24 November 2014
IDEA CELLULAR FY14
Idea Cellular’s annual report analysis for FY14 highlights healthy
increase in operating cash flows driven by robust EBITDA growth of
38.5% and negative working capital. Contingent liabilities increased
significantly to INR109.5b in FY14 (68% of net worth). The company
has written-off bad debts/advances of INR1.15b in FY14 (4% of
PBT), while it has cumulative deposits, loans and advances of
INR20b (12% of net worth).
n
A
NNUAL
R
EPORT
T
HREADBARE
The
ART
of annual report analysis
Ø
Increase in FY14 operating
cash flows driven by robust
EBITDA growth
Ø
Deposits, loans and advances
stood at INR20b in FY14 (12%
of net worth)
Ø
Bad debts/advances of INR1.15b written-off
in FY14 (4% of PBT)
Healthy operating cash flows in FY14:
Operating cash flow
increased to INR82.2b in FY14 from INR63b in FY13, primarily due
to robust growth in EBITDA and negative working capital in FY14.
Deposits, loans and advances stood high at 12% of net worth:
Deposits with corporates (unrelated parties) stood at INR9.8b in
FY14 (FY13: INR14.2b), primarily to operators for 3G ICR
arrangements and other statutory purposes. Loans and advances
increased from INR7.4b in FY13 to INR10.2b in FY14. However,
no details are available on the nature of loans and advances or
the parties to which these are given.
Bad debts/advances of INR1.15b written-off:
Net receivables
reduced to INR4.6b in FY14 from INR6.3b in FY13. Of these,
receivables exceeding six months overdue stood at INR425m in
FY14 (FY13: INR744m); 9.2% of FY14 receivables (FY13: 11.8%).
Further, the company has written off bad debts/advances of
INR1.15b in FY14 (4% of PBT).
Contingent liabilities on the rise:
Contingent liabilities jumped to
INR109.5b in FY14 from INR65.5b in FY13; 68% of FY14 net worth
(FY13: 46%). The increase was primarily due to higher income tax
demands, licensing disputes and demand notices towards one
time spectrum charges. Management believes that no provision
is required on these.
Debt increases on account of deferred spectrum liability:
Debt
to Equity increased to 1.25x for FY14, compared to 1x in FY13.
D/E increased due to the deferred payment liability for spectrum
acquisition. Bharti Airtel has disclosed the deferred spectrum
liability as off-balance sheet item as part of ‘Commitments’
under contingent liabilities.
Adjusted RoE for FY14 lower by 100bp:
Adjusted RoE stood at
11% in FY14 versus reported RoE of 12%. This is on account of
incremental depreciation of INR1.2b on the fair value portion of
assets in Indus Towers being adjusted through general reserve
instead of P&L, in accordance with the scheme of amalgamation.
n
Stock Info
Bloomberg
CMP (INR)
Equity Shares (m)
52-Week Range (INR)
M.Cap. (INR b)/(USD b)
1,6,12 Rel. Perf. (%)
IDEA IN
168
3,543.5
184/125
595.3/9.6
3/7/-85
n
Financial summary (INR b)
Y/E Mar
2014
2015E
Net Sales
265.2
313.7
EBITDA
83.3
105.2
Adj. Net Profit
19.7
33.0
Adj. EPS (INR)
5.9
9.2
Adj. EPS Gr. (%)
94.1
54.7
BV/Sh (INR)
49.8
64.5
RoE (%)
12.7
16.6
RoCE (%)
7.2
9.0
Div. Payout (%)
7.9
7.9
E: MOSL Estimates (Analyst estimates)
2016E
350.7
119.6
30.9
8.6
-6.2
72.4
12.6
8.7
7.9
n
n
Shareholding pattern (%)
As on
Promoter
DII
FII
Others
Sep-14
42.3
3.9
25.0
28.8
Jun-14
42.9
4.5
21.6
30.9
Sep-13
45.9
4.9
17.3
32.0
Note: FII Includes depository receipts
n
Auditor’s name
Deloitte Haskins & Sells LLP
ART
will present a threadbare portrait of annual reports - statistical, strategic and structured. We believe
ART's
wide canvas - from accounting and auditing issues to operating
performance to management insights to governance matters - will help readers paint a clearer picture of the stock's investment worthiness.
