You must read the following disclaimer before continuing. The ...

IMPORTANT NOTICE

IMPORTANT: You must read the following disclaimer before continuing. The following disclaimerapplies to the attached Offering Circular (“Offering Circular”) received by e-mail or otherwisereceived as a result of electronic communication, and you are therefore advised to read this disclaimerpage carefully before reading, accessing or making any other use of the attached Offering Circular. Inaccessing the Offering Circular, you agree to be bound by the following terms and conditions,including any modifications to them from time to time, each time you receive any information fromus as a result of such access.

Confirmation of Your Representation: By accepting the e-mail and accessing the attached OfferingCircular you will be deemed to have represented to DBS Bank Ltd. and Standard Chartered Bank(together the “Joint Lead Managers”) that (i) you are outside the United States and, to the extent youpurchase the securities described in the attached Offering Circular, you will be doing so pursuant toRegulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”) and (ii) thatyou consent to delivery of the attached Offering Circular and any amendments or supplements theretoby electronic transmission.

This Offering Circular has been sent to you in electronic form. You are reminded that documentstransmitted via this medium may be altered or changed during the process of transmission andconsequently none of the Issuer, the Joint Lead Managers, the Trustee (as defined in this OfferingCircular), the Agents (as defined in this Offering Circular) or any person who controls, or is a director,officer, employee, agent, representative or affiliate of, any such person accepts any liability orresponsibility whatsoever in respect of any difference between the Offering Circular distributed to youin electronic form and the hard copy version available to you on request from the Joint Lead Managers.

Restrictions: The attached Offering Circular is being furnished in connection with an offering exemptfrom registration under the Securities Act solely for the purpose of enabling a prospective investor toconsider the purchase of the securities described in the Offering Circular. You are reminded that theinformation in the attached document is not complete and may be changed. Any investment decisionshould be made on the basis of a complete final Offering Circular.

Nothing in this electronic transmission constitutes an offer of securities for sale in any jurisdictionwhere it is unlawful to do so.

THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THESECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OF THE U.S. OR OTHERJURISDICTION AND MAY NOT BE OFFERED OR SOLD WITHIN THE U.S., EXCEPTPURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THEREGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLESTATE OR LOCAL SECURITIES LAWS.

You are reminded that you have accessed the attached Offering Circular on the basis that you are aperson into whose possession this Offering Circular may be lawfully delivered in accordance with thelaws of the jurisdiction in which you are located and you may not nor are you authorised to deliveror forward this document, electronically or otherwise, to any other person. If you have gained accessto this transmission contrary to the foregoing restrictions, you will be unable to purchase any of thesecurities described herein.

Actions that You May Not Take: You should not reply by e-mail to this electronic transmission, andyou may not purchase any securities by doing so. Any reply e-mail communications, including thoseyou generate by using the “Reply” function on your e-mail software, will be ignored or rejected.

THE ATTACHED OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTEDTO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNERWHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THISDOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITHTHIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THEAPPLICABLE LAWS OF OTHER JURISDICTIONS.

You are responsible for protecting against viruses and other destructive items. Your use of this e-mailis at your own risk and it is your responsibility to take precautions to ensure that it is free from virusesand other items of a destructive nature.

STRICTLY CONFIDENTIAL

Reliance Communications Limited(Indian Corporate Identification No. L45309MH2004PLC147531)

(Incorporated in India with limited liability)

US$300,000,0006.5 per cent. Senior Secured Notes due 2020

Offer Price: 100 per cent.

The US$300,000,000 6.5 per cent. Senior Secured Notes due 2020 (the “Notes”) offered by Reliance Communications Limited (the“Issuer”) will bear interest from May 6, 2015 at 6.5% per annum payable semi-annually in arrear on May 6 and November 6 of eachyear, beginning on November 6, 2015.

The Issuer may, on any one or more occasions, redeem all or a part of the Notes at a redemption price equal to 100 per cent. of theprincipal amount of the Notes to be redeemed plus accrued and unpaid interest, if any, to the redemption date, plus a “make-whole”premium. At any time and from time to time, the Issuer may redeem up to 35 per cent. of the aggregate principal amount of the Notesat a redemption price of 106.5 per cent. of the principal amount of the Notes, plus accrued and unpaid interest, if any, with the net cashproceeds of one or more sales of common stock of the Issuer in an equity offering. Not later than 30 days following the occurrence ofa Change of Control, the Issuer shall make an offer to purchase to all holders of Notes at a purchase price equal to 101 per cent. ofthe principal amount, plus accrued and unpaid interest, if any, to (but not including) the date of purchase.

The Notes will be unsubordinated obligations of the Issuer, senior in right of payment to any future obligations of the Issuer expresslysubordinated in right of payment to the Notes, and will rank at least pari passu in right of payment with all unsubordinated indebtednessof the Issuer (subject to any priority rights of such unsubordinated indebtedness pursuant to applicable law). The obligations of theIssuer with respect to the Notes and the performance of all other obligations of the Issuer under the Trust Deed and the Notes will besecured by a security package (the “Collateral”), which will consist of (i) the movable plant and machinery, including (withoutlimitations) tower assets and optic fibre cables, if any (whether attached or otherwise), capital work in progress (pertaining to movablefixed assets), both present and future, including all the rights, title, interest, benefits, claims and demands in respect of all insurancecontracts relating thereto of the Issuer, Reliance Telecom Limited (“RTL”), Reliance Infratel Limited (“Reliance Infratel”) andReliance Communications Infrastructure Limited (“RCIL”); (ii) an assignment of certain telecommunications licences of the Issuer (butnot any of its subsidiaries) relating to unified access services and national long distance and international long distance services(collectively, the “Licence”); and (iii) a pledge over all the equity shares held by the Issuer in RCIL and all the equity shares held bythe Issuer and Reliance Infocomm Infrastructure Limited (“RIIL”) in RTL. Security interests in the Collateral will be created withincertain specified times following the closing date and the Collateral will be shared on a pari passu basis with the holders of certain otherindebtedness existing on the closing date and certain other indebtedness in the future.

For a more detailed description of the Notes, see “Terms and Conditions of the Notes” beginning on page 178, and for a descriptionof certain risks relating to the Notes, see “Risk Factors — Risks relating to the Notes” beginning on page 48.

The Notes have been provisionally rated “Ba3” by Moody’s and “BB-” by Fitch, respectively. The ratings reflect the rating agencies’assessment of the likelihood of timely payment of the principal of and interest on the Notes. The ratings do not constituterecommendations to purchase, hold or sell the Notes inasmuch as such ratings do not comment as to market price or suitability for aparticular investor. We cannot assure you that the ratings will remain in effect for any given period or that the ratings will not be revisedby such rating agencies in the future if, in their judgment, circumstances so warrant.

Investing in the Notes involves risks. See “Risk Factors” beginning on page 22.

Approval in-principle has been received for the listing and quotation of the Notes on the Official List of the Singapore ExchangeSecurities Trading Limited (the “SGX-ST”). The SGX-ST assumes no responsibility for the correctness of any of the statements made,opinions, expressed or reports contained in this Offering Circular. Approval in-principle for the listing and quotation of the Notes onthe SGX-ST is not to be taken as an indication of the merits of the Notes, the Issuer or the Issuer’s subsidiaries or associated companies(if any). Currently, there is no public market for the Notes.

The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S.Securities Act”), or any state securities laws in the United States, and may not be offered or sold within the United States, exceptpursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act andapplicable state securities laws. Accordingly, the Notes are only being offered and sold by the Lead Manager (as defined herein)outside the United States in compliance with Regulation S under the U.S. Securities Act. For a description of certain restrictionson resale or transfer, see “Transfer Restrictions” beginning on page 253. This document is not a prospectus for the purposes ofthe (Indian) Companies Act, 2013 and the (Indian) Companies Act, 1956.

The Notes will be represented by beneficial interests in the global certificate (the “Global Certificate”) in registered form whichwill be registered in the name of a nominee of, and will be deposited on or about May 6, 2015 with a common depositary for,Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme, Luxembourg (“Clearstream”). Beneficialinterests in the Global Certificate will be shown on, and transfers thereof will be effected only through, records maintained byEuroclear and Clearstream. Except as described herein, certificates for Notes will not be issued in exchange for beneficialinterests in the Global Certificate.

Joint Global Coordinators, Joint Book Runners and Joint Lead Managers

DBS Bank Ltd. Standard Chartered Bank

The date of this Offering Circular is April 27, 2015.

TABLE OF CONTENTS

Page

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

SUMMARY FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

RECENT DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

CORPORATE STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

OVERVIEW OF THE REGULATORY REGIME IN INDIA . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

OUR BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

DESCRIPTION OF MATERIAL INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128

DESCRIPTION OF COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

BOARD OF DIRECTORS AND SENIOR MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 164

PRINCIPAL SHAREHOLDERS AND OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 173

RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178

THE GLOBAL CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221

GLOBAL CLEARANCE AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222

TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224

LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227

SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249

TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253

SUMMARY OF CERTAIN PRINCIPAL DIFFERENCES BETWEEN INDIAN GAAPAND IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254

LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269

INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269

GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

i

NOTICE TO INVESTORS

This offering circular (the “Offering Circular”) does not constitute an offer by or on behalf of theIssuer, or DBS Bank Ltd. or Standard Chartered Bank (together the “Joint Lead Managers”) to sellthe Notes, or a solicitation of an offer on behalf of the Issuer or the Joint Lead Managers to buy theNotes, in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in suchjurisdiction. Neither the delivery of this Offering Circular nor any sale made hereunder shall, underany circumstances, create any implication that there has been no change in our affairs since the dateof this Offering Circular or that the information contained in this Offering Circular is correct as at anytime after that date.

This Offering Circular is confidential. We are providing it solely for the purpose of enabling you toconsider a purchase of the Notes. You should read this Offering Circular before making a decisionwhether to purchase the Notes. You must not use this Offering Circular for any other purpose, ordisclose any information in this Offering Circular to any other person.

We have prepared this Offering Circular, and we are solely responsible for its contents. You areresponsible for making your own examination of us and your own assessment of the merits and risksof investing in the Notes. By purchasing the Notes, you will be deemed to have made certainacknowledgements, representations and agreements as set forth under the section headed “TransferRestrictions” below.

No representation or warranty, express or implied, is made by the Joint Lead Managers, the Trusteeor the Agents (as defined in the “Terms and Conditions of the Notes”) as to the accuracy orcompleteness of the information set forth herein, and nothing contained in this Offering Circular is,or shall be relied upon as, a promise or representation, whether as to the past or the future. None ofthe Joint Lead Managers, the Trustee or the Agents has independently verified any of such informationor assumes responsibility for its accuracy or completeness. Each of the Joint Lead Managers, theTrustee and the Agents disclaims all and any liability, whether arising in tort or contract or otherwise,which they might otherwise have in respect of this Offering Circular or any such statement.

The Notes may not be a suitable investment for all investors. The Notes are complex financialinstruments. Potential investors must determine the suitability of an investment in the Notes in lightof their own circumstances. A potential investor should not invest in the Notes unless it has theexpertise (either alone or with a financial adviser) to: have sufficient knowledge and experience tomake a meaningful evaluation of the Notes; have access to, and knowledge of, appropriate analyticaltools to evaluate the Notes, in the context of its particular financial situation; have sufficient financialresources and liquidity to bear all the risks of an investment in the Notes; and evaluate how the Noteswill perform under changing conditions, the resulting effects on the value of the Notes and the impactthat such an investment will have on their overall investment portfolio.

Each person receiving this Offering Circular acknowledges that: (i) such person has been afforded anopportunity to request from us and to review, and has received, all additional information consideredby it to be necessary to verify the accuracy of, or to supplement, the information contained herein; (ii)such person has not relied on the Joint Lead Managers or any person affiliated with the Joint LeadManagers in connection with any investigation of the accuracy of such information or its investmentdecision; and (iii) no person has been authorised to give any information or to make any representationconcerning us, our subsidiaries and affiliates, the Notes (other than as contained herein andinformation given by our duly authorised officers and employees in connection with investors’examination of our Group and the terms of this offering of the Notes (this “Offering”)) and, if givenor made, any such other information or representation should not be relied upon as having beenauthorised by us or the Joint Lead Managers.

The distribution of this Offering Circular and the Notes may in certain jurisdictions be restricted bylaw. Persons into whose possession this Offering Circular comes are required by us and the Joint LeadManagers to inform themselves about and to observe any such restrictions. For a description of therestrictions on offers, sales and resale of the Notes and the distribution of this Offering Circular, see“Subscription and Sale” and “Transfer Restrictions” below.

ii

The Issuer confirms that, having made all reasonable inquiries, this Offering Circular contains allinformation which is (in the context of the issue of the Notes) material and that such information istrue and accurate in all material respects and is not misleading in any material respect, that anyopinions, predictions or intentions expressed in this Offering Circular are honestly held or made andare not misleading in any material respect. The Issuer confirms that this Offering Circular does notomit to state any material fact necessary to make such information, opinions, predictions or intentions(in the context of the issue of the Notes) not misleading in any material respect. The Issuer confirmsthat all proper enquiries have been made to ascertain or verify the foregoing and this Offering Circulardoes not contain any untrue statement of a material fact nor does it omit to state any material factnecessary to make the statements therein.

This Offering Circular summarises certain material documents and other information, and we refer youto them for a more complete understanding of what we discuss in this Offering Circular. In makingan investment decision, you must rely on your own examination of us and the terms of this Offering,including the merits and risks involved. We are not making any representation to you regarding thelegality of an investment in the Notes by you under any legal, investment or similar laws orregulations. You should not consider any information in this Offering Circular to be legal, businessor tax advice. You should consult your own attorney, business adviser and tax adviser for legal,business and tax advice regarding an investment in the Notes.

We reserve the right to withdraw this Offering at any time, and the Lead Manager reserves the rightto reject any commitment to subscribe for the Notes in whole or in part and to allot to any prospectivepurchaser less than the full amount of the Notes sought by such purchaser. The Lead Manager andcertain related entities may acquire, for their own account, a portion of the Notes.

In connection with this Offering, certain persons participating in the Offering may engage intransactions that stabilise, maintain or otherwise affect the price of the Notes. Specifically, theJoint Lead Managers may bid for and purchase Notes in the open market to stabilise the priceof the Notes. The Joint Lead Managers may also over-allot the offering, creating a syndicateshort position. In addition, the Joint Lead Managers may bid for and may stabilise or maintainthe market price of the Notes above market levels that might otherwise prevail. The Joint LeadManagers are not required to engage in these activities, and may end these activities at any time.These activities will be undertaken solely for the account of the Joint Lead Managers, and notfor and on behalf of the Issuer.

iii

CERTAIN TERMS AND CONVENTIONS

We have prepared this Offering Circular using a number of conventions, which you should considerwhen reading the information contained in this Offering Circular. Unless the context requiresotherwise, references in this Offering Circular to:

• our “Company” and the “Issuer” are to Reliance Communications Limited, a company withlimited liability incorporated under the laws of India;

• “we,” “us,” “our” and “our Group” are to the Issuer and its subsidiaries taken as a whole;

• “Clearstream” are to Clearstream Banking, société anonyme, Luxembourg;

• “EBITDA” for any period has been calculated after considering impact of Depreciation,Impairment and Amortisation (net of amount adjusted by/transfer from provision for businessrestructuring and general reserve), Finance Costs, Minority Interest and Share of Loss inAssociate to Profit Before Tax and Exceptional Items and Adjustments. EBITDA as presentedmay be calculated differently from Consolidated EBITDA as defined and used in the Trust Deedgoverning the Notes.

• “Euroclear” are to Euroclear Bank S.A./N.V.; and

• “Joint Lead Managers” are to DBS Bank Ltd. and Standard Chartered Bank.

Certain terms used in this Offering Circular are defined in “Definitions and Abbreviations” and“Glossary of Technical Terms” contained elsewhere in this Offering Circular.

All references in this Offering Circular to the “Indian Government” or the “Government” arereferences to the government of the Republic of India. All references in this Offering Circular to “U.S.dollars,” “US$” and “$” are to the lawful currency of the United States, and all references to “`”“Rs.”, “rupee”, “rupees” or “Indian rupees” are to the lawful currency of India. Certain figures(including percentages) have been rounded for convenience, and therefore actual sums, quotients,percentages and ratios may differ from the sums, quotients, percentages and ratios contained in thisOffering Circular.

Rounding adjustments have been made in calculating some of the financial information and otheramounts included in this Offering Circular. As a result, numerical figures shown as totals in sometables may not be exact arithmetic aggregations of the figures that precede them, and actual numbersmay differ from those contained herein due to rounding. References to a particular “fiscal” year areto our financial year ended or ending March 31 of that year. References to a year other than a “fiscal”year are to the calendar year ended or ending December 31.

Statements about us or the Notes in this Offering Circular, including statements regarding our businessoperations, financial condition, results of operations, prospects and expansion programmes, supersedeany press release or other public statement made prior to the date of this Offering Circular by us, orany officer, director, shareholder or affiliate of us, regarding matters covered in this Offering Circular.

iv

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Offering Circular are not historical facts and are “forward-lookingstatements”. This Offering Circular may contain words such as “anticipate”, “believe”, “could”,“estimate”, “expect”, “forecast”, “guideline”, “may”, “plan”, “predict”, “project”, “should”, “target”,and “will” and similar expressions that are intended to identify forward-looking statements, but arenot the exclusive means of identifying these statements. In particular, “Business” and “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” contain forward-lookingstatements, including relating to production, refining, manufacturing and other activities, capitalexpenditure, market trends and other factors affecting us.

Forward-looking statements are subject to certain risks and uncertainties, including, but not limitedto:

• decreasing prices of our services;

• our ability to expand our current business and introduce new products;

• our ability to select the right technology;

• competition and shifting usage patterns in the telecommunications market;

• our ability to maintain our systems and deal with system failures;

• our reliance on other telecommunications service providers;

• changes in laws, rules, regulations, taxation or accounting standards or practices;

• our ability to ensure continuity of senior management and ability to attract and retain keypersonnel; and

• other factors, including those discussed in “Risk Factors”.

Forward-looking statements involve inherent risks and uncertainties. If one or more of these or otheruncertainties or risks materialise, actual results may vary materially from those estimated, anticipatedor projected. Specifically, but without limitation, capital costs could increase, projects could bedelayed, and anticipated improvements in capacity, performance or profit levels might not be fullyrealised. Although we believe that the expectations of our management as reflected by suchforward-looking statements are reasonable based on information currently available to it, noassurances can be given that such expectations will prove to have been correct. Accordingly, you arecautioned not to place undue reliance on the forward-looking statements, which speak only as at thedate they are made. We do not undertake any obligation to update or revise any of them, whether asa result of new information, future developments or otherwise.

v

ENFORCEMENT

Our Company is a company incorporated with limited liability under the laws of India. Some of itsSubsidiaries are also incorporated in India. A majority of our Company’s Directors and executiveofficers are residents of India and a substantial portion of the assets of our Company and such personsare located in India. As a result, it may not be possible for investors outside India to effect serviceof process upon our Company or such persons in India, or to enforce against them judgments obtainedin courts outside India.

