of India. The Hon’ble Supreme Court has stayed e. DoT has issued demand notes on March 15, 2018 of the operation of TDSAT order. Demands raised on TTSL Rs.25.45 crores and Rs.149.95 crores followed by SCN are Rs.51.08 crores (March 31, 2019 – Rs.51.08 crores). issued earlier for delay in roll out obligation of CDMA and In March 2009, BSNL demanded payment and issued GSM services as per License agreements. TTSL has disconnection notices in case of failure to pay. The 222 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Hon’ble Supreme Court has stayed disconnection and (ii) Taxes, duties and other demands of TTML further clarified that the stay regarding TDSAT judgment was only towards refunds to be made by BSNL to TTSL. S. Description March 31, March 31, No. 2020 2019 h. TTSL received demands from DoT for payment of one- 1 Claims against time spectrum fees for additional CDMA spectrum held the Company not beyond 2.5MHz in all its circles for the period from acknowledged as debt * January 1, 2013 till the expiry of the initial terms of the (refer notes below) respective licenses. TTSL responded to DoT, intimating about its decision to retain only one block spectrum -Telecom regulatory 575.01 1,230.93 in Delhi Circle and surrender the balance spectrum. matters In the opinion of TTSL, inter-alia, the above demand -Others 257.66 256.42 amounts to alteration of financial terms of the licenses 2 Disputed service tax 319.78 291.34 issued in the past and therefore, TTSL has filed a Writ demands {refer note (e)} Petition before Hon’ble Kolkata High Court challenging 3 Disputed sales tax 3.88 0.13 the decision to levy one-time spectrum charge and has demands {refer note (e)} subsequently, obtained a stay against the demand. TTSL has paid Rs.198.20 crores (March 31, 2019 – Total 1,156.33 1,778.82 Rs.198.20 crores) for the period January 1, 2013 to December 31, 2018 under protest. Kolkata High Court *includes contingent liabilities towards indemnification disposed off the matter and permitted TTSL to approach (Refer Note 1.2) TDSAT on March 12, 2019. TDSAT granted relief vide orders dated May 10, 2019 in terms of (a) setting aside Unless otherwise stated below the management believes that, the impugned decisions / orders dated 28.12.2012, based on legal advice, the outcome of these contingencies 15.03.2013 and demands dated 20.03.2013, (b) held that will be favourable and that a loss is not probable, further the amount of Rs.198.20 Cr. paid by TTSL for retaining outflow of economic resources is not probable in either case: 1.25 MHz CDMA spectrum beyond the startup spectrum a. Bharat Sanchar Nigam Limited (BSNL) issued demand in Delhi Circle was not legal and should be refunded back notices to pay Access Deficit Charge (ADC) aggregating to TTSL within 2 months from the date of the order, and (c) Rs.166.90 crores, including interest, for the period directed payment of interest at rate of 8% per annum from November 14, 2004 upto February 28, 2006. The the respective dates when the instalments were paid. DoT demands stated that ‘Fixed Wireless’ services provided filed CA no. 6766/2019 seeking a stay of TDSAT orders by TTML under the brand name ‘WALKY’ had mobility dated May 10, 2019. TTSL filed a Review Petition seeking features and should be treated as mobile services for declaration that DoT is not entitled to OTSC in view of the the purpose of Interconnect Usage Charges Regulations fact that TTSL had surrendered the spectrum. The Review and ADC was payable on such calls. TTML filed a petition Petition was dismissed by TDSAT orders dated August before the Hon’ble Telecom Dispute Settlement Appellate 30, 2019. TTSL has challenged the TDSAT orders dated Tribunal (TDSAT) in this regard. TDSAT disallowed May 10, 2019 and August 30, 2019 vide Civil Appeal Diary TTML’s petition and held that ADC was payable on such No. 32001 of 2019 since TDSAT had not dealt with the calls. TTML filed an appeal before the Hon’ble Supreme fact of surrender of spectrum. TTSL’s contention is that Court, which confirmed that ADC was payable on fixed even if DoT is empowered to levy OTSC, OTSC cannot wireless service vide order dated April 30, 2008. As there be levied on TTSL since TTSL has already surrendered were claims and counter-claims between TTML and the spectrum. The Supreme Court issued notice in the BSNL, the senior counsel of BSNL offered and Hon’ble Appeals vide Order dated September 30, 2019. TTSL has Supreme Court directed that quantification of amounts filed its Reply to DoT’s Appeal and DoT has also filed its payable to each other be made by Hon’ble TDSAT. Reply to TTSL’s Appeal. Time has been granted to parties to file Rejoinder Affidavits. There is no specific next date TTML thereafter, filed a petition in TDSAT to determine of hearing in the matters. Based on legal advice, TTSL / reconcile amounts payable to each other and TDSAT has considered the said demand as remote in nature. vide its order dated August 12, 2008 held that BSNL and TTML should exchange relevant information and reconcile the differences. On April 15, 2010, TDSAT TELESERVICES LIMITED 223