Ashish Gupta
(Ashish.Gupta@MotilalOswal.com); +91 22 3982 5544
Piyush Chaplot
(Piyush.Chaplot@MotilalOswal.com); +91 22 3312 4975
Investors are advised to refer through disclosures made at the end of the Research Report.

ART|
Idea Cellular FY14
ART #1
ACCOUNTING/AUDITING AND KEY FINANCIAL INSIGHTS
Higher EBITDA drives improvement in operating cash flows
n
n
Higher operating cash flows
driven by improved EBITDA
performance
n
Operating cash flow increased to INR82.2b during FY14 against INR63b in FY13
(30% over FY13). The cash flows improved due to robust growth in EBITDA and
negative working capital requirement.
During FY14, EBITDA increased sharply by 38.5% to INR82.5b in FY14 (FY13:
INR59.5b) supported by increased minutes of usage by 10.5%, increased data
revenue and higher realized rate per minute. Consequently, EBITDA margin also
increased by 4% to 31% in FY14.
Working capital remained negative in FY14 driven by increase in trade payables
and reduction in loans and advances.
Exhibit 1: Robust free cash flows during FY14 supported by deferred payment liability
(INR b)
FY11
FY12
FY13
FY14
EBITDA (Operations)
37.3
50.4
59.5
82.5
Add/(Less): Non-cash adjustments
1.2
0.4
1.4
0.8
Less: Direct Taxes Paid
-3.3
-4.1
-4.1
-6.4
Operating profit before w/cap changes
35.2
46.6
56.9
76.8
Inventories
-0.1
-0.3
0.2
0.0
Trade receivables
-0.6
-3.3
-2.2
0.5
Loans and advances
9.2
-13.3
-0.4
3.7
Other current assets
1.7
0.0
0.0
-1.9
Trade payables
5.3
8.4
8.5
3.0
Cash generated from operations
50.7
38.2
63.0
82.2
Less: Financial cost
-9.2
-11.2
-9.3
-7.7
Operating cash flow post interest
41.5
27.0
53.7
74.5
Less: Capital expenditure
-85.5
-47.3
-35.0
-37.0
Less: Payment towards spectrum and licenses*
0.0
0.0
-0.2
-31.4
Free cash flow post interest
-44.0
-20.3
18.5
6.1
Note: *Excluding deferred payment liability towards spectrum, being non-cash transaction during the
respective years
Source: Company Annual Report, MOSL
Exhibit 2: Operating performance improves (INR b)
Particulars
Revenue
EBITDA
PAT
EBITDA margin (%)
PAT margin (%)
FY11
154.4
37.3
9.0
24.1%
5.8%
FY12
FY13
FY14
194.9
224.1
264.3
50.4
59.5
82.5
7.2
10.1
19.7
25.9%
26.6%
31.2%
3.7%
4.5%
7.4%
Source: Company Annual Report, MOSL
Deposits, loans and advances stood high at 12% of net worth
Deposits stood at INR9.8b
in FY14 driven by deposits
to other operators for ICR
arrangements and for other
statutory purposes
n
n
Deposits with corporates (long-term nature to unrelated enterprises) stood at
INR9.8b in FY14 (FY13: INR14.2b). Of this, part of the deposits is given to other
operators for intra-circle roaming (ICR) arrangements. A small portion is also
given for statutory reasons. Most of these deposits are non-interest bearing.
As stated in the annual report, loans and advances (more than 50% is long-term)
increased from INR7.4b in FY13 to INR10.2b in FY14. No details are available on
the nature of loans and advances or the parties to which these are given.