India is not a signatory to any international treaty in relation to the recognition or enforcement offoreign judgments. Recognition and enforcement of foreign judgments is provided for under section13 and section 44A of the Code of Civil Procedure, 1908 (the “Civil Code”).

Section 13 of the Civil Code provides that a foreign judgment shall be conclusive as to any matterthereby directly adjudicated upon except:

• where it has not been pronounced by a court of competent jurisdiction;

• where it has not been given on the merits of the case;

• where it appears on the face of the proceedings to be founded on an incorrect view ofinternational law or a refusal to recognise the law of India in cases where such law is applicable;

• where the proceedings in which the judgment was obtained were opposed to natural justice;

• where it has been obtained by fraud; or

• where it sustains a claim founded on a breach of any law then in force in India.

Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a superiorcourt (within the meaning of that section) in any country or territory outside India which theGovernment has by notification declared to be a reciprocating territory, it may be enforced in Indiaby proceedings in execution as if the judgment had been rendered by the relevant court in India. Underthe Civil Code, a court in India will, upon the production of any document purporting to be a certifiedcopy of a foreign judgment, presume that the judgment was pronounced by a court of competentjurisdiction, unless the contrary appears on record but such presumption may be displaced by provingwant of jurisdiction. However, section 44A of the Civil Code is applicable only to monetary decreesnot being in the nature of any amounts payable in respect of taxes or other charges of a like natureor in respect of a fine or other penalty and is not applicable to arbitration awards.

Each of the United Kingdom, Singapore and Hong Kong has been declared by the Government to bea reciprocating territory for the purposes of section 44A of the Civil Code but the United States hasnot been so declared. A judgment of a court in a jurisdiction which is not a reciprocating territory maybe enforced only by a new suit upon the judgment and not by proceedings in execution. Such a suithas to be filed in India within three years from the date of the judgment in the same manner as anyother suit filed to enforce a civil liability in India. Accordingly, a judgment of a court in the UnitedStates may be enforced only by a fresh suit upon the judgment and not by proceedings in execution.

It is unlikely that a court in India would award damages on the same basis as a foreign court if anaction is brought in India. Furthermore, it is unlikely that an Indian court would enforce a foreignjudgment if it is viewed the amount of damages awarded as excessive or inconsistent with publicpolicy, and is uncertain whether an Indian court would enforce foreign judgments that wouldcontravene or violate Indian law. A party seeking to enforce a foreign judgment in India is requiredto obtain approval from the Reserve Bank of India to repatriate outside India any amount recoveredpursuant to execution, and any such amount may be subject to tax in accordance with applicable laws.Any judgment for payment of amounts denominated in a foreign currency would be converted intoRupees on the date of the judgment and not on the date of the payment. Our Company cannot predictwhether a suit brought in an Indian court will be disposed of in a timely manner or be subject toconsiderable delays.

vi

MARKET AND INDUSTRY INFORMATION

We have obtained certain market data, industry forecasts and data used throughout this OfferingCircular from internal surveys, market research and publicly available industry, Government andresearch information, publications and websites. Industry publications generally state that theinformation contained therein has been obtained from sources believed to be reliable, but that theaccuracy and completeness of the information is not guaranteed. Similarly, while we believe theseindustry forecasts and market research to be reliable, we have not independently verified thisinformation and do not make any representation as to the accuracy of this information.

In this Offering Circular, various statistical data relating to our business and non-GAAP performancemeasures, such as EBITDA, have been included. The manner in which these data are calculated isdescribed in this Offering Circular. You should note, however, that other companies in thetelecommunications industry may calculate and present these data in a different manner and, therefore,you should use caution in comparing our data with data presented by other companies, as the data maynot be directly comparable.

vii

PRESENTATION OF FINANCIAL INFORMATION

Financial Data

Our audited consolidated financial statements as at and for the financial years ended March 31, 2012,2013 and 2014 (the “audited Financial Statements”) included elsewhere in this Offering Circular,our unaudited condensed interim consolidated financial statements as at and for the three monthsended June 30, 2014 and our unaudited unreviewed consolidated financial statements as at and for thenine months ended December 31, 2014 have each been prepared in accordance with generally acceptedaccounting principles in India (“Indian GAAP”) and reporting guidelines prescribed by Indianregulatory authorities.

Indian GAAP differs in certain respects from International Financial Reporting Standards (“IFRS”).For a discussion of certain significant differences between Indian GAAP and IFRS, see “Summary ofCertain Principal Differences between Indian GAAP and IFRS”. In making an investment decision,investors must rely on their own examination of the Issuer, the terms of the offering and the financialinformation contained in this Offering Circular. Potential investors should consult their ownprofessional advisors for an understanding of the differences between Indian GAAP, on the one hand,and IFRS, on the other hand, and how these differences might affect their understanding of thefinancial information contained herein.

We publish our financial statements in Rupees. Our financial statements and the financial data relatingto our Company, the Group and the Reliance Group herein are converted from crores or thousands, asthe case may be, into billions and shown to the nearest billion of Rupees. Further, references to“lakhs” and “crores” in this Offering Circular are to the following:

• one lakh represents 100,000 (one hundred thousand);

• ten lakhs represents 1,000,000 (one million);

• one crore represents 10,000,000 (ten million);

• ten crores represents 100,000,000 (one hundred million); and

• one hundred crores represents 1,000,000,000 (one thousand million or one billion).

Rounding

Certain amounts and percentages included in this Offering Circular have been rounded. Accordingly,in certain instances, the sum of the numbers in a column may not equal the total figure for that column.

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NON-GAAP FINANCIAL MEASURES

As used in this Offering Circular, a non-GAAP financial measure is one that purports to measurehistorical or future financial performance, financial position or cash flows, but excludes or includesamounts that would not be so adjusted in the most comparable Indian GAAP measures. From time totime, reference is made in this Offering Circular to such “non-GAAP financial measures”, primarilyEBITDA, or earnings before interest, taxes and depreciation and amortisation. Our managementbelieves that EBITDA and other non-GAAP financial measures provide investors with additionalinformation about our performance, as well as ability to incur and service debt and make capitalexpenditures, and are measures commonly used by investors. The non-GAAP financial measuresdescribed herein are not a substitute for Indian GAAP (or IFRS) measures of earnings and may not becomparable to similarly titled measures reported by other companies due to differences in the waythese measures are calculated.

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EXCHANGE RATES

Fluctuations in the exchange rate between the Rupee and the U.S. dollar will affect the U.S. dollarequivalent of the Rupee price of the trading price for the Notes.

The following table sets forth, for the periods indicated, information with respect to the exchange ratebetween the Rupee and the U.S. dollar (in Rupees per U.S. dollar) based on the reference rates releasedby the Reserve Bank of India (“RBI”). No representation is made that the Rupee amounts actuallyrepresent such amounts in U.S. dollar or could have been or could be converted into U.S. dollars atthe rates indicated, any other rates, or at all.

(Rupee per U.S. Dollar 1.00)

Financial Year Period End Average High Low

2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.4 54.5 57.2 50.6

2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.1 60.5 68.4 53.7

2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.6 61.1 63.7 58.4

(Rupee per U.S. Dollar 1.00)

Month Period End Average High Low

January 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . 61.8 62.2 63.4 61.4

February 2015 . . . . . . . . . . . . . . . . . . . . . . . . . 61.8 62.0 62.3 61.7

March 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . 62.6 62.4 62.8 61.8

(Source: RBI)

We have used exchange rates declared by the Foreign Exchange Dealers Association of India(“FEDAI”) for conversion of U.S. dollars into Rupees in the financial statements at the year end. Theexchange rates used at the end of the financial years 2012, 2013 and 2014 were `50.875, `54.285 and`59.915, respectively. Although we have converted selected Rupee amounts in this Offering Circularinto U.S. dollars for convenience, such conversions should not be considered as a representation thatsuch U.S. dollar amounts have been, could have been or could be converted into Rupee amounts at anyparticular rate, the rate stated above or at all. There are certain restrictions on the conversion ofRupees into U.S. dollars.

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DEFINITIONS AND ABBREVIATIONS

We have prepared this Offering Circular using certain definitions and abbreviations which you shouldconsider when reading the information contained herein.

The following list of certain capitalised terms used in this Offering Circular is intended for theconvenience of the reader/prospective investor only and is not exhaustive.

The terms defined in this Offering Circular shall have the meanings set forth in this section, unlessspecified otherwise in the context thereof, and references to any statute or regulations or policies shallinclude amendments thereto, from time to time.

Term Description

“Company” or “ourCompany” . . . . . . . . . . . .

Reliance Communications Limited, a public limited companyincorporated under the Companies Act, 1956 and having its registeredoffice at H Block, 1st Floor, Dhirubhai Ambani Knowledge City, NaviMumbai 400 710, Maharashtra. It is clarified that references to “us”,“we” or “our” are to our Company, together with its Subsidiaries, jointventures and associate companies on a consolidated basis.

“U.S. dollar” or “US$” . . . . The legal currency of the United States.

“AD Bank” . . . . . . . . . . . . . Designated authorised dealer category I bank appointed in accordancewith the ECB Guidelines.

“AGM” . . . . . . . . . . . . . . . . Annual general meeting.

“Articles” . . . . . . . . . . . . . . The articles of association of our Company.

“AS” . . . . . . . . . . . . . . . . . . Accounting standards issued by the Institute of Chartered Accountantsof India.

“Auditors” . . . . . . . . . . . . . The statutory auditors of our Company being Chaturvedi & Shah,Chartered Accountants and BSR & Co. LLP, Chartered Accountants(which has been converted from BSR & Co. into BSR & Co. LLP (alimited liability partnership) with effect from October 14, 2013).

“Board of Directors” or“Board” or “Directors” . . .

The board of directors of our Company or a duly constituted committeethereof.

“Civil Code” . . . . . . . . . . . . The Code of Civil Procedure, 1908 of India.

“Companies Act” . . . . . . . . . Companies Act, 1956 and the notified provisions of the Companies Act,2013 and the rules and regulations framed thereunder.

“Competition Act” . . . . . . . . Competition Act, 2002, as amended.

“Department of Space”. . . . . Department of Space, Government of India.

“ECB” . . . . . . . . . . . . . . . . . External commercial borrowing raised in accordance with the ECBGuidelines.

“ECB Guidelines” . . . . . . . . Foreign Exchange Management (Borrowing or Lending in ForeignExchange) Regulations, 2000 and the circulars issued thereunder by theRBI including the Master Circular — External Commercial Borrowingsand Trade Credits, dated July 1, 2014, as amended from time to time.

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Term Description

“Equity Shares” . . . . . . . . . . Equity shares of our Company of face value of `5 each.

“FEMA” . . . . . . . . . . . . . . . The Foreign Exchange Management Act, 1999 and the rules,regulations, notifications and circulars issued thereunder.

“audited FinancialStatements” . . . . . . . . . . .

Our Company’s audited consolidated financial statements for the yearsended March 31, 2014, March 31, 2013 and March 31, 2012.

“financial year” . . . . . . . . . . A period of twelve months ending 31 March of that particular year,unless otherwise stated.

“GDP” . . . . . . . . . . . . . . . . . Gross domestic product.

“Global Operations” . . . . . . . One of our primary reporting segments. See “Management’s Discussionand Analysis of Financial Condition and Results of Operations —Segment Information”.

“Government” . . . . . . . . . . . The Government of India.

“Group” . . . . . . . . . . . . . . . Our Company, its Subsidiaries, joint ventures and associate companies.

“ICAI” . . . . . . . . . . . . . . . . . The Institute of Chartered Accountants of India.

“IFRS”. . . . . . . . . . . . . . . . . International Financial Reporting Standards of the InternationalAccounting Standards Board.

“IT Act”. . . . . . . . . . . . . . . . Income Tax Act, 1961 of India.

“India” . . . . . . . . . . . . . . . . . The Republic of India.

“Indian GAAP” . . . . . . . . . . Generally accepted accounting principles followed in India.

“LRN” . . . . . . . . . . . . . . . . . Loan registration number.

“Memorandum” . . . . . . . . . . Memorandum of association of our Company.

“OCB” . . . . . . . . . . . . . . . . . A company, partnership, society or other corporate body owned directlyor indirectly to the extent of at least 60% by NRIs, including overseastrusts, in which not less than 60% of beneficial interest is irrevocablyheld by NRIs, directly or indirectly, as defined under the ForeignExchange Management (Deposit) Regulations, 2000.

“Promoters” . . . . . . . . . . . . . The promoters of our Company, being Mr. Anil D. Ambani, RelianceInnoventures Private Limited, Reliance Communications EnterprisesPrivate Limited (formerly known as AAA Communications PrivateLimited), Reliance Wind Turbine Installators Industries PrivateLimited (formerly known as AAA Industries Private Limited), RelianceOrnatus Enterprises and Ventures Private Limited (formerly known asADA Enterprises and Ventures Private Limited), Reliance CapitalLimited, Shreeji Comtrade LLP, Shrikrishna Tradecom LLP, Mrs.Kokila D. Ambani, Mrs. Tina A. Ambani, Mr. Jai Anmol A. Ambani,Mr. Jai Anshul A. Ambani and Reliance ADA Group Trustees PrivateLimited.

“RBI” . . . . . . . . . . . . . . . . . Reserve Bank of India.

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Term Description

“Regulation S” . . . . . . . . . . . Regulation S under the Securities Act.

“Reliance Group” . . . . . . . . The companies, joint ventures, associate companies and affiliates(taken as a whole), controlled by Mr. Anil D. Ambani, together withpersons acting in concert with him.

“`” or “Rupees” . . . . . . . . . The legal currency of India.

“SEBI” . . . . . . . . . . . . . . . . Securities and Exchange Board of India constituted under the SEBIAct.

“Securities Act” . . . . . . . . . . United States Securities Act of 1933, as amended.

“Shareholders” . . . . . . . . . . . The registered holders of Equity Shares.

“SMEs” . . . . . . . . . . . . . . . . Small and medium enterprises.

“State Governments” . . . . . . State Governments of India.

“Stock Exchanges” . . . . . . . . BSE Limited and National Stock Exchange of India Limited.

“Subsidiaries” . . . . . . . . . . . The subsidiaries of our Company as included in Note 11 of ourUnaudited Condensed Interim Consolidated Financial Statements as atand for the three months ended June 30, 2014.

“United Kingdom” . . . . . . . . The United Kingdom of Great Britain and Northern Ireland.

“United States”, “U.S.” or“USA” . . . . . . . . . . . . . . .

The United States of America, its territories and its possessions and theDistrict of Columbia.

“U.S. GAAP” . . . . . . . . . . . . Generally accepted accounting principles followed in the UnitedStates.

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GLOSSARY OF TECHNICAL TERMS

Term Description

“2G” . . . . . . . . . . . . . . . . . . Second generation mobile telecommunications.

“3G” . . . . . . . . . . . . . . . . . . Third generation mobile telecommunications.

“4G” . . . . . . . . . . . . . . . . . . Fourth generation mobile telecommunications.

“AGR” . . . . . . . . . . . . . . . . . Adjusted gross revenue.

“ARPU” . . . . . . . . . . . . . . . . Average revenue per user.

“AUSPI” . . . . . . . . . . . . . . . The Association of Unified Service Providers of India.

“BPO” . . . . . . . . . . . . . . . . . Business process outsourcing.

“BSNL” . . . . . . . . . . . . . . . . Bharat Sanchar Nigam Limited.

“BTS” . . . . . . . . . . . . . . . . . Base transceiver stations.

“CAGR” . . . . . . . . . . . . . . . Compounded annual growth rate.

“CDMA” . . . . . . . . . . . . . . . Code division multiple access.

“Circle(s)” . . . . . . . . . . . . . The 22 service areas into which the Indian telecommunications markethas been segregated into.

“CLI”. . . . . . . . . . . . . . . . . . Calling line identification.

“CMTS”. . . . . . . . . . . . . . . . Cellular mobile telephone services.

“COAI” . . . . . . . . . . . . . . . . The Cellular Operators Association of India.

“DG” . . . . . . . . . . . . . . . . . . Diesel generator.

“DoT” . . . . . . . . . . . . . . . . . The Department of Telecommunications, Ministry of Communicationsand Information Technology, Government of India.

“DTH” . . . . . . . . . . . . . . . . . Direct to home.

“GB” . . . . . . . . . . . . . . . . . . Gigabytes.

“Gbps”. . . . . . . . . . . . . . . . . Gigabytes per second.

“GSM”. . . . . . . . . . . . . . . . . Global system for mobile communication.

“ICR” . . . . . . . . . . . . . . . . . Intra-Circle roaming.

“IDC” . . . . . . . . . . . . . . . . . Internet data centre.

“IFRS”. . . . . . . . . . . . . . . . . International Financial Reporting Standards.

“ILD” . . . . . . . . . . . . . . . . . International long-distance.

“IP” . . . . . . . . . . . . . . . . . . . Internet protocol.

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Term Description

“IP-I Provider” . . . . . . . . . . Infrastructure provider category-I.

“IPLC” . . . . . . . . . . . . . . . . International private leased circuit.

“IPTV” . . . . . . . . . . . . . . . . Internet protocol television.

“IRU” . . . . . . . . . . . . . . . . . Indefeasible right of use.

“ISP” . . . . . . . . . . . . . . . . . . Internet service provider.

“LTE” . . . . . . . . . . . . . . . . . Long-Term Evolution.

“M2M” . . . . . . . . . . . . . . . . Machine-to-Machine.

“MHz” . . . . . . . . . . . . . . . . . Megahertz.

“MoU” . . . . . . . . . . . . . . . . . Minutes of use.

“MPLS” . . . . . . . . . . . . . . . . Multi protocol label switching.

“MTNL” . . . . . . . . . . . . . . . Mahanagar Telephone Nigam Limited.

“NLD” . . . . . . . . . . . . . . . . . National long-distance.

“NTP” . . . . . . . . . . . . . . . . National Telecom Policy.

“O&M” . . . . . . . . . . . . . . . . Operations and maintenance.

“OFC” . . . . . . . . . . . . . . . . . Optic fibre cable.

“PIN”. . . . . . . . . . . . . . . . . . Personal identification number.

“PoP”. . . . . . . . . . . . . . . . . . Point of presence.

“Rev A” . . . . . . . . . . . . . . . . Revision A, a CDMA technology capable of downlink speeds up to3.1Mbps.

“Rev B” . . . . . . . . . . . . . . . . Revision B, a CDMA technology capable of downlink speeds up to14.7Mbps.

“RKm”. . . . . . . . . . . . . . . . . Route kilometre.

“ROU” . . . . . . . . . . . . . . . . . Right of use.

“RPM” . . . . . . . . . . . . . . . . . Revenue per minute.

“SACFA” . . . . . . . . . . . . . . . Standing Advisory Committee on Radio Frequency Allocations.