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

confirmed BSNL demands for period up to August 25, Maharashtra under protest. The DoT filed a Reply. TTML 2005 and gave BSNL liberty to lodge its claim for a has to file a Rejoinder and an application for modification further period up to February 28, 2006. TTML’s appeal of the prayer clause in view of payments being made before SC against the aforesaid TDSAT order dated April by TTML. The matter has been tagged with similar 15, 2010 was admitted by the SC vide its order dated writs filed by other operators for Hearing and was last July 23, 2010 but stay was not granted. Supreme Court listed on February 04, 2020, where Bharti Airtel sought had asked for details / break up of demands which have deferment. The matter was due to taken up on March 17, been filed. Based on the legal advice available with 2020 but in view of the outbreak of COVID-19, the matter TTML, the penalty clause invoked by BSNL does not has been adjourned. Based on legal advice, TTML has apply and TTML is entitled to seek refund of Rs.50.73 considered the said demand as remote in nature. crores, the excess ADC amount paid to BSNL along with interest. d. DoT has issued instruction to TERM Cell in each Licensed Service Area to conduct monthly audit to check Out of the aforesaid Rs.166.90 crores, TTML has till date compliance levels of subscriber verification norms. DoT provided for amounts aggregating Rs.111.61 crores. The has also issued circulars to impose penalty for non- balance amounts aggregating Rs.55.30 crores have compliances to its instructions observed during the been disclosed as Contingent Liability. monthly audits. Total penalty raised to TTML on account The matter was last listed before the Hon’ble Supreme of subscriber verification norms is Rs.268.84 crores till Court on March 30, 2017 and thereafter got adjourned. March 31, 2020. Some of these penalties have been This shall come up for hearing in due course. Payments challenged by TTML in various High Courts and TDSAT. made under dispute till date aggregates Rs.111.61 Based on legal opinion that the circulars are contrary crores in relation to the above. to Section 20A of the Indian Telegraph Act, 1885, as There are similar claims raised by other operators of the circulars prescribe penalties in excess of those Rs.3.29 crores, provision of Rs.2.68 Crores has been prescribed under the Telegraph Act, TTML has disclosed made and Rs.0.61 Crores has been disclosed as the said demands as Contingent Liability. Contingent Liability. Out of the aforesaid amount of Rs.268.84 crores, TTML b. As disclosed in Note 29(d) on AGR matter under has till date provided for amounts aggregating Rs. 3.69 exceptional items, TTML has evaluated the obligation crores. The balance amounts aggregating Rs.265.15 through Probable, Possible and Remote (PPR) model crores have been disclosed as Contingent Liability. and reassessed the estimates as a result of more information or experience gained and independent e. With regards to disputes and claims referred to above opinion on certain legal issues from senior legal counsel, against TTML, appropriate competent professional to reflect the current best estimate, TTML has considered advice is available with TTML based on which, favorable Penalty and Interest on penalty on SUC amounting to outcomes are anticipated and no liability is expected to Rs.243.23 crores, as Contingent Liability. accrue to TTML. c. A demand for Rs.290.17 crores for start up spectrum (iii) Provident Fund (PF) matter beyond 2.5MHz, being a one time spectrum charges claimed for the period from January 1, 2013 till the date The Group has evaluated the impact of the Supreme of expiry of the license, was received from the DoT. Court (SC) judgement dated February 28, 2019 in TTML has filed a writ petition in the Bombay High Court case of “Vivekananda Vidyamandir And Others Vs The against the demand and obtained a stay order. TTML Regional Provident Fund Commissioner (II) West Bengal” has undertaken (written to DoT conveying its intent) to and the related circular (Circular No.C-I/1(33)2019/ surrender 1.25 MHz of CDMA spectrum after retaining Vivekananda Vidya Mandir/284) dated March 20, 2019 1.25 MHz of spectrum over and above start up spectrum issued by the Employees’ Provident Fund Organisation of 2.5 MHz in Mumbai and to surrender the spectrum in relation to non-exclusion of certain allowances from beyond 2.5 MHz in Maharashtra. Pursuant thereto, the definition of “basic wages” of the relevant employees TTML has paid under protest all four installments for the purposes of determining contribution to provident aggregating Rs.119.58 crores for spectrum retained and fund under the Employees’ Provident Funds and also completed the surrender of spectrum in Mumbai and Miscellaneous Provisions Act, 1952. In the assessment 224 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

of the management which is supported by legal advice, 35. Segment Reporting the Group believes that the aforesaid judgement does not have material impact on the Group. The Group will The Group is engaged in providing telecommunication continue to monitor and evaluate its position based on services under Unified License. These, in the context future events and developments. of Ind AS 108 on “Segment reporting”, are considered to constitute a single reportable segment. Further, the Group provide telecommunication services only in the Indian domestic market and accordingly secondary segment reporting disclosure are not required. 36. Related Party Transactions (in terms of Ind AS 24)

List of Related parties

A Holding Company Tata Sons Private Limited

B Investing Party of Holding Company Sir Dorabji Tata Trust Sir Ratan Tata Trust

C Associate ATC Telecom Infrastructure Private Limited (Formerly known as Viom Networks Limited) (ATC Infrastructure Services Private Limited has been amalgamated w.e.f September 27, 2019)

D Subsidiaries, associate and joint venture companies of holding company with whom the Company had transactions

Associate Of Holding Company Conneqt Business Solutions Limited (formerly Tata Business Support Services Limited) Tata Chemicals Limited Tata Coffee Ltd. Tata Elxsi Limited Tata Consumer Products Limited (formerly Tata Global Beverages Limited) Tata Marcopolo Motors Ltd Tata Metaliks Ltd TMF Holdings Limited (formerly Tata Motors Finance Limited) Tata Motors Insurance Broking and Advisory Services Limited Tata Motors Ltd Tata power Delhi Distribution ltd Tata Power Solar Systems Limited Tata Power Trading Company Limited Tata Steel Limited Tata Steel International India Limited TELESERVICES LIMITED 225

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Tata Steel Downstream Products Limited (formerly Tata Steel Processing and Distribution Limited) Tata Steel BSL Limited (formerly Bhushan Steel Limited) (under amalgamation) Tata Steel Foundation Tata Technologies Ltd Tatanet Services Ltd The Indian Hotels Company ltd The Tata Power Company Limited Titan Company Limited. Titan Engineering And Automation Limited Nelco Limited Tata Ceramics Limited (ceased w.e.f January 8, 2020) Trent Ltd. Voltas Limited Roots Corporation Limited

Associate Of Fellow Subsidiary STT Global Data Centres Private limited (Formerly known as Tata Communications Data Centers Pvt Ltd) (w.e.f. May 28, 2018) Tata Projects Ltd