24 November 2014
2

ART|
Idea Cellular FY14
Exhibit 3: Deposits given to corporates and loans and advances stood high (INR b)
Loans and advances of
INR10.2b in FY14 (FY13:
INR7.4b) of which more
than 50% is long-term
in nature
Particulars
Deposits with Body corporates and others (A)
- Long-term
- Short-term
Loans and advances (B)
- Long-term
- Short-term
- Less: Provision
Total (A+B)
FY11
3.5
1.9
1.6
3.1
0.7
3.0
-0.6
6.6
FY12
FY13
FY14
14.8
14.2
9.8
12.8
12.2
9.4
2.0
2.0
0.4
5.4
7.4
10.2
1.2
4.0
5.6
4.8
4.0
5.2
-0.6
-0.6
-0.6
20.2
21.6
20.0
Source: Company Annual Report, MOSL
Exhibit 4: Deposits, loans and advances to corporates at 12% of net worth
Deposits, loans and advances (INR b)
16%
15%
12%
5%
6.6
FY11
20.2
FY12
21.6
FY13
20.0
FY14
As a % of net worth
Source: Company Annual Report, MOSL
Bad debts write off of INR1.15b (4% of PBT) in FY14
n
Net receivables comes
down to INR4.6b in FY14
from INR6.3b in FY13
n
n
Net receivables reduced to INR4.6b in FY14 from INR6.3b in FY13. Of these,
receivables outstanding for more than six months from due date of payment
were INR425m in FY14 (FY13: INR744m); 9.2% of FY14 receivables (FY13:
11.8%).
The company has a policy of providing for any subscribers due for more than 90
days from the date of bill. Provision for doubtful debts on account of
interconnect usage charges (IUC), roaming charges and passive infrastructure
sharing from other telecom operators is made for dues outstanding more than
180 days from the date of billing other than when management is of the view
that the amount is recoverable.
Idea has written off bad debts/advances of INR1.15b in FY14 (4% of PBT).
Exhibit 5: Receivable outstanding for more than 6 months at 9% of total receivables (INR b)
Particulars
Receivable o/s for more than 6 months
Less: Provision for doubtful debts
Net receivables overdue for more than 6 months (A)
Other receivables
Less: Provision for doubtful debts
Net other receivables (B)
Net receivables (A+B)
FY11
2.4
-2.2
0.2
3.4
-0.2
3.2
3.4
FY12
FY13
FY14
3.1
4.1
3.7
-2.7
-3.4
-3.3
0.4
0.7
0.4
4.8
6.0
4.5
-0.3
-0.4
-0.3
4.6
5.6
4.1
4.9
6.3
4.6
Source: Company Annual Report, MOSL
24 November 2014
3

ART|
Idea Cellular FY14
Exhibit 6: Bad debts/advances written off during FY14 (INR m)
Particulars
Provision for bad and doubtful debts / advances
Bad debts/advances written off
Total
FY11
446
0
446
FY12
FY13
FY14
597
830
-115
1,152
0
0
597
830
1,038
Source: Company Annual Report, MOSL
Significant increase in contingent liabilities at 68% of net worth
n
n
n
n
Contingent liabilities significantly increased to INR109.5b in FY14 from INR65.5b
in FY13; 68% of FY14 net worth (FY13: 46%).
The increase was primarily driven by higher income tax demands of INR62.3b in
FY14 (FY13: INR50.3b). Additionally, Idea is also facing licensing disputes of
~INR20b (FY13: INR10b).
Further, during FY14, DoT has issued demand notices of INR21b towards one
time spectrum charges.
The management believes that the possibility of any of these demands
materializing is remote and hence no provision is required.
Income tax demands,
spectrum charge notices
and licensing dispute pulls
up contingent liabilities
Exhibit 7: Significant jump in contingent liabilities in FY14 (INR b)
Particulars
Income tax matters
Demand notices towards one time spectrum charges
Licensing disputes
Other claims
Service tax matters
Sales tax and entertainment tax matters
Entry tax and custom matters
Total contingent liabilities
FY11
0.8
0.0
5.0
1.4
3.9
3.5
0.4
15.0
FY12
FY13
FY14
10.5
50.3
62.3
0.0
0.0
21.1
4.8
10.0
19.9
2.1
2.2
2.6
4.8
1.9
2.1
2.8
0.4
1.0
0.4
0.6
0.3
25.3
65.4
109.5
Source: Company Annual Report, MOSL
Exhibit 8: Contingent liabilities increases sharply to 68% of net worth
Contingent liabilities (INR b)
As % to net worth
68%
46%
19%
25.3
FY12
65.4
FY13
109.5
FY14
12%
15.0
FY11
Source: Company Annual Report, MOSL
Quarterly average interest yield stable at ~9%
n
Though yearly average cash
yield is an aberration,
quarterly average interest
yield appears stable at ~9%
n
During FY14, interest income increased by 4x to INR988m (FY13: INR194m).