“SCN” . . . . . . . . . . . . . . . . . Show cause notice.

“SIM” . . . . . . . . . . . . . . . . . Subscriber identity module.

“SMS” . . . . . . . . . . . . . . . . . Short messaging service.

“STD” . . . . . . . . . . . . . . . . . Subscriber trunk dialling.

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Term Description

“Swan” . . . . . . . . . . . . . . . . Swan Telecom Private Limited.

“TDSAT” . . . . . . . . . . . . . . . Telecom Disputes Settlement Appellate Tribunal.

“TRAI” . . . . . . . . . . . . . . . . Telecom Regulatory Authority of India, constituted under the TelecomRegulatory Authority of India Act, 1997.

“UASL” . . . . . . . . . . . . . . . . Unified access services licence.

“UL Guidelines” . . . . . . . . . The Guidelines for Grant of Unified Licence dated August 19, 2013issued by the DoT.

“USSD” . . . . . . . . . . . . . . . . Unstructured Supplementary Data.

“VAS” . . . . . . . . . . . . . . . . . Value-added service.

“VLR” . . . . . . . . . . . . . . . . . Visitor location register.

“VPN” . . . . . . . . . . . . . . . . . Virtual private network.

“WLL”. . . . . . . . . . . . . . . . . Wireless local loop.

“WPC”. . . . . . . . . . . . . . . . . Wireless Planning and Coordination Wing, Department ofTelecommunications, Ministry of Communications and InformationTechnology, Government of India.

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CERTAIN SUBSIDIARIES OF OUR COMPANY

Term Description

“RCIL” . . . . . . . . . . . . . . . . . . Reliance Communications Infrastructure Limited.

“Reliance Big TV” . . . . . . . . . Reliance Big TV Limited.

“GCX” . . . . . . . . . . . . . . . . . . . Global Cloud Xchange Limited.

“RIIL” . . . . . . . . . . . . . . . . . . . Reliance Infocomm Infrastructure Limited.

“Reliance Infratel” . . . . . . . . . . Reliance Infratel Limited.

“RTL” . . . . . . . . . . . . . . . . . . . Reliance Telecom Limited.

See “Corporate Structure” for an organisational chart of our Company and certain of our keysubsidiaries.

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SUMMARY

This summary may not contain all of the information that may be important to you. You should readthis entire Offering Circular, including our consolidated financial statements and related notes and“Risk Factors”, before making an investment decision.

Overview

We are a leading integrated and converged telecommunications operator in India, and, through ourinternational Subsidiaries, are one of the leading global data communications service providers. InIndia, we own and operate a nationwide telecommunications network through which we offer a fullrange of telecommunications services to retail and enterprise customers, including mobile andfixed-line services, national and international long-distance connectivity, broadband services andenterprise solutions. We also provide tower infrastructure to other telecommunications operators.Internationally, we provide retail and wholesale voice connectivity, and through our Subsidiary, GCX,we provide a wide range of products and services to allow enterprise customers to create, manage andconnect global data networks.

We have established a pan-India, integrated (wireless and wireline) and convergent (voice, data andvideo) digital network capable of supporting services spanning the entire telecommunications valuechain, and covering over 21,000 cities and towns and over 400,000 villages. We provide 3G servicesacross 13 Circles covering 334 cities, including the metropolitan Circles of Mumbai, Delhi andKolkata. Additionally, we provide 3G services in the five Circles of Andhra Pradesh, Karnataka,Kerala, Tamil Nadu and Uttar Pradesh (East) through ICR arrangements, thus increasing our 3Gcoverage to 18 Circles. We provide wireless broadband services on our own network in 1,624 citiesand towns and offer Internet connectivity in over 19,000 towns across India. Our 43,379telecommunications towers are used for both CDMA and GSM mobile networks and service multiplemobile service providers, including ourselves, are located in all 22 Circles in India, and are supportedby an OFC network of over 190,000 RKm. We hold UASL and 3G spectrum licences as well aslicences for the provision of NLD and ILD services. Our ten data centres in four cities have a totalcapacity of approximately 1.1 million square feet (including one data centre under construction).These networks are monitored on a round-the-clock basis for quality, repairs, maintenance andtroubleshooting through two network operating centres, including our disaster recovery networkoperating centre in Hyderabad.

In India, we also offer nationwide DTH services through our wholly-owned subsidiary, Reliance BigTV, in 8,350 cities and towns. Using MPEG 4 technology, we offer 255 channels in HD like quality.We also offer Standard Definition, High Definition and High Definition-DVR set-top boxes.

As at December 31, 2014, we had a customer base of approximately 115 million customers, including106.3 million wireless customers (including 31.4 million data subscribers, of which 16.7 million were3G subscribers), 1.2 million wireline customers, over 2.6 million overseas retail customers and 4.9million DTH customers. Our enterprise clientele includes over 39,000 Indian and multinationalcorporations, including SMEs and over 290 global, regional and domestic carriers. Our enterprisecustomers include over 900 prominent enterprises in India.

Our Global Operations comprise the provision of voice, data and Internet network and services, andthe lease of submarine cable infrastructure and metropolitan city networks. We have approximately650 enterprise customers throughout developed markets such as the United States, the UnitedKingdom, the Netherlands and Singapore. We own and operate a widespread submarine fibre opticcable network spanning 68,698 RKm and connecting North America, Europe, the Middle East and Asiathrough 46 landing points in 27 countries. The total installed capacity of our five subsea cable systemsis over 21 Tbps. We also have owned and leased metropolitan networks in 27 cities across 13countries. We are one of the leading managed Ethernet service providers in the United States and havean established position in the global enterprise data market.

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We are a part of the Reliance Group, one of India’s largest business groups by market capitalisation(`621.6 billion as at December 31, 2014) with business interests in, among others, thetelecommunications, power, infrastructure, financial services and entertainment industries. TheReliance Group had approximately 95,000 employees as at December 31, 2014, and its four listedcompanies in India had over 7.68 million shareholders, as at March 13, 2015. The Reliance Group isled by Mr. Anil D. Ambani, one of India’s prominent business leaders.

From an operational perspective, our business is organised into two strategic segments: the IndiaOperations and the Global Operations. We conduct a substantial portion of our business through ourSubsidiaries, particularly, GCX, RTL, RCIL, Reliance Infratel and Reliance Big TV.

For the financial years 2014 and 2013, our total revenue was `223.21 billion and `217.78 billion,respectively, while profit after tax was `10.47 billion and `6.72 billion, respectively.

For the financial years 2014 and 2013, our India Operations and Global Operations generated totalrevenues of `185.69 billion and `177.84 billion and `46.21 billion and `49.28 billion, respectively.

Our Competitive Strengths

Presence in an Industry with Growth Potential

We believe we can capitalise on the growth potential presented by the telecommunications industry asa result of our established presence and our comprehensive range of products and services in India andglobally.

The Indian telecommunications industry has attractive growth prospects that are mainly a result offactors such as: (i) relatively low rural penetration; (ii) rapid growth in data consumption from a lowdata consumption levels; and (iii) reduced competitive intensity resulting in improved pricing powerfor existing operators. According to “The Indian Telecom Services Performance Indicator ReportJuly-September 2014” published by TRAI, 382.5 million wireless subscribers were rural subscribers,out of 930.2 million total wireless subscribers, as at September 30, 2014. According to TRAI, thenumber of rural wireless subscribers has increased by 47.6 million between September 30, 2012 and2014. While the increase in rural subscribers has increased the rural teledensity gradually from 39.5per 100 population as at September 30, 2012 to 44.3 per 100 population as at September 30, 2014, itis still very low compared to the urban teledensity, which stood at 142.4 per 100 population as atSeptember 30, 2014.

There has also been a decrease in competitive intensity as measured by the number of wirelessoperators presenting an opportunity for existing players. According to TRAI data, the number ofwireless operators (measured by whether a licensee reported subscribers in a particular circle as atmonth end) increased from 135 in December 2008 to 249 in December 2011. However, it has fallento 171 as at September 30, 2014. The monthly ARPU for GSM subscribers increased from `95 to `116between the quarter ending September 30, 2012 and the quarter ending September 30, 2014. ForCDMA subscribers, monthly ARPU increased from `78 to `110 over the same period. We believe thesefactors will allow us to leverage our existing presence to grow our revenue and improve ourprofitability.

Data consumption is also growing rapidly. Total Internet subscribers increased by 20.9% from 210.4million as at September 30, 2013 to 254.4 million as at September 30, 2014, according to “The IndianTelecom Services Performance Indicator Report July-September 2014” published by TRAI. Dataconsumption in India is largely a wireless phenomenon, as 92.6% of total Internet subscribers werewireless Internet subscribers. However, the wireless Internet subscriber base represents only 25.3% oftotal wireless subscribers. According to the Nokia Networks MBiT Report, 2014, India 2G and 3G datapayload grew by 87% from January to December 2013, of which 3G data payload grew by 146%.

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Further, we believe that the global data communications industry has attractive growth prospectsdriven by various factors, which include: (i) rapid increase of Internet users, particularly in emergingmarkets; (ii) consumer demand for faster broadband speeds; (iii) the increase in the number ofconnected devices, such as smartphones, tablets and other Internet of Everything gadgets; (iv) growthin demand of data-intensive applications, such as social networking, video, online gaming, file sharingand remote file storage; and (v) the development and widespread implementation of cloud computingtechnologies that require high bandwidth and low latency global networks.

Large Customer Base with Leadership in Data Subscribers

We have a large customer base in India. According to the monthly subscriber data of TRAI forDecember 2014, we reported 107.5 million total subscribers, of whom 106.3 million were wirelesssubscribers. We are the fourth largest wireless operator in India, as measured by the number ofwireless subscribers, with a market share of 11.3% and 12.4% on a VLR basis. The third largestoperator had a wireless subscriber market share of 15.9% and the fifth largest operator had a wirelesssubscriber market share of 8.6%. We have generated more than 100 billion MoU per quarter for thelast 12 quarters. We also have a strong market position in data subscribers and 3G subscribers. As atDecember 31, 2014, we had a wireless subscriber base of 106.3 million wireless subscribers (including31.4 million data subscribers, of which 16.7 million were 3G subscribers). Our reported voice and datatraffic were 103.4 billion minutes and 76.4 billion MB, respectively, for the three months endedDecember 31, 2014. The India enterprise customer base includes over 39,000 Indian and multinationalcorporations including SMEs and over 900 prominent enterprises in India to whom we offer a widerange of products and services spanning voice, data, collaboration, data centre services and managedservices. We believe that our large customer base provides us with significant operating leverage andgives us the opportunity to benefit significantly from the reduction in competitive intensity for voiceand the growth in data traffic.

Our global data business has a diverse customer base, including major telecommunications carriers,multinational enterprises and new media companies. Furthermore, long-term contracts with many ofthese customers provide us with high revenue visibility.

Annuity-like Recurring Revenue Streams

We believe our revenues have higher stability and predictability, due to annuity-like recurring revenuestreams across our various businesses. In the wireless business, we have acquired long-term customersthrough bundled sales and post-paid services, which lead to lower churn rates and longer customer lifecycles. We experience low churn rates for our enterprise clientele of multinational corporations andSMEs, ensuring annuity-like recurring revenue. In our carrier business, we have recurring revenuesfrom various customers, including other carriers. Our Global Operations revenues mostly are throughlong-term carrier and IRU contracts and are recurring in nature. In our tower infrastructure business,we have long-term contracts with other service providers and also have further capacity to enhancetenancies.

Comprehensive Domestic and International Network

We have a nationwide, convergent digital network capable of providing a comprehensive suite ofproducts and services to our customer base. As at December 31, 2014, our wireless network included86,792 owned and leased sites which provide coverage to over 21,000 cities and over 400,000 villagesacross all 22 Circles. Our nationwide OFC network has a length of over 190,000 RKm. We have aterrestrial network in 44 cities and towns in India with approximately more than one million buildingsconnected directly to our broadband network, which services approximately 1.2 million access lines.We have ten data centres in four cities with a total capacity of approximately 1.1 million square feet(including one data centre under construction). Our DTH services are available in 8,350 cities andtowns. Our global network is distinguished by its geographical coverage and ability to provide subseaand terrestrial connectivity to major telecommunications hubs. These include hubs in the developedmarkets in the U.S. and Europe and key emerging markets in the Middle East and Asia. Our convergednetwork provides us with great flexibility in:

• potentially bundling voice, data and video services to retail customers;

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• providing seamless, fully redundant, domestic and international connectivity to corporatecustomers at demanding service levels;

• upgrading networks, including introducing new technologies in a short time frame and in ahighly localised manner; and

• financially efficient implementation of expansion and upgrades in coverage, capacity andtechnology.

Ample, Long Validity Period Wireless Spectrum

We are the only telecommunications operator in India with allocation of CDMA spectrum (800 MHz)and GSM spectrum (900 MHz and/or 1800 MHz) in all 22 telecommunications Circles. In addition,we have been allocated 3G spectrum (2100 MHz) in 13 Circles in the 2010 auction. Most of ourspectrums have long validity periods — our CDMA spectrum is valid until 2021 or later in 19 Circles,our GSM spectrum is valid until 2021 or later in 14 Circles, and our 3G spectrum is valid until 2030in all 13 Circles. We believe that our diversity of spectrum provides us with significant advantages.In particular, our CDMA spectrum allows us to provide high-quality data services through dongles andsmartphones in a capital-efficient manner, since the lower frequency requires fewer sites for similarcoverage, and CDMA technology allows for more efficient compression and transmission of data.Further, the long validity period of our spectrum allows us to conserve cash flows relative to manyof our competitors who face expiration of validity periods for considerable spectrum holding over thenext two financial years.

Extensive Distribution and Service Network

We maintain an extensive distribution and service network covering all 22 telecommunications Circlesin India. We have recently adopted an initiative to launch full-serviced franchise owned and operatedretail outlets offering a full suite of services, including innovative self-care options, to our customers.As at December 31, 2014, we had 855 franchised Reliance Mobile exclusive stores spread across 134cities and towns, offering customer activation and after-sales services. We also intend to increase theseretail outlets to other cities. Our third-party retailer presence includes more than 680,000 outlets.Reliance Digital TV is available at more than 35,850 outlets across 8,350 cities and towns in thecountry. As at December 31, 2014, our Global Cloud Xchange operations had 156 sales and supportstaff across 28 locations and 681 engineering and operational service staff across 18 countries. InGlobal Operations, we offer virtual international calling services to 230 international destinations toover 2.6 million retail customers in the 14 countries where we operate. We believe our distributionnetworks allow us to:

• Obtain local intelligence on the popularity of our products and services which helps us toimprove targeting and customer segmentation;

• Quickly rollout and test new products and services; and

• Provide personalised sales and customer service to improve customer loyalty.

Recognised Brands

We are a part of the Reliance Group, one of India’s leading business houses. We believe the RelianceGroup has a strong and recognised brand in India which enables us to enjoy its brand recall amongconsumers in India. We believe our own brands are also recognised as leading national brands fortelecommunications services. Our brands, which include Reliance Mobile for the mobile portfolio ofservices, Reliance Hello for the fixed wireless portfolio of services, Reliance Pro and Reliance Pro3for CDMA wireless data services, and Reliance 3G for 3G Services, assist in promoting us as anintegrated telecommunications service provider country-wide. Our recognised brands assist us inattracting subscribers, particularly in an industry affected by exits and consolidation. The Reliancebrand was named among the top 20 brands in India by Interbrand in its “Best Indian Brands 2014”report.

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We have won numerous awards and accolades on industry transformation, innovation, operationalexcellence and leadership, as well as for the best practices followed by us, including in the fields ofinformation technology, network security and customer experience. These include:

• Economic Times Human Resources Excellence Award, 2014, for human resource practices,including in the areas of learning and development, talent management and talent acquisitions;

• Nasscom DSCI Excellence Award, for security in the telecommunications sector for innovativeIT security and privacy efforts which focuses on robust risk management and compliance;

• Aegis Graham Bell Award for Best Broadband Network Provider;

• “Economic Times Telecom Award 2012” in the ‘Quality and Service’ category;

• IT EDGE Award, for our innovative and agile IT processes setup using TM forum standards;

• Amdocs Innovation Award, for customer experience, enhanced customer loyalty and reducedcustomer churn, and increased productivity by decreasing the average handling time;

• ‘Top 100 CISO’ Award, for security in the telecommunications sector in the automation of useraccess management, an innovative IT security and data protection solution focusing on riskmanagement and compliance; and

• Managed Video Conferencing Service Provider of the Year, at the 2014 Frost & Sullivan IndiaICT Awards, in recognition of expertise and experience in conceptualising and delivering videoconferencing services to the Indian corporate sector.

Experienced Management Team

Our management team includes Mr. Vinod Sawhny, President and Chief Executive Officer, Mr.Gurdeep Singh, President and Chief Executive Officer (Consumer Business), Mr. Punit Garg,President, Corporate Strategy and Regulatory Affairs, Mr. William Barney, Chief Executive Officer(Global Cloud Xchange, India Enterprise and Carrier Business), and Mr. Deepak Khanna, JointPresident and Chief Executive Officer (India Enterprise). They have in-depth industry knowledge andextensive managerial experience in telecommunications, DTH and related businesses. We believe ourmanagement team is well-equipped to respond to and leverage the advancements and other changes inthe telecommunications industry in general and to execute our strategy.

Strong Shareholder

We are promoted by Mr. Anil Dhirubhai Ambani, one of India’s leading entrepreneurs. The RelianceGroup is one of India’s largest business houses by market capitalisation (`621.6 billion as at December31, 2014), with business interests in, among others, telecommunications, power, infrastructure,financial services and entertainment industries. We believe being part of one of India’s largestbusiness groups enhances our credibility and growth prospects.

The Reliance Group underlined its strategic focus on our Company with the subscription of warrantsaggregating to `13 billion by the Promoters by way of preferential allotment, which concludedsimultaneously with a qualified institutional placement of equity.

Our Strategy

Spectrum-based “Go To Market” strategy

We intend to continue to focus on offering 2G services in all 22 Circles covered by our network, and3G services in the 13 Circles in which we have been allocated 3G spectrum and the five Circles wherewe recently launched 3G services through ICR arrangements. We believe our integrated businessmodel brings about significant group synergies and economies of scale of operations, advantages thatwe will continue to utilise. We have adopted a “Circle as a Country” growth strategy, whereby weintend to customise our expansion and market intervention strategies according to peculiarcharacteristics of each Circle, and various micro-markets and subscriber classes within each Circle.We have identified Circles where we intend to participate in the natural industry-level market growthbeing witnessed in such Circles, Circles where we will take a differentially aggressive position on

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various customer propositions and Circles where we will have a well-calibrated management betweenfocus on existing subscriber base and new acquisitions. For example, we have adopted specificstrategies for the metropolitan Circles of Delhi, Mumbai and Kolkata, and our other 3G and non-3GCircles, to gain market share through focused handheld device, dongle, voice and data offerings.