Fellow Subsidiaries APTOnline Limited (Formerly APOnline Limited) Automotive Stampings and Assemblies Limited C-Edge Technologies Limited Tata Advanced Materials Ltd. (w.e.f May 31, 2019) Infiniti Retail Limited Kriday Realty Private Limited Mponline Limited Maha Online Limited Panatone Finvest Limited Taj Air Limited Tata Advanced Systems Limited Tata Asset Management Limited Tata Autocomp Systems Limited Tata Autocomp Hendrickson Suspensions Private Limited Tata Capital Financial Services Limited Tata Capital Housing Finance Limited Tata Capital Limited 226 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Tata Communication Ltd Tata Communications (America) Inc.(w.e.f. May 28, 2018) Tata Communications Collaboration Services Private Ltd(w.e.f. May 28, 2018) Tata Communications Payment Solutions Ltd(w.e.f. May 28, 2018) Tata Communications Services (Bermuda) (w.e.f. May 28, 2018) Tata Communications Transformation Services Limited(w.e.f. May 28, 2018) Tata Consultancy Services Limited Tata Consulting Engineers Limited TCE Consulting Engineers Limited Tata Housing Development Company Limited Tata Interactive Systems (Upto July 5,2018) Tata International Limited Tata Investment Corporation Limited Tata Limited Tata Petrodyne Limited(upto January 20,2020) Tata Realty and Infrastructure Limited Tata Securities Limited Tata Sia Airlines Limited Tata Toyo Radiator Ltd Tata Trustee Company Limited Tata Value Homes Limited (Formerly known as Smart Value Homes Limited) TCS e-Serve International Limited TRIL Amritsar Projects Limited (formerly TRIF Amritsar Projects Limited) (upto December 09, 2019) Tril Infopark Limited TRIL Urban Transport Private Limited Tata AIG General Insurance Company Limited

Joint venture of fellow subsidiary Sector 113 Gatevida Developers Private Limited (Formerly Known as Lemon Tree Land & Developers Private Limited) Tata AutoComp GY Batteries Private Limited (formerly Tata AutoComp GY Batteries Limited) Tata Boeing Aerospace Limited (formerly Tata Aerospace Limited) Tata Lockheed Martin Aerostructures Limited Tata Sikorsky Aerospace Limited (Formerly known as Tara Aerospace Systems Limited) Smart Value Homes (New Project) LLP Tata Ficosa Automotive Systems Private Limited (Formerly known as Tata Ficosa Automotive Systems Limited) Tata International Wolverine Brands Limited Tata International DLT Private Limited TELESERVICES LIMITED 227

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Joint Venture of Holding Company Tata SmartFoodz Limited (formerly SmartFoodz Limited) (w.e.f March 27, 2019) Tata AIA Life Insurance Company Limited Tata Industries Limited (w.e.f March 27, 2019) Tata Sky Limited Tata Unistore Limited (Formerly Tata Industrial Services Limited) (Upto March 27, 2019) Tata Advanced Materials Ltd. (upto May 30, 2019) Tata Sky Broadband Private Limited

E Post employment benefit plans of Company (Refer note 32(e) for transactions during the year) Tata Teleservices Provident Fund Tata Teleservices Gratuity Fund Tata Teleservices Superannuation Fund Tata Teleservices (Maharashtra) Gratuity Fund Tata Teleservices (Maharashtra) Superannuation Fund

F Key Management Personnel Mr. N.Srinath - Managing Director (upto March 31, 2020)/ Non-Executive Director (w.e.f. April 1, 2020) Ms. Bharati Rao- Independent Director Mr. Gopichand Katragadda- Non-Executive Director (Resigned w.e.f. January 16, 2019) Mr. Narendra Damodar Jadhav- Independent Director Ms. Vibha Paul Rishi- Independent Director (Resigned w.e.f. July 18, 2019) Mr. Saurabh Agrawal- Non-Executive Director Mr. Ankur Verma - Non-Executive Director (w.e.f. June 1, 2018) Mr. Anurag Shrivastav - Chief Financial Officer (upto June 15, 2018) Mr. Ilangovan G., Chief Financial Officer (w.e.f. June 15, 2018)

228 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) 0.11 0.11 6.27 9.90 0.26 4.16 1.84 65.58 52.22 16.08 84.26 (1.36) (0.06) (0.15) (26.42) Total (337.12) (929.48) (620.66) 1,148.94 1,087.68 (8,696.28) (5,000.00) (2,000.00) (29,616.28) (12,049.96) ------0.26 16.08 Key personnel managerial ------(0.09) holding party of Investing company ------0.11 0.11 0.62 0.02 2.52 (33.52) Joint venture company of holding ------0.02 (0.35) Joint venture of fellow subsidiary ------0.20 7.76 5.90 0.01 1.83 0.35 1.82 (0.01) (0.15) (17.21) company Associate of holding ------0.01 (0.37) (0.01) (0.05) of fellow Associate subsidiary ------5.66 3.89 4.15 0.01 65.59 52.22 79.67 (1.36) (0.06) 485.53 121.29 (26.42) (285.38) (227.60) Fellow (1,254.82) subsidiaries ------0.11 0.11 0.28 (0.21) (0.15) 655.63 (393.42) Associate ------0.01 (0.05) 966.39 (929.48) Holding (8,696.28) (5,000.00) (2,000.00) company (29,616.28) (10,795.14) March 31, 2020 1) Expenses Administrative and Other Expenses Advertisement and Business Promotion Expenses Customer Service and Call Centre Cost Access Cost Interconnect and Other Network Operation Cost Rent Managerial Remuneration Director Sitting Fees Interest expense on CCPS / OCPS / OCD 2) Income Rent income Service Revenue Other Income 3) Other transactions Reimbursement of Expenses paid Reimbursement of Expenses Received Asset Purchase of Fixed Assets Sale of Fixed Issuance of new CCPS by conversion of OCD Issuance of new CCPS Issue of OCD by the Company Issue of Equity Shares 4) Outstanding as at: Instrument entirely equity in nature (CCPS) Borrowings Payables Trade Receivables Trade Details of transactions with related parties for the year ended March 31, 2020 In the table above, income receipts and liabilities are shown in brackets. TELESERVICES LIMITED 229