Average interest yield (yearly) at 59.7% in FY14 appears high on year end
balances due to part-payment of spectrum acquisition resulting in reduction in
cash balance from INR12.7b in 3QFY14 to INR1.9b in 4QFY14.
On calculating the yields on quarterly basis, average quarterly interest yield
remained stable at 8.6%.
24 November 2014
4

ART|
Idea Cellular FY14
n
Idea also has investment of INR2.2b in mutual fund units (FY13: INR10.3b). The
average yield on such investments was 21% in FY14 (FY13: 12%).
Cash balance significantly
went down in 4QFY14 due
to spectrum payment
acquisition
Exhibit 9: Year-end cash balance lower in FY14 due to spectrum payment; hence, cash
yields appear very high (INR m)
Particulars
Interest income (A)
Cash and cash equivalents
Interest rate (%)
FY11
645
4,577
17.3%
FY12
FY13
FY14
135
194
988
1,521
1,429
1,881
4.4%
13.1%
59.7%
Source: Company Annual Report, MOSL
Exhibit 10: Cash and cash equivalent reduces in 4Q due to payment of spectrum
acquisition (INR b)
Particulars
Cash and cash equivalents
Quarterly average interest yield
1QFY14
11.1
2QFY14
3QFY14
4QFY14
20.3
12.7
1.9
8.6%
Source: Company quarterly filings, MOSL
Exhibit 11: Investment yield increases in FY14 on sale of current investments (INR m)
Particulars
Dividend and profit on sale of current investments
Current investments
Investment yield (%)
FY11
473
10,200
4%
FY12
FY13
FY14
292
667
1,280
976
10,280
2,155
5%
12%
21%
Source: Company Annual Report, MOSL
MAT credit entitlement increases further to INR11.8b
Idea is availing MAT credit
entitlement since FY08.
MAT can be carried forward
for maximum 10 years
n
n
n
Idea continues to operate under the MAT regime since FY08. Accordingly, MAT
credit entitlement has now increased to INR11.8b in FY14 from INR0.4b in FY08.
As per the Indian regulations, MAT credit entitlement can be maximum carried
forward only for 10 years.
Accordingly, the company’s first MAT credit of INR425m will expire in FY18.
Exhibit 12: Idea continues to operate under MAT regime (INR m)
Particulars
MAT Credit Entitlement
FY08
425
FY09
1,694
FY10
3,831
FY11
FY12
FY13
FY14
5,609
7,688 10,471 11,856
Source: Company Annual Report, MOSL
Exhibit 13: Despite being under MAT, Idea’s standalone tax rate is the corporate marginal
tax rate (INR m)
Particulars
Current tax
Less: MAT credit
Deferred tax
Total
%of PBT
FY11
1,581
(1,577)
614
617
7%
FY12
FY13
FY14
1,808
2,737
5,434
(1,808)
(2,737)
(1,354)
2,657
4,704
5,079
2,657
4,704
9,160
32%
37%
35%
Source: Company Annual Report, MOSL
Additional depreciation on change in estimated useful life for network
equipments
n
During FY14, Idea has additionally charged depreciation of INR5.7b (FY13:
INR170.2m) on account of change in estimated useful life of network
equipments from 7-20 years in FY13 to 10-20 years in FY14. Interestingly, the
company had depreciated assets at 10-20 years in FY12 also.