We also intend to selectively leverage existing infrastructure and our internal resources, to increaseour market share in an effective manner in each category of Circle. We have specialised marketingteams for our GSM and CDMA-based services, which we believe will allow us to offer customers morespecific and customised service and leverage revenues from each technology platform’s offeringseffectively. We will continue to seek partnerships with leading telecommunications handsetmanufacturers, to bundle our offerings with handsets to attract new subscribers in the micro-marketswe focus on.

Focus on Data-based Services

We aim to continue to increase our data subscriber base, including mobile and wireline subscribers,and revenues by focusing on improving our data service offerings, such as introducing more affordableprice plans that provide customers 3G data access speeds at 2G rates. There are five components ofour GSM data strategy: (1) focus on affordability by pricing our anchor 3G data plan at the same priceas the 2G data plan of other service providers; (2) aggressive 2G positioning to popularize Internetfurther; (3) free social networking with data plans to drive preference among young subscribers; (4)bundling contextual content for driving Internet adoption; and (5) key device partnerships.

Further, we believe that CDMA technology is well suited for high speed data-based services. Weintend to focus on increasing our market share in the large screen (computers) connectivity marketthrough our CDMA offerings and the small screen device market through 3G services in the 18 Circleswhere we provide such services. We have formulated separate CDMA data strategies for metropolitanCircles, category A towns and smaller towns which are emerging data markets. Our bundled-salesbusiness strategy is aimed at:

• offering large and faster data network and providing coverage at attractive pricing;

• bundling products through combining value service plans;

• strategic segmenting through customized upgrade plans and specific SME/enterprise offering;and

• offering a multi-mode device ecosystem, including through smart devices and universal modeInternet devices.

We also intend to continue to partner with leading smartphone brands and enter into devicecollaborations such as our “Zero Plan”, which combines the offering of a handset with voice and dataservice plans. We aim to increase data revenue through attracting a greater share of smartphone andtablet users by focusing on driving adoption of data-based services among these devices. This, webelieve, will also drive upgrades to smartphones, increase data usage by our existing customers andattract data customers.

With respect to our Global enterprise data business, we intend to focus on increasing our market sharein the finance, legal and healthcare sectors in the United States and grow the revenues from ourexisting multinational customers. We have rebranded Reliance Globalcom as Global Cloud Xchangewith the objective of focusing on developing the network infrastructure, data centre and managedservices spaces and delivering an integrated cloud ecosystem. We intend to integrate our keyinternational assets with a focus on Internet protocol and cloud services.

Continue to Focus on Offering New Products and Services

We aim to expand our revenue streams through the expansion of our portfolio of service offerings andlaunching specific sales and marketing initiatives aimed at increasing our customer base. Such effortsinclude (i) offering a wider range of wireless and wireline services, such as video on demand, onlinegaming and video chat and conferencing; (ii) further expanding our distribution network of retailstores and developing them into one-stop shops for retail customers; and (iii) providing wirelessbroadband data services through both our CDMA and 3G mobile networks. In addition, we intend to

6

focus on cross-selling and bundling of products and services, including bundling of free socialnetworking applications with data packages, through our various partnerships with devicemanufacturers and application developers. This enables us to introduce more attractive categories oftariffs and product combinations that can cater to different markets, demographics and customerneeds, and in turn, benefit our customers from the greater value presented by our product offerings.We recently have launched a series of GSM initiatives aimed at providing value to customers,including ‘TalkLoan’, a facility where customers with low balances can take talktime loans (alsoavailable on CDMA), the ‘MyStore’ upsell portal, where customers can buy six different single-dayvalidity products for `9 or get mobile-number specific offers and ‘One India, One Rate Plan’, a freenational roaming plan for our post-paid and pre-paid GSM subscribers. Under this offer, the local,STD and roaming charges are the same and we charge our customers their home plan tariffs, whileallowing roaming anywhere in India.

Focus on Reduction of Operating Costs

In line with our growth, we will also focus on cost management and margin expansion through variousmeasures to reduce our operating costs and achieve cost optimisation. We have entered into long-termoutsourcing agreements with end-to-end network managed service providers aimed at reducing ourcosts, benefitting from economies of scale and delivering superior customer experience. We believethat our agreements with such service providers will enable us to improve network performance andincrease customer satisfaction. Our other cost reduction measures include cutting down on consumablecosts, shifting to a customer-facing organisation structure with reduced manpower to create a leanerorganisation, outsourcing call centre operations to third-party business process outsourcing companiesfor optimal efficiency and focusing on decreasing the channel commission for distribution of ourprepaid subscription packs. In addition, we have entered into ICR arrangements with othertelecommunications operators to share telecommunications infrastructure in select areas, which offerour existing customers wider coverage and facilitate the expansion of our network with minimumcapital investments. We believe such arrangements will allow us to lower our capital expenditures andoperational costs as we are not required to invest in establishing and maintaining networkinfrastructure, which would typically be required as part of geographic expansion efforts. Further, toimprove our operating margins, we are focusing on initiatives such as:

• optimising network costs through outsourcing of network management services, processre-engineering in outsourcing, optimising fuel consumption and restructuring of annualmaintenance contracts with our vendors;

• reduction of gross subscriber acquisition costs through cross-selling of high-value products, suchas data and 3G packs, and additional steps aimed at optimization of channel commissions andindirect costs; and

• decreasing manpower costs through outsourcing of BPO operations and additional steps aimedat restructuring customer facing functions.

Manage our Assets Effectively

We aim to achieve better and more profitable management of our portfolio of assets, including thepassive infrastructure that we build and use and also make available on a shared basis to other wirelessand communications service providers. Our aim is to pursue expansion at a reduced cost to achieveincreased shareholder returns, improved cash flows, higher operational efficiency and increasednetwork coverage with better quality. In this regard, we have entered into various long-termagreements for sharing telecommunications towers and inter-city and intra-city OFC networks, whichalso give us the right to use such infrastructure developed by our counterparty. We intend to explorefurther opportunities for such infrastructure sharing arrangements and grow the revenue stream fromthis business segment. We are also exploring divestment of our non-core assets to reduce our debtlevels and increase profitability, thereby achieving greater returns and value for our shareholders. Wealso intend to continue to focus on reducing our leverage. We are looking at various options tomonetise our various non-core assets to deleverage our balance sheet. These non-core assets includeour subsidiary GCX, our DTH business and various real estate properties in India.

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THE OFFERING

The following summary contains basic information about the Notes and is not intended to be complete.It does not contain all the information that is important to you. For a more complete understandingof the Notes, please see “Terms and Conditions of the Notes”. Capitalised terms used in this sectionhave the meanings assigned to those terms in the section entitled “Terms and Conditions of theNotes”.

Issuer . . . . . . . . . . . . . . . . . . . . . . . . . Reliance Communications Limited

Notes Offered . . . . . . . . . . . . . . . . . . . US$300,000,000 6.5 per cent. Senior Secured Notes due2020

Maturity Date . . . . . . . . . . . . . . . . . . . November 6, 2020

Offer Price . . . . . . . . . . . . . . . . . . . . . 100 per cent.

Interest . . . . . . . . . . . . . . . . . . . . . . . 6.5 per cent. per annum, payable semi-annually in arrearon May 6 and November 6, commencing on November 6,2015.

Collateral . . . . . . . . . . . . . . . . . . . . . . The obligations of the Issuer with respect to the Notesand the performance of all other obligations of the Issuerunder the Trust Deed and the Notes will be secured by asecurity package, which will consist of: (i) the movableplant and machinery, including (without limitations)tower assets and optic fibre cables, if any (whetherattached or otherwise), capital work in progress(pertaining to movable fixed assets), both present andfuture, including all the rights, title, interest, benefits,claims and demands in respect of all insurance contractsrelating thereto, of the Issuer, RTL, Reliance Infratel andRCIL; (ii) the assignment of 20 unified access servicelicences, one national long-distance licence and oneinternational long-distance licence of the Issuer (but notany of its Subsidiaries); and (iii) a pledge over all theequity shares held by the Issuer in RCIL and all the equityshares held by the Issuer and RIIL in RTL. Securityinterests in the Collateral will be created within certainspecified times following the closing date, and theCollateral will be shared on a pari passu basis with theholders of certain other Indebtedness. For more details,see “Description of Collateral”.

Joint Lead Managers . . . . . . . . . . . . . DBS Bank Ltd. and Standard Chartered Bank

Trustee . . . . . . . . . . . . . . . . . . . . . . . . Standard Chartered Bank

Principal Paying Agent, PayingAgent, Registrar and Transfer Agent . Standard Chartered Bank

Collateral Agents . . . . . . . . . . . . . . . . Security Trustee: Axis Trustee Services Limited

Share Pledge Security Trustee: Axis Trustee ServicesLimited

Lenders’ Agent for Signing of Tripartite Agreement forAssignment of Licences (“Lenders’ Agent”): IDBI BankLimited

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Status of the Notes . . . . . . . . . . . . . . The Notes will be at all times unsubordinated obligationsof the Issuer, senior in right of payment to any futureobligations of the Issuer expressly subordinated in rightof payment to the Notes, and will rank at least pari passuin right of payment with all other present and futureunsecured obligations of the Issuer (subject to anypriority rights of such obligations pursuant to provisionsof law that are both mandatory and of generalapplication). The Notes will be secured by first-priorityliens on the Collateral (subject to certain PermittedLiens).

Covenants . . . . . . . . . . . . . . . . . . . . . . The Conditions will limit the ability of the Issuer and itsRestricted Subsidiaries to, among other things:

• incur or guarantee additional indebtedness and issuedisqualified stock and certain preferred stock;

• pay dividends on capital stock or purchase orredeem capital stock;

• create or incur certain liens on assets to secureindebtedness;

• make investments or other restricted payments;

• enter into agreements that restrict the Issuer’sRestricted Subsidiaries’ ability to pay dividends;

• consolidate or merge with other entities;

• sell or issue capital stock of Restricted Subsidiaries;

• engage in transactions with affiliates and certainshareholders;

• enter into sale and leaseback transactions; and

• transfer or sell assets.

These covenants are subject to a number of importantqualifications and exceptions described in “Terms andConditions of the Notes”.

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Taxation . . . . . . . . . . . . . . . . . . . . . . . All payments of principal and interest in respect of theNotes by or on behalf of the Issuer shall be made free andclear of, and without withholding or deduction for or onaccount of, any present or future taxes, duties,assessments or governmental charges of whatever natureimposed, levied, collected, withheld or assessed, unlessthe withholding or deduction of such taxes, duties,assessments or governmental charges is required by law.Except in the circumstances described in Condition 7(Taxation), if any such deduction or withholding isimposed by India or any political subdivision thereof orany authority therein or thereof having power to tax, theIssuer shall pay such additional amounts as will result inreceipt by the holders of Notes after such withholding ordeduction of such amounts as would have been receivedby them had no such withholding or deduction beenrequired.

Redemption at the Option of theIssuer . . . . . . . . . . . . . . . . . . . . . . . . . Subject to the conditions specified in Condition 5(b), at

any time and from time to time, the Issuer may redeem upto 35 per cent. of the aggregate principal amount of theNotes with the net cash proceeds of one or more sales ofcommon stock of the Issuer in an Equity Offering at aredemption price of 106.5 per cent. of the principalamount of the Notes redeemed, plus accrued and unpaidinterest, if any, to, but not including, the applicableredemption date. In addition, the Issuer may on any oneor more occasions redeem all or a part of the Notes at aredemption price equal to 100 per cent. of the principalamount of the Notes to be redeemed plus an applicable“make whole” premium specified in Condition 5(b).

Redemption for Tax Reasons . . . . . . . The Notes may be redeemed at the option of the Issuer inwhole, but not in part, at any time, at their principalamount, together with interest accrued, in the event ofcertain changes affecting taxes of India. See Condition5(c).

Purchase at the option of theHolders of Notes upon a Change ofControl . . . . . . . . . . . . . . . . . . . . . . . . Upon a Change of Control, the Issuer must make an Offer

to Purchase any and all outstanding Notes at 101 per cent.of their principal amount together with accrued andunpaid interest to (but not including) the Offer toPurchase Payment Date. See Condition 5(d).

Selling Restrictions . . . . . . . . . . . . . . . There are restrictions on the offer, sale and transfer of theNotes in, among others, Singapore, India, the UnitedStates, the European Economic Area, the UnitedKingdom, Hong Kong and Japan. For a description of theselling restrictions on offers, sales and deliveries on theNotes, see “Subscription and Sale”.

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Transfer Restrictions . . . . . . . . . . . . . We have not registered the Notes under the Securities Actor any state or other securities laws. The Notes aresubject to restrictions on transfer and may only be offeredor sold in transactions exempt from, or not subject to, theregistration requirements of the Securities Act. See“Transfer Restrictions”.

Governing Law . . . . . . . . . . . . . . . . . . The Notes and any non-contractual obligations arisingout of or in connection with them and the Trust Deed willbe governed by, and shall be construed in accordance,with English law.

Ratings . . . . . . . . . . . . . . . . . . . . . . . . The Notes have been provisionally rated “Ba3” byMoody’s and “BB-” by Fitch. We cannot assure investorsthat these ratings will not be adversely revised orwithdrawn either before or after delivery of the Notes.

Listing . . . . . . . . . . . . . . . . . . . . . . . . Approval in-principle has been received for the listingand quotation of the Notes on the Official List of theSGX-ST. The Notes will be traded on the SGX-ST in aminimum board lot size of US$200,000 for as long as theNotes are listed on the SGX-ST. Approval in-principle forthe listing and quotation of the Notes on the SGX-ST isnot to be taken as an indication of the merits of the Notes,the Issuer or the Issuer’s subsidiaries or associatedcompanies (if any). For so long as the Notes are listed onthe SGX-ST and the rules of the SGX-ST so require, theIssuer will appoint and maintain a paying agent inSingapore where the Notes may be presented orsurrendered for payment or redemption in the event thatthe Global Notes are exchanged for individual definitivenotes in certificated form.

Clearing System . . . . . . . . . . . . . . . . . The Notes will be represented by beneficial interests inthe Global Certificate, which will be registered in thename of a nominee for a common depositary forClearstream and Euroclear, and deposited on or about theclosing date. Beneficial interests in the Global Certificatewill be shown on and transfers thereof will be effectedonly through records maintained by of Euroclear or ofClearstream.

Use of Proceeds . . . . . . . . . . . . . . . . . . The proceeds of the Offer are expected to be US$300million. Subject to compliance with applicable laws andregulations, including without limitation the ECBGuidelines, we intend to use the net proceeds of the Offerfor capital expenditure or any other permissible end-useas prescribed by the RBI.

See “Use of Proceeds”.

Risk Factors . . . . . . . . . . . . . . . . . . . . Prior to making an investment decision, prospectiveinvestors should carefully consider the matters discussedunder “Risk Factors”.

Security Code . . . . . . . . . . . . . . . . . . . ISIN: XS1216623022

Common Code: 121662302

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SUMMARY FINANCIAL INFORMATION

You should read our summary consolidated financial information presented below in conjunction withour consolidated financial statements and the related notes contained elsewhere in this OfferingCircular. For a discussion of the basis on which our consolidated financial statements have beenprepared and presented, see “Presentation of Financial Information”.

Our summary consolidated financial data as at and for the financial years ended March 31, 2012, 2013and 2014 presented below has been extracted or derived from our audited consolidated financialstatements for such years (as restated), which have been audited by Chaturvedi & Shah, CharteredAccountants and BSR & Co. LLP, Chartered Accountants, (which has been converted from BSR & Co.into BSR & Co. LLP (a limited liability partnership) with effect from October 14, 2013), the jointstatutory auditors of the Company (the “Auditors”). Our summary consolidated financial data as atand for the three months ended June 30, 2014 has been extracted or derived from our unauditedcondensed interim consolidated financial statements for such period. Our results for the three monthsended June 30, 2014 should not be considered indicative of the actual results we may achieve for thefinancial year 2015.

We have prepared and presented our consolidated financial statements included in this OfferingCircular in accordance with Indian GAAP.

Summary Balance Sheet as at March 31, 2012, 2013 and 2014 and June 30, 2014

As at March 31, (Audited)June 30, 2014(Unaudited)2012 2013 2014

(` in billion)(US$ inmillion)

(` inbillion)

(US$ inmillion)

EQUITY AND LIABILITIES

Shareholders’ Funds

Share Capital . . . . . . . . . . . . . . . . . . . . 10.32 10.32 10.21 161.97 10.21 161.97

Reserves and Surplus . . . . . . . . . . . . . . . 352.64 328.18 313.88 4,979.46 310.78 4,930.28

362.96 338.50 324.09 5,141.43 320.99 5,092.25

Minority Interest . . . . . . . . . . . . . . . . . 8.60 7.25 7.43 117.87 7.83 124.22

Non Current Liabilities

Long Term Borrowings . . . . . . . . . . . . . . 296.46 286.78 279.13 4,428.17 244.31 3,875.78

Deferred Tax Liabilities (Net) . . . . . . . . . . 10.18 13.72 18.03 286.03 18.03 286.03

Other Long Term Liabilities . . . . . . . . . . . 12.17 12.33 9.15 145.16 8.49 134.69

Long Term Provisions . . . . . . . . . . . . . . . 8.24 8.85 10.31 163.56 10.31 163.56

327.05 321.68 316.62 5,022.92 281.14 4,460.06

Current Liabilities

Short Term Borrowings . . . . . . . . . . . . . . 55.39 88.00 89.09 1,413.34 95.05 1,507.89

Trade Payables . . . . . . . . . . . . . . . . . . . 23.18 23.64 35.16 557.79 39.85 632.19

Other Current Liabilities . . . . . . . . . . . . . 118.81 104.01 118.56 1,880.86 147.49 2,339.81

Short Term Provisions . . . . . . . . . . . . . . . 26.66 18.74 12.57 199.41 12.52 198.62

224.04 234.39 255.38 4,051.40 294.91 4,678.51

TOTAL . . . . . . . . . . . . . . . . . . . . . . . 922.65 901.82 903.52 14,333.62 904.87 14,355.04

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As at March 31, (Audited)June 30, 2014(Unaudited)2012 2013 2014


(` inbillion)

(US$ inmillion)

ASSETS

Non Current Assets

Fixed Assets

Tangible Assets . . . . . . . . . . . . . . . . . 435.51 443.39 439.34 6,969.78 433.72 6,880.62

Intangible Assets . . . . . . . . . . . . . . . . 229.01 210.49 193.19 3,064.81 187.95 2,981.68

Capital Work in Progress . . . . . . . . . . . 50.26 38.64 31.90 506.06 31.79 504.32

714.78 692.52 664.43 10,540.65 653.46 10,366.62

Goodwill . . . . . . . . . . . . . . . . . . . . . . . 50.09 51.25 53.00 840.80 53.13 842.87

Non Current Investments . . . . . . . . . . . . . 1.33 1.11 1.18 18.72 1.19 18.88

Deferred Tax Assets (Net) . . . . . . . . . . . . — — 14.88 236.06 14.88 236.06

Long Term Loans and Advances . . . . . . . . . 24.82 32.10 35.42 561.91 38.94 617.75

Other Non Current Assets . . . . . . . . . . . . 6.18 2.23 0.84 13.33 0.76 12.06

797.20 779.21 769.75 12,211.47 762.36 12,094.24

Current Assets

Current Investments . . . . . . . . . . . . . . . . 5.19 5.51 6.05 95.98 6.08 96.46

Inventories . . . . . . . . . . . . . . . . . . . . . 5.66 4.97 4.15 65.83 4.03 63.93

Trade Receivables . . . . . . . . . . . . . . . . . 35.84 39.11 39.19 621.71 43.73 693.74

Cash and Bank Balance . . . . . . . . . . . . . . 5.50 7.31 5.04 79.96 6.16 97.72

Short Term Loans and Advances . . . . . . . . 49.88 45.81 58.28 924.57 58.09 921.55

Other Current Assets . . . . . . . . . . . . . . . 23.38 19.90 21.06 334.10 24.42 387.40

125.45 122.61 133.77 2,122.15 142.51 2,260.80

TOTAL . . . . . . . . . . . . . . . . . . . . . . . 922.65 901.82 903.52 14,333.62 904.87 14,355.04

Exchange Rate 1 USD = `63.035 as at December 31, 2014.