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise) 5.86 0.19 3.48 0.08 20.84 41.70 12.73 (0.08) 232.16 178.25 (13.26) Total Total (245.18) (205.32) (614.86) 1,391.80 2,621.56 1,901.41 (15,920.00) (15,160.64) (15,920.00) (17,191.08) ------5.86 0.19 Key Personnel Managerial ------0.27 0.08 3.13 (0.01) (31.53) Company of Holding Joint Venture Joint Venture ------(1.14) (0.01) of fellow subsidiary Joint venture ------

1.80 7.45 0.38 0.04 3.08 18.55 (2.09) (0.01) 420.67 (19.49) Company Associate Of Holding ------0.01 0.17 (0.32) (1.77) of fellow Associate subsidiary - - - - 3.48 0.04 22.45 41.71 14.22 97.84 12.35 (0.08) 456.79 171.43 230.36 (11.49) (192.19) (224.01) (205.31) Fellow (1,400.00) (1,133.53) Subsidiaries ------0.44 (0.25) 514.34 (409.48) 2,599.88 Associate ------0.21 0.01 0.01 (0.01) (0.26) 1,803.57 Holding Company (15,920.00) (13,760.64) (15,920.00) (16,057.55) March 31, 2019 1) Expenses Administrative and Other Expenses Customer Service and Call Centre Cost Access Cost Interconnect and Other Network Operation Cost Rent Managerial Remuneration Director Sitting Fees Interest expense on CCPS / OCPS OCD 2) Income Rent income Service revenue Other Income 3) Other transactions Reimbursement of expenses paid Reimbursement of expenses received Purchase of fixed asset Sale of fixed assets Issuance of new CCPS by conversion of OCD Issue of OCD by the Company 4) Outstanding as at: Instrument entirely equity in nature (CCPS) Borrowings Payables Trade Receivables Trade Details of transactions with related parties for the year ended March 31, 2019 In the table above, income receipts and liabilities are shown in brackets. 230 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Transactions with Key management personnel 37. Hedging activities and derivatives

March 31, March 31, Derivatives not designated as hedging instruments 2020 2019 The Group uses foreign exchange forward contracts, Short term employee benefits 15.87 5.67 cross currency swaps (‘CCS’) and interest rate swaps Post-employment benefits 0.21 0.19 to manage some of its exposures. The foreign exchange Directors sitting fee 0.26 0.19 forward contracts and cross currency swaps are not Total 16.34 6.05 designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the As the liabilities for the gratuity and compensated absences underlying transactions. are provided on an actuarial basis and calculated for the Company as a whole rather than each of the individual employees, the said liabilities pertaining specifically to Key managerial personnel are not known and hence, not included in the above table.

Hedge disclosures

The current status of hedging of derivative instruments is given below:

Particulars Notional amount (USD in Mns) Fair value assets/(liabilities) (INR Cr) March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Forward contracts 1.88 4.22 0.35 (0.91) ICICI Bank Loan - Forward contracts 172.49 - 54.43 - Total 174.37 4.22 54.78 (0.91)

The foreign currency exposure that are not hedged by derivative instruments:

Particulars Notional amount (USD in Mns) March 31, March 31, 2020 2019 Trade Payables USD 0.10 2.00 EURO - (0.05) Total 0.10 1.95

Interest Rate Swap Contract

Using Interest rate swap contracts, the Group agrees to exchange floating rate of interest rate to fixed rate on agreed principal amounts. Such contracts enable the Group to mitigate the interest rate risk on borrowings. Such Contracts are settled on semi- annual basis. The terms of the interest rate swaps generally match the terms of the underlying exposure. In cases where any hedge ineffectiveness arises, it is recognized through profit or loss. Interest Rate Swaps measured at fair value through OCI are designated as hedging instruments in cash flow hedges of floating rate borrowings. TELESERVICES LIMITED 231

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Details are listed below:

Interest rate swaps - hedged Notional amount (USD in Mns) Fair value assets/(liabilities) (INR Cr) March 31, March 31, March 31, March 31, 2020 2019 2020 2019 ICICI Bank Loan 172.49 - (14.30) -

Interest rate swaps - hedged Notional amount (INR Cr) Fair value assets/(liabilities) (INR Cr) March 31, March 31, March 31, March 31, 2020 2019 2020 2019 IndusInd Bank Loan 1,485.00 1,192.50 (1.45) (2.59)

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessment to ensure that an economic relationship exists between the hedged item and hedging instrument. There was no recognised ineffectiveness during the year ended March 31, 2020 (for the year ended March 31, 2019: Nil).

Movement in Cash Flow Hedge Reserve and Cost of Hedge Reserve

Cash Flow Hedge Reserve Amount As at 31.03.2018 - Add: Change in fair value of Interest rate swaps (1.76) As at 31.03.2019 (1.76) Add: Change in fair value of Interest rate swaps (3.39) Closing balance as at 31.03.2020 (5.15) Cost of Hedge Reserve As at 31.03.2019 - Add: Change in fair value of Forward contracts and Interest rate swaps (12.55) Closing balance as at 31.03.2020 (12.55)

38. Fair Values of financial assets and liabilities

The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial assets, financial liability and equity instrument are disclosed in note 2.3(t) to the consolidated financial statements. Set out below, is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments:

232 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Financial Assets and Liabilities (including assets held for sale and associated liabilities as at March 31, 2019)

Fair Value Carrying Value As at As at As at As at March 31, March 31, March 31, March 31, 2020 2019 2020 2019 Financial Assets (a) Measured at Fair Value through Profit or Loss (FVTPL) Mandatorily measured: Investments 7.28 1,210.54 7.28 1,210.54 Derivative Financial Assets 5,992.23 5,940.59 5,992.23 5,940.59 (b) Amortised Cost Investments 16.27 - 16.27 - Trade receivables 279.76 300.76 279.76 300.76 Cash and cash equivalents 275.99 710.04 275.99 710.04 Bank balances other than above 35.48 33.99 35.48 33.99 Loans and other financial assets 1,114.63 381.42 1,114.63 381.42 7,721.64 8,577.34 7,721.64 8,577.34 Financial Liabilities (a) Measured at Fair Value through Profit or Loss (FVTPL) Derivative Financial Liabilities 0.70 3.50 0.70 3.50 (b) Amortised Cost Borrowings 19,214.60 32,087.09 19,214.60 32,087.09 Lease Liabilities 677.49 - 677.49 - Trade payables 957.92 1,509.27 957.92 1,509.27 Other current financial liabilities 5,704.70 5,107.51 5,704.70 5,107.51 26,555.41 38,707.37 26,555.41 38,707.37