5
24 November 2014

ART|
Idea Cellular FY14
Exhibit 14: Additional depreciation charged on change in useful life of assets (INR m)
Particulars
Additional depreciation
FY11
613
FY12
FY13
FY14
149
170
5,686
Source: Company Annual Report, MOSL
Exhibit 15: Estimated useful life of network equipment altered (In years)
Particulars
Buildings
Network Equipments
Optical Fiber
Other Plant and Machineries
Office Equipments
Computers
Furniture and Fixtures
Motor Vehicles
Leasehold Improvements
Leasehold Land
FY14
9 to 30
10 to 20
15
3 to 5
3 to 5
3 to 5
3 to 10
Up to 5
Period of Lease
Period of Lease
Source: Company Annual Report, MOSL
Exhibit 16: Useful life of network equipments (In years)
Particulars
Network Equipments
FY11
10 to 20
FY12
10 to 20
FY13
7 to 20
FY14
10 to 20
Source: Company Annual Report, MOSL
Foreign exchange loss of INR7.5b capitalized; to increase depreciation in
future years
n
n
n
Capitalization of foreign
exchange will increase the
depreciation in future,
which will adversely impact
the company’s future
profitability
n
Foreign exchange losses capitalized during the year increased by 81% to INR7.5b
in FY14 from INR4.1b in FY13. This represents ~25% of PBT for FY14 (FY13: 26%).
The company earlier had exercised the option available under Indian Accounting
Standards for adjusting the exchange difference on long term foreign currency
loans to the cost of the assets acquired out of these loans.
Accordingly, long term foreign currency monetary liabilities used for acquisition
of fixed assets are adjusted to the cost of the fixed assets and amortized over
the remaining useful life of the asset. If the liability is used for any other
purpose, it is recognized in “Foreign Currency Monetary Item Translation
Difference Account” and amortized over the period of liability not exceeding
March 31, 2020.
The capitalization of foreign exchange will increase the depreciation in future,
which will adversely impact the company’s future profitability. However, in the
current year, the company will benefit on account of lower finance cost.
24 November 2014
6

ART|
Idea Cellular FY14
Exhibit 17: Capitalization of foreign exchange loss/ (gain) at 25% of PBT (INR m)
Capitalized under fixed assets (INR m)
53%
26%
% of PBT
25%
-76
FY11
-1%
5,635
FY12
4,120
FY13
7,476
FY14
Source: Company Annual Report, MOSL
Adjusted RoE lower by 100bp to 11% in FY14
n
n
n
Idea’s adjusted RoE stood at 11% in FY14 versus reported RoE of 12%. The
reduction in RoE is on account of adjustment of depreciation of INR1.2b on the
difference between fair value and book value of assets recognized in Indus
Towers directly being adjusted through general reserve instead of being routed
through the P&L in accordance with the scheme of amalgamation.
The company has also adjusted its share of discrepancy in the physical
verification of fixed assets of the JV through reserves of INR115m. Cumulatively,
these adjustments form 4.3% of FY14 PBT.
Hence, adjusted PAT would be INR18.3b versus reported PAT of INR19.7b.
Exhibit 18: Depreciation on fair value of assets adjusted through reserves (INR b)
Particulars
Opening net worth
Add: Profit for the year
Less: Dividend (including tax)
Add/(Less): Other adjustments
Reserve created by JV on merger as per scheme
Depreciation on fair value of fixed assets by JV
Discrepancy in physical verification of fixed assets of JV
Others
Closing net worth
FY11
118.7
3.9
0.0
FY12
123.0
7.2
0.0
FY13
130.5
10.1
(1.4)
FY14
143.0
19.7
(1.7)
Depreciation of INR1.3b
(4.3% of PBT) on fair value
of assets adjusted directly
through reserves
-
-
-
5.3
-
-
-
(1.2)
-
-
-
(0.1)
0.2
0.3
3.8
0.3
122.9
130.6
143.0
165.2
Source: Company Annual Report, MOSL
Exhibit 19: Adjusted RoE lower than reported for FY14 (INR b)
Particulars
Net profit (A)
Direct adjustments through reserves (B)
Difference (A+B)
RoE (%)
Reported
Adjusted
19.7
19.7
0.0
-1.3
19.7
18.3
12%
11%
Source: Company Annual Report, MOSL
Increased debt to equity on account of deferred spectrum liability
n
n
Loan funds increased from INR140.4b in FY13 to INR206.3b in FY14 resulting in
D/E increasing to 1.25x in FY14 as compared to 1x in FY13.