13

Summary Statement of Profit and Loss Accounts for the Financial Years ended March 31, 2012,2013 and 2014 and the three months ended June 30, 2014

Financial Year Ended March 31, (Audited) Three Months EndedJune 30, 2014(Unaudited)2012 2013 2014


(` inbillion)

(US$ inmillion)

INCOME

Revenue from Operations . . . . . . . . . . . . . 196.77 205.61 212.38 3,369.24 53.54 849.37

Other Income . . . . . . . . . . . . . . . . . . . . 7.05 12.17 10.83 171.81 1.69 26.81

Total Income . . . . . . . . . . . . . . . . . . . . 203.82 217.78 223.21 3,541.05 55.23 876.18

EXPENDITURE

Network Operation Expenses. . . . . . . . . . . 96.52 103.68 105.50 1,673.67 27.41 434.84

Employees Benefit Expenses . . . . . . . . . . . 12.83 11.89 10.25 162.61 2.75 43.62

Finance Cost . . . . . . . . . . . . . . . . . . . . 16.30 24.99 30.19 478.94 7.67 121.68

Depreciation, Impairment and Amortisation . . 54.50 53.31 59.39 942.17 12.25 194.34

Depreciation and Amortisation adjustedby/transfer from:

Provision for Business Restructuring . . . . (1.02) (0.99) (0.47) (7.46) — —

General Reserve. . . . . . . . . . . . . . . . . (1.13) (1.23) (1.32) (20.94) (2.94) (46.64)

General Reserve. . . . . . . . . . . . . . . . . (12.57) (12.64) (12.25) (194.34) — —

39.78 38.45 45.35 719.43 9.31 147.70

Selling and General Administration Expenses. 29.57 30.62 30.20 479.10 6.44 102.16

Total Expenses . . . . . . . . . . . . . . . . . . . 195.00 209.63 221.49 3,513.75 53.58 850.00

Profit Before Exceptional Items. Tax andAdjustment . . . . . . . . . . . . . . . . . . . 8.82 8.15 1.72 27.30 1.65 26.18

Exceptional Items

Bad Debts and Subsidy written off . . . . . . . 11.07 — — —

Equivalent amount withdrawn from GeneralReserve . . . . . . . . . . . . . . . . . . . . . . (11.07) — — —

Capital Work in Progress written off . . . . . . — 3.25 — —

Equivalent amount withdrawn from GeneralReserve . . . . . . . . . . . . . . . . . . . . . . — (3.25) — —

Depreciation on account of Change inexchange rate . . . . . . . . . . . . . . . . . . — 2.75 3.85 61.08 0.96 15.23

Equivalent amount withdrawn from GeneralReserve . . . . . . . . . . . . . . . . . . . . . . — (2.75) (3.85) (61.08) (0.96) (15.23)

Foreign currency Exchange Fluctuation(Gain) / Loss (net) . . . . . . . . . . . . . . . 15.73 8.41 5.95 94.39 0.95 15.07

Equivalent amount withdrawn from GeneralReserve . . . . . . . . . . . . . . . . . . . . . . (15.73) (8.41) (5.95) (94.39) (0.95) (15.07)

Fuel Expenses . . . . . . . . . . . . . . . . . . . 0.70 0.62 — —

Equivalent amount withdrawn from GeneralReserve . . . . . . . . . . . . . . . . . . . . . . (0.70) (0.62) — —

Prior Period Adjustments . . . . . . . . . . . . — — 0.56 8.88 —

Profit Before Tax . . . . . . . . . . . . . . . . . 8.82 8.15 1.16 18.42 1.65 26.18

Provision for:

- Current Tax . . . . . . . . . . . . . . . . . . . (1.06) 0.71 0.46 7.30 0.01 0.16

Less: MAT Credit Entitlement . . . . . . . . — — (0.10) (1.58) —

- Deferred Tax . . . . . . . . . . . . . . . . . . 6.51 3.54 (10.57) (167.68) —

- Equivalent amount withdrawn fromGeneral Reserve . . . . . . . . . . . . . . . . (6.51) (3.54) — —

(1.06) 0.71 (10.21) (161.96) 0.01 0.16

14

Financial Year Ended March 31, (Audited) Three Months EndedJune 30, 2014(Unaudited)2012 2013 2014


(` inbillion)

(US$ inmillion)

Profit After Tax (before adjustment ofMinority Interest / Associates) . . . . . . . 9.88 7.44 11.37 180.38 1.64 26.02

Less: Share of Profit transferred to Minority . 0.61 0.73 0.92 14.60 0.32 5.08

Less: Share of Loss / (Profit) of Associates . . (0.01) (0.01) (0.02) (0.32) —

Profit After Tax (after adjustment ofMinority Interest / Associates) . . . . . . . 9.28 6.72 10.47 166.10 1.32 20.94


15

Summary Cash Flow Data for the Financial Years ended March 31, 2012, 2013 and 2014

Financial Year Ended March 31, (Audited)

2012 2013 2014


A) CASH FLOW FROM OPERATING ACTIVITIES:

Net Profit before tax as per Statement of Profit andLoss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.82 8.15 1.16 18.42

Adjusted for:

Provision for Doubtful Debts, Loans & Advances . . . . . . 0.60 1.08 2.89 45.85

Depreciation / Impairment and Amortisation . . . . . . . . . 39.78 38.45 45.35 719.44

Prior Period Adjustments . . . . . . . . . . . . . . . . . . . . . — — 0.56 8.88

Effect of Foreign Exchange Changes (net) . . . . . . . . . . (1.36) (0.12) (0.38) (6.04)

(Profit) / Loss on Sale of Assets and Capital Work inProgress (net) . . . . . . . . . . . . . . . . . . . . . . . . . . (0.07) 0.28 0.20 3.17

Profit on Sale of Investments . . . . . . . . . . . . . . . . . . (0.23) (0.35) (0.09) (1.43)

Financial Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.30 24.99 30.19 478.94

Write Back of Provision towards Business Restructuring . . — (5.50) (4.41) (69.96)

Write Back of Provision towards Liabilities No LongerRequired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1.92) (4.50) (71.39)

Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.40) (0.11) (0.47) (7.46)

54.62 56.80 69.34 1,100.02

63.44 64.95 70.50 1,118.42

Operating Profit before Working Capital Changes

Adjusted for:

Receivables and Other Advances . . . . . . . . . . . . . . . (24.23) (5.53) (5.81) (92.17)

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.49) 0.70 0.82 13.01

Trade Payables and Other Liabilities . . . . . . . . . . . . 17.98 (23.91) 5.59 88.68

(6.74) (28.74) 0.60 9.52

Cash Generated from Operations . . . . . . . . . . . . . . . 56.70 36.21 71.10 1,127.94

Income Tax Refund . . . . . . . . . . . . . . . . . . . . . . . . 4.70 4.77 2.50 39.66

Income Tax Paid . . . . . . . . . . . . . . . . . . . . . . . . . . (3.89) (2.73) (5.21) (82.65)

Net Cash from Operating Activities . . . . . . . . . . . . . 57.51 38.25 68.39 1,084.95

B) CASH FLOW FROM INVESTING ACTIVITIES:

Additions of Fixed Assets and Capital Work in Progress(including realised variation capitalised) . . . . . . . . . . (48.50) (21.14) (21.65) (343.46)

Sale of Fixed Assets and Capital Work in Progress . . . . . 2.16 — —

Purchase of Investments . . . . . . . . . . . . . . . . . . . . . (269.41) (128.76) (115.88) (1,838.34)

Sale of Investments . . . . . . . . . . . . . . . . . . . . . . . . 269.64 129.11 116.04 1,840.88

Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40 0.10 0.49 7.77

Net Cash Used in Investing Activities . . . . . . . . . . . . (45.71) (20.69) (21.00) (333.15)

16

Financial Year Ended March 31, (Audited)

2012 2013 2014


C) CASH FLOW FROM FINANCING ACTIVITIES:

Net Proceeds / (Repayment) from Short Term Borrowings . (52.11) 32.68 1.32 20.94

Expenses on FCCB (Withholding Tax) . . . . . . . . . . . . . (1.77) — —

Realised Foreign Exchange Loss . . . . . . . . . . . . . . . . (1.67) (12.66) (5.24) (83.13)

Proceeds from Long Term Borrowings . . . . . . . . . . . . . 107.56 14.76 24.99 396.45

Repayment of Long Term Borrowings . . . . . . . . . . . . . (88.61) (25.29) (39.95) (633.77)

Dividends Paid (including tax on dividend) . . . . . . . . . . (1.19) (0.60) (0.61) (9.68)

Finance Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17.18) (24.65) (30.18) (478.78)

Net Cash from / (used in) Financing Activities . . . . . . (54.97) (15.76) (49.67) (787.97)

Net Increase / (Decrease) in Cash and CashEquivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . (43.17) 1.80 (2.28) (36.17)

Opening Balance of Cash and Cash Equivalents . . . . . 48.66 5.50 7.31 115.97

Effect of Exchange Gain / (Loss) on Cash and CashEquivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.01 0.01 0.01 0.16

Closing Balance of Cash and Cash Equivalents . . . . . . 5.50 7.31 5.04 79.96


Note: Cash and Cash Equivalent includes cash on hand, cheques on hand, remittances-in-transit and bank balance including

Fixed Deposits with Banks.

Summary Unaudited Condensed Interim Consolidated Cash Flow Data for the three monthsended June 30, 2014

Three Months Ended June 30,(Unaudited)

2014

(` in billion) (US$. in million)

A) Cash Flow from Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . 13.67 216.86

B) Cash Flow used in Investing Activities . . . . . . . . . . . . . . . . . . . . . . (6.45) (102.32)

C) Cash Flow used in Financing Activities . . . . . . . . . . . . . . . . . . . . . . (6.09) (96.61)

Net Increase / (Decrease) in Cash and Cash Equivalents (A+B+C) . . . . . . 1.13 17.93

Opening Balance of Cash and Cash Equivalents . . . . . . . . . . . . . . . . . 5.04 79.96

Effect of Exchange Gain/(Loss) on Cash and Cash Equivalents . . . . . . . . (0.01) (0.17)

Closing Balance of Cash and Cash Equivalents . . . . . . . . . . . . . . . . 6.16 97.72


Note: Cash and Cash Equivalent includes cash on hand, cheques on hand, remittances-in-transit and bank balance including


17

Other Financial Data

The following table sets out our EBITDA for the periods indicated:

Financial Year EndedMarch 31, 2012

(Audited)


(Audited)


(Audited)

Nine Months EndedDecember 31, 2014

(Unaudited)

(` in billion)(US$ inmillion (` in billion)

(US$ inmillion (` in billion)

(US$ inmillion) (` in billion)

(US$ inmillion)1

EBITDA . . . . . . . . . . 64.30 1,020.07 70.87 1124.30 76.36 1,211.39 54.17 859.36

EBITDA

Profit Before Tax andException Items andAdjustments . . . . . . . 8.82 139.92 8.15 129.29 1.72 27.29 6.31 100.10

Add/(Less)

Finance Costs . . . . . . . . 16.30 258.59 24.99 396.45 30.19 478.94 20.89 331.40

Depreciation, Impairmentand Amortisation (net ofamount adjustedby/transfer fromprovision for businessrestructuring and generalreserve) . . . . . . . . . 39.78 631.08 38.45 609.98 45.35 719.44 28.21 447.53

Minority Interest and Shareof Loss in Associate . . . (0.60) (9.52) (0.72) (11.42) (0.90) (14.28) (1.24) (19.67)

64.30 1,020.07 70.87 1,124.30 76.36 1,211.39 54.17 859.36

Notes: Exchange rate used for conversion is 1 USD = Rs 63.035 as at December 31, 2014.

For the nine months ended December 31, 2014, the Total Income (i.e. revenue) and EBITDA withoutincluding GCX and its subsidiaries, which are Unrestricted Subsidiaries, was 88.8% and 91.5% of ourConsolidated Total Income (i.e. revenue) and our Consolidated EBITDA, respectively. As at December31, 2014, the Total Assets without including GCX and its subsidiaries, which are UnrestrictedSubsidiaries, was 93.4% of the our Consolidated Total Assets.

Notes:

(1) EBITDA is calculated before considering impact of Depreciation, Impairment and Amortisation (net of amount adjustedby/transfer from provision for business restructuring and general reserve), Finance Costs and Exceptional Items andAdjustments.

(2) EBITDA is a non-Indian GAAP financial measure. The table above sets forth a reconciliation of EBITDA to our ProfitBefore Exception Items, Tax and Adjustment calculated in accordance with Indian GAAP. The use and calculation ofEBITDA may vary from similarly titled measures used by other companies in the telecommunications industry. EBITDAshould not be considered as an alternative to net income, income before income taxes or net cash flows provided byoperating activities or any other performance measure determined in accordance with Indian GAAP. EBITDA hasimportant limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis ofour results as reported under Indian GAAP. Some of the limitations with EBITDA are listed below:

• does not reflect cash expenditures, or future requirements, for capital expenditures or contractual commitments;

• does not reflect changes in, or cash requirements for, working capital needs;

• does not reflect certain tax payments that may represent reductions in cash available;

• does not reflect any cash requirements for the assets being depreciated and amortised that may have to be replacedin the future; and

• does not reflect the significant interest expense or the cash requirements necessary to service interest or principalpayments on indebtedness.

Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to us toinvest in the growth of its business. EBITDA should not be considered in isolation or as a substitute for performancemeasures calculated in accordance with Indian GAAP. We compensate for these limitations by relying primarily on itsGAAP results. You are cautioned not to place undue reliance on EBITDA.

EBITDA as presented may be calculated differently from Consolidated EBITDA as defined and used in the Trust Deedgoverning the Notes.

18

RECENT DEVELOPMENTS

We recently published our unaudited unreviewed consolidated financial statements as at and for thenine months ended December 31, 2014, which have been set out below:

Unaudited Financial Results (Consolidated) for the nine months ended December 31, 2014

Income Statement

Particulars

Nine Months Ended

December31, 2014

(Unaudited)

December31, 2013

(Unaudited)

(` in billion) (` in billion)

1 Income from operations

(a) Net Income from Operations ................................................................................ 157.40 155.69

(b) Other Operating Income ....................................................................................... 3.36 2.64

Total Income from Operations ..................................................................................... 160.76 158.33

2 Expenses

(a) Access Charges .................................................................................................... 21.00 20.45

(b) License Fee .......................................................................................................... 8.28 9.03

(c) Employee Cost ..................................................................................................... 7.59 7.17

(d) Depreciation and Amortisation ............................................................................. 28.21 27.68

(e) Other Expenses .................................................................................................... 71.67 71.11

Total Expenses .............................................................................................................. 136.75 135.44

3 Profit from Operations before Other Income, Finance Costs and Exceptional Items(1 - 2) ............................................................................................................................ 24.01 22.89

4 Other Income ................................................................................................................. 3.19 8.17

5 Profit before Finance Costs and Exceptional Items (3 + 4) ........................................ 27.20 31.06

6 Finance Costs (net)*........................................................................................................ 20.89 21.12

7 Profit after Finance Costs but before Exceptional Items (5 - 6) ................................. 6.31 9.94

8 Exceptional Items ........................................................................................................... — —

9 Prior Period Adjustment ................................................................................................. — —

10 Profit from Ordinary Activities before Tax (7 - 8 - 9) ................................................ 6.31 9.94

11 Tax Expenses ................................................................................................................. 0.21 0.05

12 Net Profit from ordinary Activities (10 - 11) ............................................................... 6.10 9.89

13 Share of (Profit)/Loss of Associates ............................................................................... (0.03) (0.02)

14 Share of Minority Interest .............................................................................................. 1.27 1.00

15 Net Profit after Taxes, Minority Interest and share of profit / (loss) of Associates(12 - 13 - 14) ................................................................................................................. 4.86 8.91

* Finance costs include interest expense of `19.65 billion and `19.72 billion for the nine months ended December 31, 2014

and 2013, respectively.

19

Unaudited Consolidated Statement of Assets and Liabilities

Particulars

As atDecember31, 2014

(Unaudited)

(` in billion)

A Equity and Liabilities

1 Shareholders’ Funds

(a) Share Capital .............................................................................................................................. 11.91

(b) Reserves and Surplus (Net of `380 billion relating to *) ............................................................ 354.58

(c) Money Received against Warrants ................................................................................................ 6.50

Sub-total - Shareholders’ Funds .......................................................................................................... 372.99

2 Minority Interest .................................................................................................................................. 8.74

3 Non Current Liabilities

(a) Long Term Borrowings ................................................................................................................ 249.40

(b) Deferred Tax Liabilities (Net) ...................................................................................................... 18.03

(c) Other Long Term Liabilities ......................................................................................................... 9.15

(d) Long Term Provisions ................................................................................................................. 8.35

Sub-total - Non Current Liabilities ..................................................................................................... 284.93

4 Current Liabilities

(a) Short Term Borrowings ............................................................................................................... 69.04

(b) Trade Payables............................................................................................................................. 50.51

(c) Other Current Liabilities .............................................................................................................. 126.11

(d) Short Term Provisions ................................................................................................................ 12.62

Sub-total - Current Liabilities ............................................................................................................. 258.28

Total Equity and Liabilities ................................................................................................................. 924.94

B Assets

1 Non Current Assets

(a) Fixed Assets ................................................................................................................................ 644.82

(b) Goodwill on Consolidation........................................................................................................... 54.48

(c) Non Current Investments ............................................................................................................. 1.28

(d) Deferred Tax Asset (net) .............................................................................................................. 14.88

(e) Long Term Loans and Advances................................................................................................... 40.86

(f) Other Non Current Assets ............................................................................................................ 0.83

Sub-total - Non Current Assets ............................................................................................................ 757.15

2 Current Assets

(a) Current Investments ..................................................................................................................... 6.37

(b) Inventories ................................................................................................................................... 3.66

(c) Trade Receivables ........................................................................................................................ 43.34

(d) Cash and Cash Balances .............................................................................................................. 12.46

(e) Short Term Loans and Advances .................................................................................................. 73.00

(f) Other Current Assets .................................................................................................................... 28.96

Sub-total - Current Assets ................................................................................................................... 167.79

Total Asset ............................................................................................................................................ 924.94

* - 21,279,000 nos. of equity shares held by ESOS Trust.