The carrying amounts of trade receivables, trade to the use of unobervalbe inputs, including own credit payables, other financial liabilities, short term borrowings, risk. cash and cash equivalents and other bank balances are considered to be the same as their fair value, due to their For financial assets and liabilities that are measured short-term nature. at fair value, the carrying amounts are equal to the fair values. The fair value for loans and security deposits were calculated based on cash flows discounted using a For fair value of Investment and derivative financial current lending rate. They are classified as level 3 fair assets/liabilities, the following methods and assumptions values in fair value hierarchy due to the inclusion of are used to estimate the fair values: unobservable inputs including counterparty credit risk. a) The fair values of the FVTPL financial assets The fair values of non-current borrowings are based on (investments in mutual funds) are derived from discounted cash flows using a current borrowing rate. quoted market prices in active markets. They are classified as level 3 fair values hierarchy due TELESERVICES LIMITED 233

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

b) The fair value of CCPS derivative component is As at As at based on valuation from certified valuer. The valuer March 31, March 31, has used binomial lattice model. The rate of interest 2020 2019 assumed between 4.25% to 4.57% and volatility assumed between 83% to 165%. Financial Assets c) The other derivative assets/ liabilities are basis the FVTPL valuation received from the banks. Quoted Level 1 3.14 1,206.40 Investments d) The current and non-current portion of derivative Derivative Level 2 5,992.23 5,940.59 assets and liabilities as disclosed above is as follows: financial assets Unquoted Level 3 4.14 4.14 Particulars March 31, March 31, Investments 2020 2019 5,999.51 7,151.13 Derivative Assets- Non 3,994.20 1,868.40 current Financial Liabilities Derivative Assets- Current 1,998.03 4,072.19 FVTPL Derivative Liabilities- 0.70 3.50 Derivative Level 2 0.70 3.50 Current financial liabilities

39. Fair value hierarchy 0.70 3.50

The following table provides the fair value measurement The financial assets categorised as Level 3 pertain to hierarchy of the Group’s assets and liabilities. unquoted investments in equity instruments of an entity in the normal course of business to obtain savings in The fair value hierarchy is based on inputs to valuation electricity expenses. Thus, the management believes that techniques that are used to measure fair value that are the carrying value is a fair approximation of the fair value. either observable or unobservable and consists of the following three levels. The fair values of the financial assets and financial liabilities included in the level 2 categories above have • Level 1 — Quoted (unadjusted) market prices in been determined in accordance with generally accepted active markets for identical assets or liabilities pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate • Level 2 — Valuation techniques for which the that reflects the credit risk of counterparties. lowest level input that is significant to the fair value measurement is directly or indirectly observable During the year ended March 31, 2020 and March 31, 2019, there were no transfers between Levels of fair • Level 3 — Valuation techniques for which the value measurements. lowest level input that is significant to the fair value measurement is unobservable 40. Financial risk management objectives and policies

For the purpose of fair value disclosures, the Group The risk management objective of the Group is to hedge has determined classes of assets and liabilities on the risk of change in the foreign currency exchange rates basis of the nature, characteristics and risks of the asset associated with its direct transactions denominated in or liability and the level of the fair value hierarchy as foreign currency. Since most of the transactions of the explained above. Group are denominated in its functional currency (INR), any foreign exchange fluctuation affects the profitability The following table summarises financial assets and of the Group and its financial position. Hedging provides liabilities measured at fair value on a recurring basis and stability to the financial performance by estimating the financial assets that are not measured at fair value on a amount of future cash flows and reducing volatility. recurring basis (but fair value disclosures are required). 234 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

The Group follows a consistent policy of mitigating The sensitivity analysis below have been determined foreign exchange risk by entering into appropriate based on floating rate rupee liabilities that are not hedged hedging instruments as considered from time to time. by derivative instruments, the analysis is prepared The Group is having a defined risk management policy assuming the amount of the liability outstanding at the for exposure in foreign currencies. The Group does not end of the reporting period was outstanding for the whole enter into a foreign exchange transaction for speculative year. A 50 basis point increase or decrease represents purposes. management’s assessment of the reasonably possible change in interest rates. The Group’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and If interest rate had been 50 basis points higher/lower other payables. and all other variables were held constant, the Group’s profit/other comprehensive income for the year ended Market risk March 31, 2020 would decrease by Rs.261.23 crores and increase by Rs.295.57 crores (NIL as at March 31, The Group’s activities expose it primarily to the financial 2019). risks of changes in foreign currency exchange rates and interest rates. The Group enters into a variety of Foreign currency risk management derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk, including: Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate i. Forward foreign exchange contracts to hedge the because of changes in foreign exchange rates. The exchange rate risk arising on the suppliers’s credit Group undertakes transactions denominated in foreign and foreign currency trade payables. currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are ii. Cross currency interest rate swap managed within approved risk management policy parameters using forward foreign exchange contracts; iii. Interest rate swaps to mitigate risk of rising interest principal only swaps contracts, cross currency interest rate rate swap contracts. There has been no change to the Group’s exposure The Group’s exposure to the risk of changes in foreign to market risks or the manner in which these risks are exchange rates relates primarily to the Group’s foreign managed and measured. currency borrowing and interest thereon. When a derivative is entered into for the purpose of being Interest rate risk management a hedge, the Group negotiates the terms of those