This was primarily due to the higher spectrum liability which the company
acquired during the auction of 900 MHz and 1800 MHz in February 2014 for a
total cost of INR104b. Out of the total amount, Idea has made upfront payment
7
24 November 2014

ART|
Idea Cellular FY14
n
n
of INR31.4b and for balance (INR72.6b) amount is payable in 10 annual
installments after a moratorium of 2 years.
Current maturities of long term borrowings stood at INR18.6b in FY14 (FY13:
INR17.8b) with short-term borrowings of INR6.5b in FY14.
Bharti Airtel has disclosed the deferred spectrum liability as off-balance sheet
item as part of ‘Commitments’ under contingent liabilities.
Exhibit 20: Increase in debt fund; additional debts during FY14 relates to deferred
spectrum liability
Particulars
Deferred payment liability towards spectrum
Foreign currency loan
Rupee term loan
Redeemable non-convertible debentures
Vehicle loan
Other short-term loans
Total loan fund
FY11
0.0
30.9
70.7
0.0
0.3
18.8
120.7
FY12
FY13
FY14
0.0
13.3
87.4
54.0
62.4
62.2
41.0
35.8
26.7
0.0
6.3
4.7
0.2
0.3
0.3
38.2
22.4
25.1
133.4
140.4
206.3
Source: Company Annual Report, MOSL
Exhibit 21: Spectrum acquisition results in jump in debt
Loan funds (INR b)
Debt to equity (x)
1.25
1.02
0.98
121
FY11
133
FY12
0.98
140
FY13
206
FY14
Source: Company Annual Report, MOSL
Exhibit 22: Net debt to EBITDA increases marginally
Net debt (INR b)
2.8
2.6
2.2
2.5
Net Debt/EBITDA (x)
105.9
FY11
130.9
FY12
128.7
FY13
202.3
FY14
Source: Company Annual Report, MOSL
Sharp increase in CWIP in FY14; to result in higher depreciation in future
n
Capital work in progress increased to INR114b for FY14 against INR8.8b in FY13.
The increase is primarily due to the spectrum acquisition during the auctions in
February 2014. On utilization of the spectrum, depreciation will increase in
future years.
24 November 2014
8

ART|
Idea Cellular FY14
Exhibit 23: Spectrum acquisition increases the CWIP (INR b)
Particulars
Tangible assets
Intangible assets
Capital work-in-progress
Total
FY11
176
49
36
261
FY12
FY13
FY14
201
209
219
69
83
77
7
9
114
277
300
410
Source: Company Annual Report, MOSL
Marginal reduction in average borrowing cost to 6%
n
Average borrowing rate marginally reduced to 6% in FY14 as compare to 7% in
FY13.
Exhibit 24: Finance cost marginally lower; interest capitalized due to spectrum liability in
our view (INR m)
Particulars
Interest on fixed loan
Interest on others
Financing charges
Interest capitalized
Finance cost
FY11
4,652
251
257
4,093
9,253
FY12
FY13
FY14
9,554
9,276
8,818
385
298
242
543
583
492
42
0
403
10,524
10,157
9,955
Source: Company Annual Report, MOSL
Exhibit 25: Borrowing cost continues to reduce
9%
Finance cost (INR m)
8%
Average borrowing cost
7%
6%
9,253
FY11
10,524
FY12
10,157
FY13
9,955
FY14
Source: Company Annual Report, MOSL
Actuarial gain of INR127m on gratuity primarily due to higher discount rate
n
n
Idea’s gratuity cost charged to P&L decreased to INR107m from INR486m in
FY14. The company’s underfunded liability increased to INR809m on FY14 (v/s
INR734m in FY13).
Interestingly, the company had an actuarial gain of INR127m, which we believe
is primarily due to the discount rate on actuarial assumption increasing from
8.1% in FY13 to 9-9.1% in FY14.