20

Unaudited Condensed Interim Consolidated Cash Flow Statement for the nine months endedDecember 31, 2014

Particulars

Nine Months endedDecember 31, 2014

(Unaudited)

(` in billion)

A. Cash Flow From Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.21

B. Cash Flow used in Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16.04)

C. Cash Flow used in Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.75)

Net Increase/ (Decrease) in Cash and Cash Equivalents ( A + B + C) . . . . . . . . . . . . . . . . . . . 7.42

Cash and Cash Equivalents as at April 1, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.04

Cash and Cash Equivalents as at December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.46

(a) Cash and Cash Equivalents includes cash on hand, cheques on hand, remittances-in-transit and bank balance includingFixed Deposits with Banks.

(b) Cash Flow used in Investing Activities includes “Additions to Fixed Assets and Capital Work In Progress (includingrealised variation capitalised)” of `16.45 billion.

Notes

1. Figures of the previous period have been regrouped and reclassified, wherever required.

2. Pursuant to the Schemes of Arrangement (“the Schemes”) sanctioned by the Hon’ble High Court of Judicature at Bombay,variation on account of changes in exchange rates including amortisation of the balance in “Foreign Currency MonetaryItem Translation Difference Account (FCMITDA)” and depreciation consequent to addition of exchange differences tothe cost of capitalised assets aggregating to `2.72 billion and `7.12 billion during the quarter and nine months endedDecember 31, 2014 respectively, are withdrawable from General Reserve. These withdrawable items are not consideredin the accounts for the quarter and nine months ended December 31, 2014 and consequently no withdrawal has beenmade. The necessary effects, if any, will be carried out at the year end. The Company has, as permitted under the saidSchemes, adjusted additional depreciation of `2.95 billion and `8.83 billion, arising on fair value of the assets, for thequarter and nine months ended December 31, 2014 respectively, by withdrawing an equivalent amount from GeneralReserve.

3. Pursuant to the Companies Act, 2013 (the Act) becoming effective from April 1, 2014, the Company and a subsidiarycompany have adopted estimated useful life of fixed assets as stipulated under Schedule II to the Act, except in case ofsome of its telecommunication equipments, as legally advised and as permitted by the said Schedule, where, based oncondition of such telecommunication equipments, regular maintenance schedule, material of construction and pastexperience, the Company has considered useful life of 20 years instead of 18 years and a subsidiary company hasconsidered useful life of optic fiber cables as 35 years instead of 20 years applied hitherto.

4. The Company has on January 20, 2015 received `6.50 billion towards balance 50.0% of the issue price for 86,666,667Warrants allotted on August 7, 2014 to the Promoter Group entity exercising rights for subscription of equivalent numberof Equity Shares of `5.00 each at a price of `150.00 per Warrant (including share premium of Rs 145.00 per EquityShare). Consequently, the paid up share capital of the Company has increased from `12.01 billion to `12.44 billion.

5. The Scheme of Amalgamation of Reliance Infratel Limited into its holding company Reliance CommunicationsInfrastructure Limited, a wholly owned subsidiary of the Company has been approved by the requisite majority of themembers and is pending for approval of the Hon’ble High Court of Judicature at Mumbai. The minority shareholders ofReliance Intratel have filed an objection to the amalgamation before the Court. The Scheme will be given effect in theAccounts upon receipt of statutory and contractual approvals and after making a filing with the Registrar of Companies.

6. Paid up share capital of the Company is net of 21,279,000 equity shares, of `5/- each, `0.11 billion being the face valueof such equity shares. The Company has consolidated financial statements of the RCOM ESOS Trust as at March 31, 2014with Standalone financial results of the Company in terms of SEBI(ESOS and ESPS) Guidelines, 1999 and recent opinionof the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI).

7. After review by the Audit Committee, the Board of Directors of the Company has approved the above results at theirmeeting held on February 13, 2015.

March 2015 Spectrum Auctions

We were successful bidders in the recently concluded spectrum auctions by the Government of Indiain March 2015. For more details, see “Our Business — Licences and Spectrums”.

21

RISK FACTORS

Prospective investors should carefully consider the risk factors relating to our business and ourindustry described below together with all other information contained in this Offering Circularbefore making any investment decision relating to the Notes. These risks and uncertainties are not theonly issues that we face; additional risks and uncertainties not presently known to us or that wecurrently believe to be immaterial may also have an adverse effect on our business, results ofoperations, financial condition or prospects and cause the trading price of the Notes to fallsignificantly or us to be unable to pay the principal amount and interest on the Notes and, in eithercase, you to lose all or part of your investment. Prospective investors should pay particular attentionto the fact that our Company is incorporated under the laws of India and that our Company is subjectto a legal and regulatory environment which may differ in certain respects from other countries.Unless otherwise stated in the relevant risk factors set forth below, we are not in a position to specifyor quantify the financial or other risks mentioned herein.

Risks relating to our Business

We have incurred substantial indebtedness, which could affect our ability to operate our business.

As at December 31, 2014, our total outstanding indebtedness was `390.46 billion. Our level ofindebtedness exposes us to several risks, such as:

• inability to meet debt service obligations;

• payment of interest in respect of any floating rate indebtedness may be affected by fluctuationsin interest rates; and

• increased vulnerability to general adverse economic, industry and competitive conditions, whichcould make it more difficult or expensive for us to obtain funding in the future.

Further, we have a number of working capital financings and other short-term debt facilities, whichhave been extended to us on a yearly basis. While in the past we have been successful in negotiatingwith banks to roll-over or refinance our borrowings, including our short-term debt instruments andobtain sufficient credit, we cannot assure you that we will be able to do so in the future. This mayresult in liquidity problems and we may be required to find alternate sources of funding, which maynot be available on terms acceptable to us or at all.

If any of these or other similar risks due to our level of indebtedness were to materialise, our business,results of operations, financial condition and our ability to pay principal and interest on the Notes maybe adversely affected. Notwithstanding our current level of indebtedness, we may incur additionalindebtedness in the future, which could exacerbate these risks.

Our lenders have substantial rights to determine how we conduct our business which may put us ata competitive disadvantage and may have an adverse effect on our business, results of operationsand financial condition.

The financing agreements in respect of our indebtedness contain certain restrictive covenants,including restrictions on borrowing additional funds or accepting deposits, issuing bonds, debenturesor commercial papers, changing management control or making substantial changes to themanagement set-up of our Company, making substantial changes to the accounting policies,undertaking mergers, acquisitions and other corporate restructuring transactions. We have also grantedsecurity over some of our assets and provided corporate guarantees to certain of our lenders. See“Management’s Discussion and Analysis of the Financial Condition and Results of Operations —Indebtedness”. It is also possible that future financing agreements may contain similar restrictivecovenants.

22

We are also required to maintain certain financial ratios under our offshore financing agreements suchas asset cover ratio, net debt to EBITDA ratio, EBITDA to interest expenses ratio, minimum net worthand debt service cover. These financial ratios and the restrictive provisions could limit our flexibilityto engage in certain business transactions or activities. We were not in compliance with some of thesefinancial ratios under one or more of our financing agreements, including in particular the EBITDAto interest expenses ratio and net debt to EBITDA ratio in the past. We have requested and obtainedwaivers of the non-compliance with the financial covenants for the period ended September 30, 2014.However, with respect to US$62 million of indebtedness outstanding as of December 31, 2014, whilethe Indian branch of one of our lenders and its regional headquarters in Asia have approved our waiverrequest, the relevant lending entity is currently reviewing our request. Although the lending entity hasindicated that its export finance team is in-principle fine with our waiver request, it is yet to issue aformal waiver letter. In addition, the lender requires consent from an export credit agency to issue theformal waiver letter, which we understand that the lender is seeking to obtain. The lender has indicatedthat its final decision is expected to be delivered within two weeks from April 15, 2015. While in suchinstances in the past, the export credit agency and the lender has granted such consents and waivers,there can be no assurance that such consent and/or waiver will be obtained. If either of the waiver orconsent is not obtained, it could lead to cross defaults under other indebtedness, including the Notes.See Condition 8(c) of the Notes. We are also required to file a compliance certificate for the nexttesting period ending March 31, 2015 by July 31, 2015. There can be no assurance that we will be incompliance with such financial ratios or that such waivers or amendments would be forthcoming inthe future. If we do not obtain any such required approval or waiver, the lenders under thoseagreements could declare an event of default.

Further, under some of our offshore financing agreements, we cannot incur any long-term debt or anyobligation which is, in the opinion of the lender, on terms and conditions more favourable than theterms and conditions of such financing agreements, without the prior written consent of the lender,unless such more favourable terms are offered to the lender. While we believe that the terms andconditions of the Notes are not more favourable than the terms of these borrowings and we havenotified such lenders about this Offering, we cannot assure you that such lenders will not require usto amend the terms and conditions of these borrowings.

Under some of our other onshore financing agreements, we cannot create security over our assetswithout consent of certain lenders who have the benefit of security on such assets, and the failure toobtain such an express written consent may result in an event of default under these onshore financingagreements. Pursuant to such onshore financing agreements, we have created security on our movablefixed assets in favour of certain lenders on a pari passu basis and Axis Trustee Services Limited hasbeen appointed as security trustee to hold the security for the benefit of such onshore lenders.Whenever we avail any additional secured financing for which security is required to be created oversuch movable fixed assets in favour of a new lender, on a pari passu basis, such new lender (or itsagent) accedes to the master security trustee agreement (the “MSTA”) and relevant securitydocuments are executed in favour of such lender. The Notes will be secured by creating security, interalia, on such assets and the Trustee will enter into a deed of accession to accede to the MSTA. Suchlender deed of accession will become effective upon being counter-signed by the security trustee (inits capacity as trustee for the existing secured lenders and the new secured lender). Pursuant to theterms of the MSTA, the existing secured lenders acknowledge creation of further security (includingfor the Notes) and confirm that the security shall at all times rank pari passu inter se amongst theexisting secured lenders and the new lender. Since the creation of security in favour of the new lenderis acknowledged and confirmed by the existing secured lenders (acting through the security trustee),we do not believe it is necessary to obtain, and have not obtained, express prior written consent forcreation of security on a pari passu basis (including for the Notes) under the onshore facilitydocuments to which these secured lenders are signatories. There is no assurance our lenders will takethe same view.

Some of our other onshore facility agreements stipulate that we cannot incur any additional financialindebtedness without prior consent of the lenders (except in accordance with the lenders’ financialbase case approved by the lenders from time to time). The lenders have approved, pursuant tosubmission of a financial base case by us in terms of these agreements, additional borrowings whichwe may incur in a financial year. We believe that the issuance of the Notes (the proceeds of which willbe used for capital expenditure or any other permissible end-use as prescribed by the RBI) is in

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accordance with and within the limits set out under the most recent lenders financial base caseapproved by the lenders as included in the annexure to the common loan agreement dated February20, 2015 entered into with our lenders. We therefore do not believe that we need to obtain, and havenot obtained, prior written consent from these lenders for the Offering. If we incur furtherindebtedness which exceeds the permissible debt cap any time prior to the end of the relevant financialyear, we will need to obtain consent from our lenders under these onshore financing agreements.Failure on our part to obtain such consent may result in the lenders having a right to call an event ofdefault under these facility agreements.

Almost all our financing agreements, including the Notes, contain customary cross-default orcross-acceleration provisions, with or without thresholds in case of non-compliance by us with theprovisions of other financing agreements. As a result, any default under a financing agreement maycause the acceleration of repayment of not only such debt but also other debt (including the Notes),or result in a default under our other financing agreements (including with respect to the Notes).

Furthermore, under our financing agreements, the lenders have certain remedies, including cancellingany outstanding commitments, accelerating repayment, exercising cross-default or cross-accelerationprovisions, and enforcing their security interests. Under certain financing arrangements, the lendershave the right to convert, at their option, the whole or part of a defaulted amount of a loan into fullypaid-up Equity Shares on the occurrence of events of default (unless waived) such as a paymentdefault, breach of financial covenants, failure to obtain the proper consents, failure to perfect securityas specified, and such other breaches of covenants that are either not cured or are not curable.

It is possible that we would not have sufficient funds upon an acceleration of our financial obligationsto pay the principal amount and interest in full (including with respect to the Notes).

If any of these events were to occur, our business, results of operations and financial condition arelikely to be adversely affected.

If we do not continue to provide services that are technologically up to date, we may not remaincompetitive and our business, results of operations and prospects may be adversely affected.

The telecommunications industry is characterised by technological changes, including an increasingpace of change in existing mobile systems, industry standards and ongoing improvements in thecapacity and quality of technology. As new technologies develop, our equipment may need to bereplaced or upgraded, or our networks may need to be rebuilt in whole or in part in order to sustainour competitive position. As a result, we may require substantial capital expenditure and access torelated technologies in order to integrate new technologies with our existing technology and phase outoutdated and unprofitable technologies. If we are unable to modify our networks, such as by offeringLTE-based services, and equipment on a timely and cost-effective basis, we may lose customers.Moreover, for our Global Operations, we have significant operations in the emerging markets wherethe regulations may not be in line with the latest developments in technology and the market demandfor new technologies as well as the technology we use and as a result, we may be required to changethe manner in which we offer our products and services.

Many of the services we offer are technology-intensive and the deployment or acceptance of newtechnologies, such as 4G, may render such services non-competitive or obsolete and we may need toreduce the prices we charge for such services. In addition we face the risk of unforeseen complicationsin the deployment of new services and technologies, and we cannot assure you that these newtechnologies can be successfully deployed or will be commercially successful. Our results ofoperations would also suffer if our new services and products are not well received by our customers,are not appropriately timed with market opportunities or are not effectively brought to market. Further,certain VAS agreements entitle the service provider to terminate such agreements without cause uponnotice.

It is also possible that the development of technologies, products and services may intensifycompetition due to the entry of new competitors, the expansion of services offered by existingcompetitors or new Internet-based services, which allow users to make calls, send SMSs and offerother advanced features such as the ability to route calls to multiple handsets and offer alternate modesof connectivity. We cannot predict which of many possible future technologies, products, or services

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will be important to maintain our competitive position. To the extent we do not keep pace withtechnological advances or fail to respond in a timely manner to changes in the competitiveenvironment affecting our industry or if our VAS agreements are terminated, we could lose marketshare or experience an adverse effect on our business, results of operations and prospects.

Our business is capital-intensive and may require additional debt or equity financing. We cannotassure you that we will be able to raise such financing on acceptable terms, or at all.

Our business is capital intensive, as a substantial amount of capital is required to build, maintain andoperate our telecommunications, enterprise and DTH networks. We also require a significant amountof capital to develop, market and distribute our services and products, to develop and implement newtechnologies, to acquire and invest in new businesses or licence areas and to acquire spectrum rights.We expect to incur capital expenditure on an ongoing basis for network expansion including theexpansion of our GSM, CDMA, 3G and high-speed data networks, expansion of our enterprisebusiness including development of new IDCs, expansion of our global operations and upgrading ourinformation technology systems.

The actual amount and timing of our future capital requirements may also differ from estimates dueto reasons such as unforeseen delays or cost overruns in establishing, expanding or upgrading ournetworks, unanticipated expenses and responding to regulatory changes and engineering, design andtechnological changes, among other things. To the extent that our capital requirements exceedavailable resources, we will be required to seek additional debt or equity financing. Additional debtfinancing could increase our interest expense and may require us to comply with additional restrictivecovenants under our financing agreements.

Our ability to obtain additional financing on acceptable terms, or at all, will depend on a number offactors, including our future financial condition, results of operations and cash flows, general marketconditions for telecommunications companies and economic, political and other conditions in themarkets where we operate. Any inability to obtain sufficient financing could result in an adverse effecton our planned capital expenditure, our business and financial condition.

Our actual results may be different from the unaudited and unreviewed consolidated financialstatements as at and for the nine months ended December 31, 2014 included in this OfferingCircular.

Consistent with our past practice, we recently published and submitted to the Indian Stock Exchangesour unaudited and unreviewed consolidated financial statements as at and for the nine months endedDecember 31, 2014 (“December 2014 Consolidated Financial Statements”), which are set out in“Recent Developments”.

The December 2014 Consolidated Financial Statements were prepared by our management and ourauditors have not audited, examined or performed any procedures with respect to such financialstatements. Accordingly, our auditors have expressed no opinion or any form of assurance and assumeno responsibility for such financial statements.

The December 2014 Consolidated Financial Statements may be subject to a number of significantrisks, uncertainties and assumptions. They may be inaccurate and actual results may be materiallydifferent from such financial statements. Investors are cautioned not to place undue reliance on theDecember 2014 Consolidated Financial Statements.

We are subject to extensive regulation, which may adversely affect our ability to do business.

The Government, together with TRAI, regulates many aspects of the telecommunications industry inIndia. The extensive regulatory structure under which we operate may constrain our flexibility torespond to market conditions, technological developments, competition or changes in our coststructure. In addition, we are required to obtain a wide variety of approvals from various regulatorybodies. We cannot assure you that these approvals will be forthcoming on a timely basis, or at all,which could have an adverse effect on our business and results of operations.

The Government may replace or amend laws, regulations or policies, including guidelines forlicensing, spectrum allocation and pricing rules. We also may incur additional expenditure to complywith changes in regulation. For example, on December 28, 2012 and March 15, 2013, the DoT issued

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orders levying one-time charge for excess GSM and CDMA spectrums, respectively. We have filedappeals against these orders in the Calcutta High Court and the court has stayed the implementationof these orders. Additionally, the DoT announced guidelines for the verification of subscriberseffective November 2012, making wide-ranging changes in subscriber activation processes,disconnection and other related matters. In August 2013, the DoT announced the grant of unifiedlicence, which aims to unify all licences (except broadcasting and DTH) under the ambit of the TRAIunder one licence. This may adversely affect our existing licences, including the extension thereof.Also, see “Overview of the Regulatory Regime in India”. The earliest that certain of ourtelecommunications licences are due for renewal is in the financial year 2016. On expiry of licences,operators are required to opt for unified licences, which will have a validity of 20 years. In addition,allocation of spectrum has been separated from the grant of licences and is required to be acquiredseparately through the auction process. The renewal of our licences are also subject to specified termsand conditions and we could be charged a substantial entry fee and increased licence fees, which couldhave an adverse effect on our business and results of operations. We may also incur capital expenditureto comply with and benefit from anticipated changes in regulation which may be delayed, notimplemented or not implemented on terms favourable to us. In addition, the grant of approval for dualtechnology services has also been challenged before the Supreme Court of India by the COAI. Theseproceedings have been adjourned and final hearing is yet to be concluded.