derivatives to match the terms of the hedged exposure. The Group is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The Group is having risk management policy which The floating interest rate risk on borrowing is managed provides the guidelines for managing the currency risk by the Group by the use of interest rate swap contracts. exposure. Accordingly, the Group hedges upto 100% Hedging activities are evaluated regularly to align with of its underlying liabilities due within next one year. the interest rate views and defined risk appetite, ensuring For the balance underlying liabilities, the Group hedge the most cost-effective hedging strategies are applied. ranges from 0-50%. As at March 31, 2020 the Group has The Group’s exposures to interest rate financial liabilities unhedged foreign currency exposure of USD 0.10 million are detailed in the liquidity risk management section of (USD 2.00 million as at March 31, 2019) and hence the this note. impact of foreign currency fluctuation is not material. As at March 31, 2020, the Group has variable rate borrowings of Rs.6,538.54 crores (Rs.1,185.35 crores as at March 31, 2019), out of which net exposure to interest rate risk is Rs.3,757.91 crores (Rs.NIL as at March 31, 2019) after considering the effect of derivative instruments. TELESERVICES LIMITED 235

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Credit risk Financial instruments and cash deposits:

Financial assets: Credit risk from balances with banks and financial institutions is managed by the Group’s treasury The Group maintains exposure in cash and cash department in accordance with the Group’s policy. equivalents, term deposits with banks, security deposits Investments of surplus funds are made only with with counter-parties, loans to third parties. Individual risk approved counterparties and within credit limits assigned limits are set for each counterparty based on financial to each counterparty. Counterparty credit limits are position, credit rating and past experience. Credit limits reviewed by the Group’s Board of Directors on regular and concentration of exposures are actively monitored basis and may be updated throughout the year subject by the Group. to approval of the Group’s Finance Committee. The limits are set to minimise the concentration of risks and The Group’s maximum exposure to credit risk as at therefore mitigate financial loss through counterparty’s March 31, 2020 and March 31, 2019 is the carrying potential failure to make payments. value of each class of financial assets as disclosed in the consolidated financial statements. Liquidity risk

Trade receivables: Ultimate responsibility for liquidity risk management rests with the management and board of directors, Trade receivables and unbilled revenue are typically which has established an appropriate liquidity risk unsecured and are derived from revenue earned from management framework for the management of customers. Trade receivables of the Group consist of the Group’s short-, medium- and long-term funding a large number of customers, spread across diverse and liquidity management requirements. The Group industries and geographical areas and hence the manages liquidity risk by maintaining adequate banking Group has minimal concentration of credit risk of its facilities and reserve borrowing facilities (i.e. cash credit, customers. Credit risk has been managed by the Group bank loans, bill discounting, buyers credit and suppliers through credit approvals, establishing credit limits credit), by continuously monitoring forecast and actual and continuously monitoring the creditworthiness of cash flows, and by matching the maturity profiles of customers to which the Group grants credit terms in the financial assets and liabilities. Also, refer note 1.3 on normal course of business. On account of adoption of going concern. Note below sets out details of additional Ind AS 109, the Group uses expected credit loss model undrawn facilities that the Group has at its disposal to to assess the impairment loss or gain. The Group uses further reduce liquidity risk. a provision matrix and forward looking information and an assessment of the credit risk over the expected life of At March 31, 2020, the Group has undrawn committed the financial asset to compute the expected credit loss borrowing facilities of Rs.700.96 crores (Rs.817.59 allowance for trade receivables. crores as at March 31, 2019) towards working capital limits expiring within a year and renewable at discretion The Group’s maximum exposure to credit risk for the of the banks. components of the balance sheet at March 31, 2020 and March 31, 2019 is the carrying amounts as illustrated in The table below summarizes the maturity policy of the Note 9. Group’s financial liabilities (including liabilities directly associated with asset held for sale) based on contractual undiscounted payments. 236 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

As at March 31, 2020

Particulars Carrying Due in 1st Due in 2nd Due in 3rd Due after Total amount year year to 5th year 5th year contracted cash flows Financial Liabilities: Non-Derivative Liabilities: Non-current borrowings (including 10,148.68 - 9,533.37 2,000.83 - 11,534.20 interest accrued but not due)* Lease Liabilities 677.49 199.73 201.56 416.39 - 817.68 Current borrowings (including interest 9,065.92 9,432.35 - - - 9,432.35 accrued but not due)* Trade and other payables 957.92 957.93 - - - 957.93 Other financial liabilities 5,704.71 6,132.11 - - - 6,132.11 Total Non-Derivative Liabilities 26,554.72 16,722.12 9,734.93 2,417.22 - 28,874.27 Derivative Liabilities: Interest Rate Swap 0.70 0.70 - - - 0.70 Total Derivative Liabilities 0.70 0.70 - - - 0.70

As on March 31, 2019

Particulars Carrying Due in 1st Due in 2nd Due in 3rd Due after Total amount year year to 5th year 5th year contracted cash flows Financial Liabilities: Non-Derivative Liabilities: Non-current borrowings (including 17,280.65 - 6,512.87 11,742.36 3,090.16 21,345.39 interest accrued but not due)* Lease Liabilities ------Current borrowings (including interest 14,806.44 14,986.85 - - - 14,986.85 accrued but not due)* Trade and other payables 1,509.27 1,568.47 - - - 1,568.47 Other financial liabilities 5,107.51 5,358.07 - - - 5,358.07 Total Non-Derivative Liabilities 38,703.87 21,913.39 6,512.87 11,742.36 3,090.16 43,258.78 Derivative liabilities: Forwards 0.91 0.91 - - - 0.91 Interest Rate Swap 2.59 2.59 - - - 2.59 Total Derivative Liabilities 3.50 3.50 - - - 3.50

*It includes contractual interest payment based on interest rate prevailing at the end of the reporting period after adjustment for the impact of interest swaps, over the tenor of the borrowings.

The disclosed financial derivative instruments in the above table are the gross undiscounted cash flows. However, those amounts may be settled gross or net. TELESERVICES LIMITED 237

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Excessive risk concentration

There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions. Further, the Group’s policies and procedures include specific guidelines to whereby maximum bank wise limits are set up to which the Group can hedge with each of the banks.