Exhibit 26: Actuarial assumptions
Particulars
Discount rate
Expected return on plan assets
Salary escalation
FY11
FY12
FY13
FY14
8.00% 8.% - 8.25%
8.10% 9.% - 9.10%
7.50%
7.50%
9.00%
9.00%
5% - 7%
5% - 7%
7.00%
7.00%
Source: Company Annual Report, MOSL
24 November 2014
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Idea Cellular FY14
Exhibit 27: Change in present value of obligation (INR m)
Particulars
Present value of obligations as at beginning of year
Interest cost
Current service cost
Benefits paid
Actuarial (gain)/loss on obligations
Past service cost
Present value of obligations as at end of year
FY11
258
23
58
-18
48
0
370
FY12
FY13
FY14
370
473
959
35
45
89
75
88
165
-13
(19)
(26)
6
134
(125)
0
238
-
473
959
1,063
Source: Company Annual Report, MOSL
Exhibit 28: Changes in the fair value of plan assets (INR m)
Particulars
Fair value of plan assets at beginning of year
Expected return on plan assets
Contributions
Benefits paid
Actuarial gain/(loss) on plan assets
Fair value of plan assets at the end of year
Funded status
Actual return on plan assets
FY11
148
13
36
-18
5
184
186
18
FY12
FY13
FY14
184
210
226
15
17
21
22
16
31
-13
(19)
(26)
3
2
2
210
226
253
263
734
809
17
18
21
Source: Company Annual Report, MOSL
Exhibit 29: Amounts to be recognized in the Balance Sheet (INR m)
Particulars
Present value of obligations as at the end of year
Fair value of plan assets as at the end of the year
Funded status
Net asset/(liability) recognized in balance sheet
FY11
370
184
186
-186
FY12
FY13
FY14
473
959
1063
210
226
253
263
734
809
-263
(734)
(809)
Source: Company Annual Report, MOSL
Exhibit 30: Expenses recognized in Statement of Profit & Loss (INR m)
Particulars
Current service cost
Interest cost
Expected return on plan assets
Net actuarial (gain)/loss
Past service cost
Expenses recognized in P&L
FY11
58
23
-13
44
0
112
FY12
FY13
FY14
75
88
165
35
45
89
-15
-17
-21
4
132
-127
0
238
-
99
486
107
Source: Company Annual Report, MOSL
Unhedged forex position of INR30b; INR depreciation may negatively
impact profits
n
n
n
Unhedged foreign currency exposure stood at INR30.5b in FY14 versus INR38.3b
in FY13. Majority of the forex exposure pertained to foreign currency loans.
Hedged forex position increased to INR47.1b in FY14 from INR41.7b in FY13.
In case of any currency depreciation, profits of the company might be negatively
impacted.
24 November 2014
10

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Idea Cellular FY14
Exhibit 31: Hedged/unhedged foreign currency exposure (INR m)
Particulars
Hedged position
Foreign Currency Loan
Foreign Currency Loan
Trade payables
Other liabilities
Other liabilities
Hedged position (A)
Unhedged position
Foreign Currency Loan
Trade Payables
Trade Payables
Trade Payables
Other liabilities
Trade receivables
Trade receivables
Unhedged position (B)
Total foreign currency exposure
Currency
USD
JPY
USD
USD
JPY
FY13
654
10,626
24
3
18
FY14
668
5,313
46
7
8
FY13
40,399
1,469
41,868
FY14
43,744
3,369
47,113
USD
USD
EURO
GBP
USD
USD
Euro
657
52
0
0
5
10
0
474
46
0
-
0
13
0
35,760
3,096
28,472
2,786
(564)
(769)
38,292
30,490
80,160
77,603
Source: Company Annual Report, MOSL
Other financial highlights
n
During FY14, the company charged ESOP cost of INR437m (FY13: INR0.3m) as
per intrinsic value approach. Had the company determined the ESOP cost as per
fair value approach, net income would be lower by INR93.6m in FY14.
24 November 2014
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ART|
Idea Cellular FY14
ART #2
MANAGEMENT SPEAK/KEY PLANS
Data revenue - the next big opportunity
n
n
n
n
n
n
n
With over 900m mobile users in the country and the expected higher consumer
internet adoption, India is all set to catapult to among the Top 3 mobile
broadband markets in the world.
Idea is well positioned to play a key role in the emerging broadband market and
is steadily transforming itself to capture higher mobile data share by acquiring
additional spectrum, upgrading technology to 3G and 4G as well as building
talent capability of its employees and partners as customers adapt to the
emerging online lifestyle.