The DoT has issued the directions on implementation of green technologies in telecommunicationssector in 2012 pursuant to which service providers are required to ensure that by 2015 and thereafter,by 2020 specified percentages of all towers are powered by hybrid power. See “Overview of theRegulatory Regime in India”. Further, the Supreme Court of India, on April 17, 2014, ruled that theComptroller and Auditor General of India had the authority to examine the accounts of privatetelecommunications companies such as ours.

Our telecommunications and DTH licences reserve broad discretion to the Government to influencethe conduct of our businesses by giving the Government the right to modify, at any time, the termsand conditions of our licences, take-over our networks and to terminate or suspend our licences in theinterests of national security or in the event of a national emergency, war or similar situations. Underour licences, the Government may also impose certain penalties including suspension, revocation ortermination of a licence in the event of a default by us in complying with the terms and conditionsof the licence.

Further, with respect to our Global Operations, the regulatory environment varies substantially fromcountry to country and may restrict our ability to compete in some markets. For example, injurisdictions where we desire to extend our network or offer new services, we may be required toobtain landing licences, operator licences and other permits. We cannot provide any assurance that wewill be able to obtain the authorisations that we need to implement our business plan and provide newservices or that these authorisations, if obtained, will not be later revoked. We may also be prohibitedfrom entering certain countries or from providing all of our services in one or more countries. If wefail to comply with any of the regulatory requirements applicable to us, or to obtain and maintain thenecessary licences and permits, we may not be able to conduct our business, which may have anadverse effect on our business, results of operations and our ability to pay principal and interest onthe Notes.

There are several regulatory proceedings and other disputes pending against us for alleged breachesof licence conditions and other alleged breaches of laws, rules and regulations, which, if successfulmay have an adverse effect on our business and results of operations.

We are involved in a number of legal cases, including regulatory, civil disputes and consumer claims,pending at various levels of adjudication before various courts and tribunals, including:

• Pending dispute with the DoT with respect to our notice for refund of excess licence feesaggregating to `2.32 billion paid by us in light of the changes to the definition of AGR by TDSATin August 2007.

• Pending dispute with respect to demands by the DoT for `17.58 billion towards levy of one-timeprospective charges for holding CDMA spectrum beyond 2.5 MHz for the period from January

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1, 2013 till the expiry of the initial terms of the respective licences, one time retrospectivecharges of `50 million for holding GSM spectrum beyond 6.2 MHz for the period from July 1,2008 to December 31, 2012 and a one-time spectrum fee of `1.69 billion for GSM spectrum heldbeyond 4.4 MHz payable in eight annual instalments.

• Pending dispute with the DoT for alleged shortfall in payment of licence fees in 22 Circles byour Company and RTL amounting to approximately `6.2 billion for the financial years 2007,2008 and 2009 in relation to difference in computation of AGR by the DoT and ourselves. If thiscase is decided against us, we may be required to pay additional licence fees with respect tosubsequent financial years.

See “Legal Proceedings”. In the event that some of these cases are decided against us, it could havean adverse effect on our business, results of operations and our ability to pay principal and intereston the Notes, including as a result of significant monetary penalties and the cancellation of ourlicences.

There are on-going investigations against our Subsidiary, RTL and three executives of the RelianceGroup in relation to the award of a UASL, which may have an adverse effect on our business.

On October 22, 2011, the Special Judge, the Central Bureau of Investigation (“CBI”) framedpreliminary charges against RTL, three executives of the Reliance Group and certain persons notrelated to the RTL for various offences, under various Sections of the Indian Penal Code, or in thealternative, the Prevention of Corruption Act, 1988, in relation to award of the UASL to Swan, nowknown as Etisalat DB Private Limited. It is alleged that Swan was ineligible to be granted a UASLas RTL, directly as well as through its associates, was holding securities in Swan in excess of theprescribed limit of 10% under the UASL. RTL has inter-alia contended that when Swan acquired theUASL and became a licensee, RTL together with its associates did not hold any securities in Swan.The matter is pending before the Special Judge, CBI. Further, a special leave petition has been filedbefore the Supreme Court of India for quashing of charges framed on October 22, 2011. The matteris pending for hearing before the Supreme Court of India. For details, see “Legal Proceedings”. In theevent that the Special Judge, CBI were to decide this case against us and any appeals by us againstsuch order are also dismissed by higher courts, it could have an adverse effect on the business of RTLincluding monetary fines.

New technology may reduce demand for bandwidth, which may adversely affect our financialcondition and results of operations

Many of our customers utilise the Internet for various purposes, which may evolve based on changesin technology and social adaptation to such new technology. For example, in recent years, the rise inpopularity of certain Internet uses such as the proliferation of content through video, social networks,online gaming, music, file sharing, e-mail and others, along with the use of multiple devices to accessthe Internet (such as mobile phones and tablets) has had a direct bearing on capacity usage by ourcustomers. If new technology that requires less bandwidth gains popularity, we may experiencereduction in demand for our capacity, and our operating results and revenue flow may be materiallyand adversely affected.

Our Company may, as part of its efforts to raise funds and reduce indebtedness, sell interests in oneor more of its businesses or Subsidiaries.

As part of its effort to raise funds and reduce indebtedness, our Company may sell all or part of itsinterests in one or more of its businesses or Subsidiaries through a listing of the shares of suchSubsidiaries or the sale to third parties of all or a portion of its shares in such Subsidiaries. We areevaluating the option of monetizing our stake in GCX and other non-core assets, including our DTHbusiness and real estate. Following any such sale of all or part of its interest in such existing and futureSubsidiaries, our Company’s equity interest in the assets held by such Subsidiaries would be reducedby a corresponding amount. Although our Company would receive the proceeds of any sale of sharesin such Subsidiaries, under certain financing arrangements we are required to apply all proceedsarising from disposal of our shareholding in GCX towards repayment of financial indebtedness of ourCompany. Further, we cannot assure you that such proceeds will accurately reflect the value of suchSubsidiaries to our Company’s business.

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We rely on sophisticated billing and credit control systems any failure of which may lead to a lossof revenue and customers.

We are dependent on several sophisticated processes, IT systems and software packages for servicesusage, billing and credit control. We also have outsourced certain aspects of these systems to specialistservice providers. For example, we have outsourced our network and related infrastructuremanagement, including operations and maintenance to third-party service providers. Any failure ofcritical IT systems, including those provided by third parties, could have an adverse effect on ourbusiness and results of operations, and lead to a loss of revenue and customers.

We are dependent on several complex software packages that record minutes used, calculate theappropriate charge and then deduct the amount due from the account of the subscriber or record theamount payable by the subscriber. Any failure to properly capture the services provided or to chargethe appropriate fees could have an adverse effect on our revenue. No system or process can ensuretotal capture and some loss of revenue is common. However, if our revenue leakages increase, or aregreater than those of our competitors, our business and results of operations may be adverselyaffected.

Our Auditors have included certain matters of emphasis in their reports on our audited FinancialStatements.

The auditors’ reports on our financial statements as at and for the financial years ended March 31,2014, 2013 and 2012 and the three months ended June 30, 2014 include certain matters of emphasisrelating to the following:

• In accordance with the schemes of arrangements approved by the Bombay High Court underdifferent schemes of arrangement binding on our Company and three of our Subsidiaries, namely,RCIL, Reliance Infratel and RTL, certain expenses and/or losses, were identified by the boardsof directors of the respective companies as exceptional or otherwise subject to the accountingtreatment prescribed in the schemes of arrangement and were withdrawn from our correspondinggeneral reserves. See “Management’s Discussion and Analysis — Significant Factors Affectingour Results of Operations — Schemes of Arrangements and Amalgamations”; and

• Consequent to the investigations by an investigative agency (Central Bureau of Investigation) inrelation to the entire telecommunications sector in India, certain preliminary charges have beenframed by a trial court against our Subsidiary, RTL, and three executives of the Reliance Group.A writ petition has been filed before the Supreme Court of India against such charges, which ispending for hearing.

Also, see “Financial Statements — Independent Auditors’ Report”. If any such observation is includedin the auditors’ report for our financial statements in the future, the trading price of our Notes maybe adversely affected.

We face significant competition in the markets in which we operate, which could result in a decreasein our market share and profitability.

Competition in the industry and the markets in which we operate is intense. For our India operations,we face significant competition from other telecommunications companies with pan-India footprintssuch as Bharti Airtel Limited, Vodafone India Limited, Idea Cellular Limited (“Idea”) and TataDoCoMo Limited. Our competitors may affect our ability to bid competitively for spectrum that theGovernment auctions, may result in our subscriber base declining, could cause a decrease in tariffrates and ARPU and could cause an increase in customer churn and an increase in selling andpromotional expenses, all of which could have an adverse effect on our business and results ofoperations. In addition, intra-Circle mobile number portability, which enables customers to switchtheir mobile telecommunications services providers without changing their phone numbers wasintroduced across all Circles in January 2011. In addition, in October 2014, the Telecom Commissionaccepted the recommendations of the DoT to introduce inter-Circle (pan-India) mobile numberportability (“MNP”) from May 2015. In addition, the CDMA handsets market is not as developed asthe GSM handsets market and our existing CDMA customers may choose to shift to GSM-based

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services provided by us or other operators due to the unavailability of suitable devices. This could leadto greater movement of customers among providers of mobile telecommunications services, whichcould increase our marketing, distribution and administrative costs, slow growth in subscribers andreduce revenues.

We also compete with companies such as Mahanagar Telephone Nigam Limited (“MTNL”) and BharatSanchar Nigam Limited (“BSNL”), which are state-owned enterprises controlled by the Governmentand therefore enjoy certain competitive advantages. For example, BSNL is not required to pay entryfees, which gives it a significant competitive advantage over other telecommunications operators. Wecannot assure you that we will be able to compete successfully with the Government operators. If theGovernment does not ensure a level playing field, our business and results of operations may beadversely affected.

Some of our competitors have entered into roaming and tower sharing arrangements and in the futuremay combine or merge or begin to engage in extensive sharing, roaming or resale arrangements whichcould adversely affect our business and results of operations. Further, the Government recently issuedguidelines liberalising mergers and acquisitions in the mobile telecommunications industry. Suchliberalised policies that facilitate the consolidation of the industry could adversely affect our businessand results of operations.

For our DTH business, we compete directly with other pay DTH operators, as well as indirectly withcable operators, IPTV operators and free-to-air television. These competitors include Dish TV andTata Sky. We believe that we compete on pricing, programming content offerings, services, subscribersatisfaction, network quality and content delivery.

For our Global Operations, we compete primarily on the basis of price, geographical reach, networkperformance, network reliability and service quality against telecommunications companies thatprovide competing network access and data and voice services. We face competition from existing,newly developed and planned cable systems along certain of our existing and planned network routes.These competitors include Tata Communications Limited, Verizon and AT&T.

Further, we may also face competition from new entrants in the markets we operate in.

Certain of our competitors may be able to offer services at relatively lower costs and may be able tobundle services and offer complete solutions to their customers in ways that we cannot provide. If weare not able to compete successfully, our business and results of operations could be adverselyaffected.

We are dependent on a limited number of vendors to supply critical network and other equipmentand services.

We depend upon key suppliers and vendors to provide us with equipment and services that we needto build, develop, maintain and rollout our networks and operate our businesses. These vendors alsoprovide maintenance support. We are substantially dependent on these vendors for critical componentsfor future expansions. We cannot be certain that we will be able to obtain satisfactory equipment andservice on acceptable terms or that our vendors will perform as expected. Should we fail to receivethe quality of equipment and maintenance services that we require, to negotiate appropriate financialterms for equipment and services or to obtain adequate supplies of equipment in a timely manner, orif our key suppliers discontinue the supply of such equipment and services due to withdrawal from themarkets we operate in or otherwise, we may find it difficult to replace a vendor on a timely basiswithout significant capital expenditure, which could significantly disrupt our services. This may havean adverse effect on our business and results of operations. Further, certain of the agreements with ourvendors have expired and we cannot assure you that we will be able to renew such agreements onacceptable terms, or at all.

In addition, certain of our agreements with vendors for the supply of handsets contain customarywarranty provisions under which the vendors have agreed to provide warranty to the end users for anydefects as set out in the relevant agreements. Purchasers of these handsets, however, could potentiallyclaim damages from us. We cannot assure you that we will not be subject to the risks and costsassociated with product liability and warranties, and negative publicity which may adversely affectour brand, business and results of operations.

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Our outsourcing policy has made and may make us further dependent upon certain external suppliersof important services both to us and to our customers. We have outsourced most of our network andrelated infrastructure management, including operations and maintenance to third-party vendors. Asa result, we are exposed to the supply and service capabilities of each of these vendors, which maybe adversely affected by their ability to retain and attract appropriate personnel, their financialposition and many other factors which are outside our control. If such a vendor fails to performadequately or we terminate the vendor or such vendor terminates its agreement with us, we may notbe able to provide such services ourselves or find an alternative supplier without disruption to ourservices or incurring additional costs or at all, which may have an adverse effect on our business andresults of operations.

Our agreements with certain third parties also contain restrictions and impose obligations on us,including consent requirements before we undertake certain actions. We may require consents fromthird parties under our agreements, which we have not obtained. Any failure by us to obtain therequired consents from third parties may adversely affect our relationship with them and our business.

If our ability to use the intellectual property rights owned or licensed by us is restricted in anymanner, we may not be able to provide our services on commercially viable terms, which mayadversely affect our business and results of operations.

Network elements and telecommunications equipment including software and firmware deployed inour network are licensed or purchased from various third parties, including from vendors with theintellectual property rights to use or licence these elements and equipment. Although our vendors haveprovided warranties and indemnities including the rights to terminate in the event of any breach inrespect of any intellectual property rights in the respective agreements and arrangements, we cannotassure you that the intellectual property rights owned by or licensed to us will not be challenged, orthat whether the relevant intellectual property rights are valid, enforceable or sufficiently broad toprotect our interest or will provide or continue to provide us with any competitive advantage. Any lossor withdrawal of those intellectual property rights may affect our ability to provide our services andmay adversely affect our business and results of operations.

Our inability to collect our receivables on a timely basis, or at all, could adversely affect ourfinancial condition, liquidity and results of operations.

As at June 30, 2014, March 31, 2014 and March 31, 2013, our outstanding trade receivables, net ofallowance for doubtful accounts, were `43.73 billion, `39.19 billion and `39.11 billion, respectively.Our provisions for doubtful accounts, increased to `16.13 billion as at June 30, 2014 from `15.98billion and from `13.07 billion as at March 31, 2014 and March 31, 2013 respectively. In addition,we also had short-term loans and advances outstanding of `58.09 billion, as at June 30, 2014, whichincludes `7.14 billion from a third-party. Our outstanding receivables from third parties includereceivables from vendors including a vendor who we had engaged in the past for certain defeasementservices by discounting of cash flows in respect of our equipment supply contracts, infrastructureproviders, customers and other telecommunications operators. Our inability to collect our receivablesand advances, due to macroeconomic conditions, or otherwise, on a timely basis, or at all, couldadversely affect our financial condition, liquidity and results of operations.

The brand names used by us for marketing our services are owned either by Reliance or its GroupCompanies or are licensed to us for use by the respective owner and not all of the brand names weuse have been registered.

The brand names that we use to market our products are not owned by us but are used pursuant tospecific arrangements with Reliance or its Group Companies. Our Company has entered into a brandlicence agreement with Anil Dhirubhai Ambani Ventures Private Limited for use of the brand“Reliance” on May 6, 2006 for a period of 10 years. Further, certain of our trademark and patentapplications are in various stages of registration. In addition, we have not applied for the registrationof our ‘Reliance Pro’ and ‘Reliance Pro3’ brands, which we use for our CDMA wireless data servicesand ‘Reliance 3G’ brand, which we use for our 3G services. If any of the brands under which we

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operate become unavailable, we may have to carry out our business operations either under our ownbrand name, either already registered or to be created and registered, or under a different brand namethat may be acquired from our Group Companies, which could result in disruptions in our operationsand may adversely affect our business and reputation.

We depend on certain key personnel, and our business and growth prospects may be adverselyaffected if we lose the services of such personnel.

Our future success is dependent upon the continued service of our key executives and employees. Wecannot assure you that we will be able to retain these executives and employees. If one or more of thekey personnel were unable or unwilling to continue in their present positions, or if they join acompetitor, our business may be disrupted and our results of operations may be adversely affected. Wecannot assure you that we will be able to attract and retain the key personnel that we will need toachieve our business objectives.

Further, our business industry requires personnel with diverse skills. Any failure to recruit and retainappropriate employees may adversely affect our business. We may face challenges in training ouremployees in the rapidly changing industry and our inability to do so successfully may adverselyaffect our business.

Required licences and permits may be difficult to obtain, and once obtained may be amended orrevoked or may not be renewed.

In addition to our licences and spectrum, the deployment of our networks requires various approvalsfrom central, state and local government and regulatory authorities, particularly in relation toestablishing cell sites. These approvals include building, construction and environmental approvals,antenna and mast deployment approvals and other planning permissions. We have experienced andmay continue to experience, difficulties in obtaining some of these approvals. This may force us toseek alternative cell sites or incur considerable effort and expense where a suitable alternative cell siteis not available. Further, some of our telecommunications interconnect agreements may be terminatedin the event of termination or non-renewal of such licences and approvals. Inability to obtain therequired approvals in a timely manner, or at all, may have an adverse effect on business and resultsof operations.

Further, we are required to comply with various environmental laws and regulations in India. Forexample, our subsidiary, Reliance Infratel, which provides passive telecommunications infrastructure,is required to comply with various laws and regulations in India concerning air and noise emissions.These laws can impose liability for non-compliance and may in the future give rise to substantialenvironmental compliance or remediation liabilities and costs. In addition to potential clean upliability, we may also become subject to monetary fines and penalties for violation of applicableenvironmental laws, regulations or administrative orders. We may also be sued by third parties fordamages and costs resulting from environmental contamination or health hazards emanating from ourproperties. This may have an adverse effect on our business and results of operations.

We may acquire or make strategic investments in complementary businesses, or enter into strategicpartnerships or alliances with third parties in order to grow business. If we are unable to identifysuitable acquisition targets, obtain satisfactory acquisition financing or successfully integrate suchacquisitions, our business and prospects may be adversely affected.

We may acquire or make strategic investments in complementary businesses, or enter into strategicpartnerships or alliances with third parties in order to grow our business. We will continue to exploreacquisition opportunities, including if appropriate, acquisitions that may be of a significant size andscale. We may not be able to identify suitable targets for acquisitions, strategic investments orstrategic partnerships, or we may not be able to complete those transactions on terms acceptable to us,or at all. Further, our acquisition strategy may require us to obtain additional debt or equity financing,which could subject us to certain additional risks. We may not be able to finance our acquisitions onterms acceptable to us or at all. Our inability to identify suitable acquisition targets or investments,or the inability to complete such transactions, may adversely affect our business and prospects.