41. Net Debt Reconciliation

As at As at March 31, March 31, 2020 2019 Borrowings Non-current borrowings (including current maturities of long term debt and liabilities 15,788.48 22,287.30 directly associated with assets classified as held for sale) Current borrowings 9,065.92 14,806.45 Interest accrued but not due 1.42 0.16 Total Borrowings 24,855.82 37,093.91 Cash and cash equivalents 275.99 710.04 Current investments 3.14 1,206.40 279.13 1,916.44 Total Net debt 24,576.69 35,177.47

Cash Current Total Total Net Debt and cash investments Borrowings equivalents Net debt as at March 31, 2018 76.64 636.00 47,326.88 46,614.24 Cash flows 633.40 564.47 6,996.39 5,798.52 Interest expense - - 3,992.76 3,992.76 Interest paid - - (4,261.18) (4,261.18) Other non-cash movements - Fair value adjustments - 5.93 (3,945.26) (3,951.19) Conversion of OCD into equity instruments - - (13,015.68) (13,015.68) Net debt as at March 31, 2019 710.04 1,206.40 37,093.91 35,177.47

Cash Current Total Total Net Debt and cash investments Borrowings equivalents Net debt as at March 31, 2019 710.04 1,206.40 37,093.91 35,177.47 Cash flows (434.05) (1,194.17) (510.59) 1,117.63 Interest expense - - 2,054.06 2,054.06 Interest paid - - (1,289.04) (1,289.04) Transfer to Bharti (Refer note 1.2) (4,263.95) (4,263.95) Other non-cash movements - Fair value adjustments - (9.09) - 9.09 - Adjustments for equity component of compound - - 467.72 467.72 financial instruments -Conversion of OCD into equity instruments - - (8,696.29) (8,696.29) Net debt as at March 31, 2020 275.99 3.14 24,855.82 24,576.69 238 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

42. Payment to Auditors (excluding GST) of Rs.10,858.58 crores (March 31, 2019: Rs.15,001.04 crores) in respect of unabsorbed depreciation and Particulars Year ended Year ended business losses amounting to Rs.31,077.79 crores March 31, March 31, (March 31, 2019: Rs.43,343.08 crores) in aggregate 2020 2019 which can be carried forward against future taxable For audit fees 1.21 1.45 income. Tax losses carry forward for which no deferred tax assets were recorded amounted to: For other services 4.71 3.34 For reimbursement of 0.50 0.48 expenses Particulars As at year As at Total 6.42 5.27 ended ended March 31, March 31, 43. Deferred taxes 2020 2019* Expiring within 1 year 6.98 - No provision for current income tax is required to be Expiring within 1 to 5 284.40 5,201.22 made as, on the basis of the Group’s computations, years there is no taxable income. The Group also carries Expiring within 5 to 8 6,961.38 7,584.45 forward accumulated losses resulting into tax loss carry years forward situation. Since, it is not probable that the Group Expiring without limitation 23,825.03 30,557.41 will generate future taxable profits; no deferred tax asset Total 31,077.79 43,343.08 has been recognized on unused tax losses. Accordingly, the Group has restricted recognition of deferred tax * includes temporary difference relating to CMB asset to the extent of deferred tax liability. undertaking which has been transferred to Bharti (Refer note 1.2). Given that uncertainty over future taxable profits available for set off against unabsorbed depreciation and business The tax rate for March 2020 was 34.94% (March 2019: losses, the Group has not recognised deferred tax assets 34.61%). 44. Disclosures pursuant to Schedule III to the Companies Act 2013

Year ended March 31, 2020 Name of the entity Net Assets Share in profit or (loss) Share in other Share in total i.e. total assets minus total comprehensive income comprehensive income liabilities As % of Amount As % of Amount As % of Amount As % of Amount consolidated consolidated consolidated consolidated net assets profit or loss profit or loss profit or loss Parent Tata Teleservices Limited 66% (12,608.19) 87% (11,402.60) 103% (20.37) 87% (11,422.97) Subsidiaries Tata Teleservices (Maharashtra) (14%) 2,588.87 (2%) 262.91 (2%) 0.31 (2%) 263.22 Limited MMP Mobi Wallet Payment 0% 0.82 0% 0.20 - - 0% 0.20 Systems Limited TTL Mobile Private Limited 0% 7.90 0% 0.18 - - 0% 0.18 NVS Technologies Limited 0% (0.15) 0% (0.01) - - 0% (0.01) Non-controlling Interests in all subsidiaries Tata Teleservices (Maharashtra) 47% (9,036.71) 15% (1,920.19) (2%) 0.34 15% (1,919.85) Limited Associate ATC Telecom Infrastructure ------Private Limited* Total 100% (19,047.46) 100% (13,059.51) 100% (19.72) 100% (13,079.23) TELESERVICES LIMITED 239

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Year ended March 31, 2019 Name of the entity Net Assets Share in profit or (loss) Share in other Share in total i.e. total assets minus total comprehensive income comprehensive income liabilities As % of Amount As % of Amount As % of Amount As % of Amount consolidated consolidated consolidated consolidated net assets profit or loss profit or loss profit or loss Parent Tata Teleservices Limited 65% (12,402.19) 237% (6,304.84) 87% (6.77) 236% (6,311.61) Subsidiaries Tata Teleservices (Maharashtra) (5%) 992.15 (149%) 3,957.49 7% (0.51) (148%) 3,956.98 Limited MMP Mobi Wallet Payment 0% 0.63 0% (0.20) - - 0% (0.20) Systems Limited TTL Mobile Private Limited 0% 7.74 0% 0.42 - - 0% 0.42 NVS Technologies Limited 0% (0.14) 0% (0.01) - - 0% (0.01) Non-controlling Interests in all subsidiaries Tata Teleservices (Maharashtra) 40% (7,661.85) 13% (345.14) 7% (0.54) 13% (345.68) Limited Associate ATC Telecom Infrastructure - - (1%) 29.26 - - (1%) 29.26 Private Limited* Total 100% (19,063.66) 100% (2,663.02) 100% (7.82) 100% (2,670.84) * not consolidated as per equity method with effect from October 24, 2018, as the Group has classified the investment in ATC as asset held for sale – Refer note 21