Idea more than doubled its annual mobile data traffic (2G & 3G) on its network
to 79.4b MB and influenced nearly 18.6% of its customer base to access internet
from their mobile in FY14.
Data revenue improved from 6.6% to 10.1%, as data revenue registered a
growth of 78.4%
.
Active subscribers of voice and/or data on 3G platform and enjoying wireless
broadband services reached to 10.2m as of March 2014, almost double
compared to 5.1m subscribers as of March 2013
.
Idea is making steady investments in its fibre cable transmission network which
is now expanded to 82,000 kms in FY14, compared to 74,000 kms in FY13.
Idea expanded its 2G and 3G network aggressively during the year. It has added
14,684 2G sites on its network, taking the 2G site count to 104,778 as on March
31, 2014. On 3G front, the company added 4,241 3G cell sites in the 10 service
areas where it provides 3G services with its own spectrum and ended March 31,
2014 with 21,381 3G sites.
New businesses/ initiatives
n
n
n
Idea launched 8 new Idea Smartfone models ranging in screen size from 3.5” to
5.5”, all the Idea Smartfone models launched are on the popular Android OS
platform with Dual SIM capability.
Idea launched its mobile transactions brand ‘Idea My Cash’ to tap the potential
of domestic remittance business, through its wholly owned subsidiary namely
Idea Mobile Commerce Services Limited (IMCSL).
Idea in February 2014 spectrum auctions acquired an additional 65.2 MHz. With
this spectrum acquisition, the company has extended its 3G spectrum footprint
to Delhi service area. It now owns 3G spectrum in 12 service areas translating to
80% of its current revenue. Idea also acquired spectrum capability to provide
High Speed 4G LTE mobile broadband services in 8 service areas - 58% of
revenue.
24 November 2014
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ART|
Idea Cellular FY14
ART #3
GOVERNANCE MATTERS
Most directors are regular in attending board meetings
n
n
n
The company is regularly calling its board meeting as per the prescribed laws.
During FY14, the company held four Board meetings.
All directors have attended at least 50% of the meetings (at least 2 meetings for
FY14), except Mr Mohan Gyani who has attended only 1 meeting during FY14.
Our analysis of Mr Mohan Gyani’s and Mr P Murari’s attendance at board
meetings for last four years indicates that they have attended less than 50% of
the meetings in few years.
Exhibit 32: Most directors attended board meeting regularly
Name
Director's position
FY11
FY12
FY13
FY14
Mr. Kumar Mangalam Birla
NEC
4
4
4
1
Mrs. Rajashree Birla
NED
2
3
2
2
Dr. Rakesh Jain
NED
4
4
4
3
Mr. Biswajit A. Subramanian
NED
3
3
3
3
Dr. Shridhir Sariputta Hansa
NED
2
4
4
4
Mr. Juan Villalonga Navarro
NED
1
NA
NA
NA
Mr. Sanjeev Aga
NED
4
4
3
4
Mr. Arun Thiagarajan
ID
3
4
4
4
Mr. Gian Prakash Gupta
ID
4
4
4
4
Mr. Mohan Gyani
ID
1
2
1
1
Ms. Tarjani Vakil
ID
4
3
4
2
Mr. R.C. Bhargava
ID
3
2
4
3
Mr. P. Murari
ID
2
1
1
2
Mrs. Madhabi Puri Buch
ID
NA
1
4
4
Mr. Himanshu Kapania
MD
NA
4
4
4
Board meeting held
4
4
4
4
Note: NEC-Non-Executive Chairman, NED-Non-Executive Director, ID-Independent Director, MD-
Managing Director
Source: Company Annual Report, MOSL
Managerial remuneration of directors
n
The managerial remuneration paid by the company to its key managerial
personnel (Managing Director) has gone down from INR107.5m in FY13 to
INR93.3m in FY14.
Exhibit 33: Remuneration paid to directors falls by 13% in FY14 (INR m)
Key Management Personnel
Himanshu Kapania
FY11
103.8
FY12
FY13
FY14
41.4
107.5
93.3
Source: Company Annual Report, MOSL
24 November 2014
13

ART|
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Idea Cellular FY14
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Exhibit 34: Remuneration paid
on
directors falls by 13%
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IDEA CELLULAR
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