45. Discontinued operations 46. Capital management

Particulars For the For the The Group manages its capital to ensure it will be able to year ended year ended continue as a going concern while maximizing the return March 31, March 31, to shareholders through the optimization of the debt 2020 2019 and equity balance. The capital structure of the Group A. Results of includes issued net debt (borrowings as detailed in note discontinued operations 17 and 18 offset by cash and bank balances and current investments) and total equity of the Group. Other Income 0.54 1.84 Other Expenses (0.16) (1.61) The Group manages its capital structure and makes Profit before tax from 0.38 0.23 adjustments in light of changes in economic conditions discontinued operations and the requirements of the financial covenants. The Profit after tax from 0.38 0.23 Group monitors capital using a gearing ratio, which is discontinued operations net debt divided by total equity. B. Cash flows from discontinued operations The gearing ratio at the end of the reporting period was Net cash generated/ as follows: (used in): - Operating activities 1.09 (5.58) - Investing activities 0.23 5.66 - Financing activities (0.42) - Net cash flows for the 0.90 0.08 year 240 25th 2019-20

Notes to consolidated financial statements as at and for the year ended March 31, 2020 (All amounts in Rupees Crores unless stated otherwise)

Particulars As at As at *Debt is defined as long-term and short-term borrowings March 31, March 31, (excluding derivatives and financial guarantee contracts, and 2020 2019 Lease liabilities) including current maturities of long term debt and interest accrued but not due (including liabilities directly Debt * 24,855.82 37,093.91 associated with assets held for sale for the year ended March Equity Share capital 6,704.51 5,775.03 31, 2019). Instrument entirely equity in 29,616.28 15,920.00 nature Other equity (46,331.55) (33,096.85) Total Equity (10,010.76) (11,401.82) Net debt to equity ratio (2.48) (3.25)

In terms of our report attached

For Price Waterhouse Chartered Accountants LLP For and on Behalf of the Board of Directors Firm Registration No.: 012754N/N500016

Nitin Khatri Ankur Verma N Srinath Partner (Director) (Director) Membership Number: 110282 (DIN No: 07972892) (DIN No: 00058133)

Ilangovan G Rishabh Aditya (Chief Financial Officer) (Company Secretary) Place : Mumbai Place : Mumbai Date : June 2, 2020 Date : June 2, 2020 TELESERVICES LIMITED 241

Form AOC-I

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014) Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures

Part “A”: Subsidiaries (Information in respect of each subsidiary to be presented with amounts in Rs. In Crores)

1 Sl. No. ( a ) ( b ) ( c ) ( d ) 2 Name of the subsidiary Tata TTL Mobile MMP Mobi NVS Teleservices Private Limited Wallet Payment Technologies (Maharashtra) (formerly Virgin Systems Limited Limited Limited Mobile India Private Limited) 3 The date since when subsidiary was October 17, November 10, July 13, September 12, acquired 2018 2017 2010 2014 4 Reporting period for the subsidiary N.A N.A N.A N.A concerned, if different from the holding company’s reporting period 5 Reporting currency INR INR INR INR 6 Exchange rate as on the last date N.A N.A N.A N.A of the relevant Financial year in the case of foreign subsidiaries. 7 Share Capital 1,954.93 460.11 71.00 0.10 8 Reserves & Surplus (19,434.09) (1,022.05) (70.77) (0.15) 9 Total Assets 1,714.21 9.06 3.77 0.08 10 Total Liabilities 19,193.37 571.00 3.54 0.13 11 Investments - 3.14 - - 12 Turnover 1,077.74 - - - 13 Profit / (Loss) before taxation (3,714.11) (21.40) 0.20 (0.01) 14 Provision for taxation - - - - 15 Profit / (Loss) after taxation (3,714.11) (21.40) 0.20 (0.01) 16 Proposed Dividend - - - - 17 % of shareholding 48.30% 100% 100% 100%

For and on Behalf of Board of Directors

Ankur Verma N Srinath Director Director [DIN No: 07972892] [DIN No: 00058133]

Place: Mumbai Ilangovan G Rishabh Aditya Date: June 2, 2020 Chief Financial Officer Company Secretary

Note: 1. Names of subsidiaries which are yet to commence operations : NVS Technologies Limited 2. Names of subsidiaries which have been liquidated or sold during the year : Not Applicable 3. The figures shown herein above are as per the representation in respective company’s audited financials 242 25th 2019-20

Part “B”: Associates and Joint Ventures Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures

(Information in respect of each Associates/Joint Venture to be presented with amounts in Rs. In Crores)

Name of Associates/Joint Ventures ATC Telecom Infrastructure Private Limited (‘ATC’) 1. Latest audited Balance Sheet Date March 31, 2019 2.Date on which the Associate or Joint Venture was April 21, 2016 associated or acquired 3. Reporting currency INR 4.Shares of Associate/Joint Ventures held by the company on the year end” Number 102,780,699 Amount of Investment in Associates/Joint Venture 2,220.07 Extent of Holding % 11.63% 5. Description of how there is significant influence Power to participate in financial and operational policy 6. Reason why the associate/joint venture is not Classified as asset held for sale consolidated 7. Networth attributable to Shareholding as per latest 780.95 audited Balance Sheet 8. Profit / (Loss) for the year i. Considered in Consolidation Not applicable since investment in ATC classified as asset ii. Not Considered in Consolidation held for sale

For and on Behalf of Board of Directors

Ankur Verma N Srinath Director Director [DIN No: 07972892] [DIN No: 00058133]

Place: Mumbai Ilangovan G Rishabh Aditya Date: June 2, 2020 Chief Financial Officer Company Secretary

Note: 1. Names of associates or joint ventures which are yet to commence operations: Not applicable 2. Names of associates or joint ventures which have been liquidated or sold during the year : Not applicable