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Further, such acquisitions may involve significant investments, which may not provide favourablereturns and pose other risks, including:

• unforeseen risks or latent liabilities relating to target businesses that may only become apparentafter the merger or acquisition is finalised;

• likely complexity in the integration and management of business operations and systems;

• potential difficulties in the retention of select personnel;

• probable complications in the co-ordination of sales and marketing efforts; and

• diversion of our management’s attention from other ongoing business concerns.

If we are unable to integrate the operations of an acquired business successfully or manage such anacquisition profitably, our business and prospects may be adversely affected.

Our reputation and business may be harmed and we may be subject to legal claims if there is loss,disclosure or misappropriation of or unauthorised access to our subscribers’ or our owninformation or other breaches of our information security.

We make extensive use of online services and centralised data processing, including throughthird-party service providers. The secure maintenance and transmission of customer information is animportant part of our operations. Our information technology and other systems that maintain andtransmit customer information, or those of service providers, may be compromised by maliciousthird-party penetrations of our network security, or that of third-party service providers, or impactedby intentional or inadvertent actions or inactions by our employees, or those of third-party serviceproviders. As a result, our subscribers’ information may be lost, disclosed, accessed or taken withoutthe subscribers’ consent.

In addition, third-party service providers and us process and maintain our proprietary businessinformation and data related to our customers or suppliers. Our information technology and othersystems that maintain and transmit this information, or those of third-party service providers, may alsobe compromised by malicious third-party penetrations of our network security or that of third-partyservice providers, or impacted by intentional or inadvertent actions or inactions by our employees orthose of third-party service providers. As a result, our business information, or subscriber or supplierdata may be lost, disclosed, accessed or taken without consent.

Any major compromise of our data or network security, failure to prevent or mitigate the loss of ourservices or any customer information and delays in detecting any such compromise or loss coulddisrupt our operations, damage our reputation and subscribers’ willingness to purchase our servicesand subject us to additional costs and liabilities, including litigation.

Our telecommunications infrastructure may be affected by natural disasters and other unforeseendamage which may not be adequately covered by insurance.

We maintain and operate different kinds of telecommunications-related infrastructure, including43,379 telecommunications towers and related infrastructure. Our telecommunications infrastructurealso includes network control centres, OFC networks, submarine cable systems and certainsatellite-related infrastructure for our DTH business operations. The operation of this infrastructuremay be vulnerable to damage or interruptions due to adverse weather conditions, earthquakes, fires,floods, power loss, military or terrorist activity, telecommunications failures, software flaws,transmission cable cuts or similar events. Any failure of the networks, servers, or any link in thedelivery chain that results in an interruption in the operation or provision of any of our services coulddamage our ability to attract and retain customers and adversely affect our business and results ofoperations.

While we maintain insurance for our infrastructure against these risks (including business interruptioninsurance), we may not have adequate insurance to cover the associated costs of repair orreconstruction. Further, such business interruption insurance may not adequately compensate us forlost revenues, including penalties under our contracts with wireless service providers. This may havean adverse effect on our business, results of operations and financial condition.

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Our Promoters own a significant percentage of our Company’s issued share capital and they maytake actions that are not in your best interests.

Our Promoters owned approximately 59.70% of our Company’s issued equity share capital as atJanuary 20, 2015. As a result, they have the ability to significantly influence our operations. This willinclude the ability to appoint Directors to our Board and the right to approve significant actions atBoard and at Shareholders’ meetings, including the issue of Equity Shares and dividend payments,business plans, mergers and acquisitions, any consolidation or joint venture arrangements, anyamendment to the Memorandum and Articles and any assignment or transfer of our interest in any ofour licences. Further, we cannot assure you that the Promoters will not have conflicts of interest withyou. Our Promoters’ ability to significantly influence our operations or any such conflicts mayadversely affect our ability to execute our business strategy or to operate our business.

Our Promoters’ shareholding could also influence a change in control in our Company, impede amerger, consolidation, takeover or other business combination involving our Company or discouragea potential acquirer from making a tender offer or otherwise attempting to obtain control of ourCompany even if that was in our Company’s or your best interests.

We have certain contingent liabilities which may adversely affect our results of operations andfinancial condition.

As at June 30, 2014, our contingent liabilities not provided for, aggregated to `87.36 billion. Theseinclude amount of contracts to be executed, disputed liabilities, including tax liabilities, not providedfor, claims against the company not acknowledged as debts and guarantees. Further, our Company hasalso given corporate guarantees on behalf of certain group companies in favour of third partiesincluding banks and government authorities. See “Financial Statements — Contingent Liabilities”.

In the event that any of these contingent liabilities materialise, our results of operations and financialcondition may be adversely affected.

We have substantial international operations, including in developing markets, and face political,legal, tax, regulatory and other risks from our operations in multiple jurisdictions.

We derive a substantial portion of our revenue from international operations and have substantialphysical assets in several jurisdictions, including in the developing markets of Asia, principally India,the Middle East and countries in the Asia-Pacific region. In addition, we may contemplate futureexpansion of our exposure to those and other regions. The risks of operating in some of these areasinclude:

• uncertain and rapidly changing political, regulatory and economic conditions, including thepossibility of civil unrest, vandalism affecting cable assets, terrorism, armed conflict or theseizure or nationalising of private property;

• unexpected changes in regulatory environments and trade barriers;

• difficulties in enforcing agreements and collecting receivables through certain foreign legalsystems;

• fluctuations in currency exchange rates;

• exposure to new or different accounting, legal, tax and regulatory standards;

• burdensome tax, customs or duties, or regulatory assessments based on new or differinginterpretations of law or regulations; and

• difficulties in staffing and managing operations consistently across several operating areas.

In addition, managing operations in multiple jurisdictions may place further strain on our ability tomanage growth, which may adversely affect our business and results of operations.

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Risks relating to our India Operations

Churn in the mobile telecommunications industry in India is high and we cannot assure you thatwe will be able to retain all our existing subscribers or that we will be successful in subscriberadditions, which may have an adverse effect on our business and results of operations.

The Indian mobile telecommunications industry has historically experienced a high rate of churn. Thishigh churn rate has been a consequence of increasing competition and resultant promotional tariffs fornew connections. Churn rates are especially high among pre-paid subscribers, who constitute asignificant portion of the subscriber base of the Indian telecommunications industry.

Our churn rate for the quarters ended December 31, 2012, 2013 and 2014 were 7.3%, 3.4% and 4.9%,respectively. Our ability to retain our existing subscribers and to compete effectively for newsubscribers and reduce our rate of churn depends on, among other things:

• actual or perceived quality and coverage of our networks;

• executing our marketing and sales strategies, service delivery, customer-care activities includingaccount set-up and billing;

• our ability to anticipate and respond to various competitive factors affecting the industry,including new technologies, products and services, customer preferences, demographic trends,economic conditions and discount pricing or other strategies; and

• public perception of our brand.

Churn may also increase due to factors beyond our control, including, a slowing economy, a maturingsubscriber base and competitive offers by other service providers, including pursuant to mobilenumber portability, which was introduced in India in 2011. We cannot assure you that we will be ableto retain all our existing subscribers or that we will be successful in increasing the number of oursubscribers. A high rate of churn could have an adverse effect on our business and results ofoperations.

Our telecommunications licences, permits and spectrum allocations are subject to ongoing reviewand extensions and varying interpretations, each of which may result in modification, earlytermination, expiry on completion of the term or additional payments.

Our licences, permits and spectrum allocations are subject to the terms and conditions contained in thelicences, ongoing review and extensions and approval of such extensions by the relevant authorities.While we do not expect our business to cease operations when our licences come up for extension, wecannot assure you that these licences will be extended on satisfactory terms, or at all. Additionally,these licences and permits are subject to varying interpretations and the related uncertainty, as a result,may have an adverse effect on our business and results of operations.

The DoT in its NTP 2012, recommended refarming of spectrum and allotment of alternative frequencybands to service providers from time to time. The DoT conducted spectrum auction in the 900 MHzand 1800 MHz spectrum bands in certain Circles instead of reserving spectrum in these bands for thelicensees whose licences were due for extension in 2014. Additionally, the TRAI in itsrecommendations on valuation and reserve price of spectrum, issued in September 2013,recommended, among other things, that there be no reservation of spectrum for the renewal licenseesof the 900 MHz and 1800 MHz bands. Some of the spectrum under which we operate may need to bereplaced with another spectrum, which could have an adverse effect on our business. Our inability toextend the term of our licence or win spectrum will result in an adverse effect on our business. Further,there continues to be uncertainty as to the fees and costs of the grant and any limitations or other termsthat may be imposed upon successful extensions or bids. We have, in the past, paid significant amountsfor certain of our telecommunications licences and spectrum, and we anticipate that we may have topay increasing licence fees and spectrum usage charges for certain Circles, as well as meet specifiedrollout obligations requirements. In August 2013, the DoT also announced Guidelines for Grant ofUnified Licence (the “UL Guidelines”) which de-links the allocation of spectrum from the grant oflicences and provides the procedure for the grant of unified licences. On expiry of existing licencesor in the event of expansion of the scope of their licences to additional service areas, operators maybe required to opt for a Unified Licence for such service areas, the grant of which is subject to various

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conditions, including that no licensee shall directly or indirectly have any beneficial interest inanother licensee company in the same service area. In Bihar, Himachal Pradesh, Kolkata, MadhyaPradesh, Odisha and West Bengal Circles, both our Company and our subsidiary, RTL, hold UASLs.Pursuant to the UL Guidelines, upon the expiry of such licences (the earliest of which expires in thefinancial year 2016), we will be required to either divest our stake in RTL or transfer to our Companythe licences held by RTL in these Circles.

In addition, while we were successful bidders in the recently concluded spectrum auctions in March2015, the allocation of spectrum is provisional and is subject to the approval of the Government ofIndia and the final result of a proceeding pending before the Supreme Court of India.

We cannot assure you that we will be successful in transferring, obtaining or funding licences orspectrum, or, if licences and spectrum are awarded, that they will be obtained on acceptable terms.Furthermore, to obtain or extend our licences or spectrum, we may need to seek further fundingthrough additional borrowings or offerings, and we cannot assure you that such funding will beobtained on satisfactory terms, or at all, which could adversely affect our business, prospects,financial condition and results of operations.

Our business and the results of our operations may be affected if various regulatory measures withrespect to tower sharing among wireless telecommunications service providers and certain othertelecommunications related matters are implemented.

The Indian government has been active in its regulation of the Indian telecommunications industry.The TRAI issued a paper titled “Recommendations on Telecommunications Infrastructure Policy”dated April 12, 2011, in which it recommended, among other things, that:

• standard designs be developed for all types of telecommunications towers, which would bemandatory for all service providers;

• Infrastructure Provider-I licensees and wireless telecommunications service providers bemandated to share in-building solutions and distributed antenna systems deployed in buildings,complexes or streets;

• IP-I licences revenue-based fee be introduced;

• IP-I licensees be permitted to install and share certain kinds of active network infrastructure;

• Universal Service Obligation funds be restricted to specific areas;

• camouflaging of telecommunications towers to be made mandatory in areas at heritage,environmental or architectural importance;

• infrastructure sharing to be mandated in locations of heritage, security and environmentalimportance; and

• telecommunications infrastructure provider companies should be extended tax benefits undersection 80IA of the IT Act.

The standardisation of telecommunications tower designs could result in us having to makemodifications to our existing towers, which may be costly and could have an adverse effect on ourcash flows and profitability. Mandatory sharing of in-building solutions and distributed antennasystems could result in increased competition and could reduce the demand for new towers. Inaddition, permitting the sharing of active infrastructure could incentivise operators to utilise eachother’s active infrastructure at existing towers and rationalise the towers they require rather thandeploying their own active infrastructure or requesting new towers.

Further, the changes recommended to the Universal Service Obligation rural development promotionscheme may limit the overall development of telecommunications towers and related assets withinareas that are subject to the scheme. While beneficial to our business in certain respects due to itspromotion of tower sharing, the scheme could limit our opportunities to expand our business and mayrequire our key customers to pursue their respective proposed network expansions principally throughreliance on other operators’ or companies’ networks, as an alternative to commissioning us to developnew sites, which would adversely affect our growth prospects.

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In addition to the “Recommendations on Telecommunications Infrastructure Policy”, TRAI has alsoissued a paper titled “Recommendations on Guidelines for Unified Licence/Class Licence andMigration of Existing Licences” dated May 12, 2012, wherein TRAI has provided for the migrationof the existing licences to a unified licensing regime. The Unified Licence Recommendations providesthat IP-I Providers should also be brought under the unified licensing regime and that it should bemandated that the limit of foreign direct investment in such infrastructure providers should bedecreased to 74% within a period of three years of a unified licensing regime coming into force.However, the DoT has clarified in its press release dated February 15, 2012 that a decision in thisregard has been deferred for further examination. Further, TRAI has released its “Recommendationson Approach towards Green Telecommunications” dated April 12, 2011 pursuant to which TRAI hashighlighted the challenges posed by telecommunications, to the environment and ways to address thesame. In relation to EMF radiation, the Inter Ministerial Committee (“IMC”) had examined and issuedrecommendations in relation to the effect of EMF radiation from the base stations and mobile phone.The recommendations made by IMC were accepted by the Government and consequently directions inthis regard were issued by DoT to the mobile operators on April 10, 2012 making the new normsapplicable from September 1, 2012.

While these recommendations are currently in the form of recommendations and are underconsideration by the DoT, the implementation of any of these or other similar recommendations couldresult in increased costs for us or decreased demand from our customers, and could adversely affectour business, prospects, results of operations, cash flows and financial condition. For further detailsregarding any of the recommendations indicated above, please see the section “Overview of theRegulatory Regime in India”.

The tower sharing model may not develop in India in the manner that we anticipate.

Our business model is based on increased sharing of towers by wireless service providers, as theaddition of sharing operators at existing towers facilitates better capacity utilisation at relatively lowincremental capital expense, enhancing our cost and operational efficiencies. Our financial prospectsare directly dependent upon the sharing factor of our towers and increasing their co-location rates isa key element of our growth strategy.

Tower sharing in the wireless telecommunications sector and integrated telecommunications networksare relatively recent concepts in India. The success of the model depends on a number of factorsincluding geography, population density in rural and urban areas, financial conditions affectingoperators and customer behavioural patterns which are specific to telecommunications industries indifferent countries, including India.

There can be no assurance that growth in the wireless telecommunications sector in India will continueor that wireless service providers will seek to reduce costs by increasing their reliance on sharedtowers, either with other wireless telecommunications service providers or with third-partystand-alone tower operators such as us. In particular, wireless telecommunications service providersmay be unwilling to outsource tower operations to third parties because they may not consider it tobe economically beneficial or may be unwilling to surrender what they believe to be competitiveadvantages offered by ownership of proprietary networks, or for other reasons. Any failure of towersharing to continue to develop within the Indian wireless telecommunications sector in the way thatwe anticipate may adversely affect our business, prospects, results of operations, cash flows andfinancial condition.

Our ability to grow our business and our number of customers is dependent on the spectrumallocated to us.

The operation of our telecommunications network is limited by the amount of spectrum allocated tous. The basis for allocation of spectrum in India is determined by the DoT. The current spectrumallocated to us may not be sufficient for our expected customer growth, and our future profitabilityand growth may be adversely affected if our allocated spectrum proves inadequate or if we are unableto procure additional spectrum in the future for the expansion of our telecommunications business.

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Additional spectrum is also required to maintain quality of service. As the number of callerssimultaneously using the same spectrum capacity in a particular Circle (or areas therein) increasestowards the maximum capacity of that spectrum, the quality of the service may suffer leading to a lossof customers and revenues. This could have an adverse effect on our business and results ofoperations.

Some of our licences impose rollout obligations and other operating targets and conditions and wemay be subject to fines or the licences could be revoked if we fail to meet these conditions.

Our telecommunications licences require us to meet specified rollout obligations requirementsincluding minimum specified quality, service and coverage. Failure to comply with these obligationscould result in imposition of fines or the revocation or forfeiture of the licence for that Circle. Further,the need to meet scheduled deadlines may require more resources than otherwise budgeted for aparticular rollout obligations. We cannot assure you that we will be able to comply with the terms andconditions of these licences. Failure by us to comply with these licence conditions may result intermination of such licences and may adversely affect our business and results of operations.

We are dependent on interconnection with our competitors’ networks and associated infrastructureas well as roaming arrangements with other telecommunications operators.

Our ability to provide commercially viable wireless and fixed-line telecommunications servicesdepends, in part, upon our interconnection arrangements with other telecommunications operators,including with our competitors’ wireless and fixed-line networks and associated infrastructure. Theframework under which interconnection charges are calculated is regulated by TRAI. Any change tothis framework may require us to renegotiate our existing interconnection agreements. Further, anychange in our network coverage will require us to negotiate and mutually agree with our existinginterconnect partners on all relevant and connected aspects of such change. If we are not able tomaintain our interconnection agreements on terms that are acceptable to us or our interconnectionexpenses increase materially or operations under our interconnect agreements are suspended by theother telecommunications operators, our business and results of operations may be adversely affected.

We are dependent on roaming agreements with other telecommunications operators as a source ofrevenue. Under these agreements, we receive a fee from other telecommunications operators in returnfor permitting their customers to roam on our networks. If these roaming agreements were toterminate, or if the other telecommunications operators were to deploy incompatible technologies, ourroaming revenues may decrease, which may have an adverse effect on our business and results ofoperations. Further, if roaming charges were abolished or reduced by the regulator, our results ofoperations may be adversely affected.

We also rely on other telecommunications operators for the provision of international and domesticroaming services for our subscribers. While we have interconnection, international and ICRagreements in place with other telecommunications operators, we have no direct control over thequality of their networks and the roaming services they provide. Any difficulties or delays ininterconnecting with other networks and services, or the failure of any operator to provide reliableinterconnections or roaming services to us on a consistent basis, could result in loss of customers ora decrease in traffic, which may adversely affect our business and results of operations.

Concerns about health risks associated with mobile telecommunications equipment may reduce thedemand for our services.

The effects of any damage caused by exposure to an electromagnetic field have been and continue tobe the subject of careful evaluations by the international scientific community. We cannot rule out thatexposure to electromagnetic fields or other emissions originating from transmission infrastructure maybe found to be a health risk.

Our costs could increase and our revenue could decrease due to perceived health risks from radioemissions, especially if these perceived risks are substantiated. Public perception of potential healthrisks associated with mobile telecommunications could slow the growth of mobile telecommunicationsservices companies such as us. In particular, negative public perception of, and regulations regarding,these perceived health risks could slow the market acceptance of mobile telecommunications services,

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which could restrict our ability to expand our business. Such perception could also increase oppositionto the development and expansion of passive infrastructure, which could force us to relocate ourexisting cell-sites, which may adversely affect the quality of our services and, in turn, our businessand results of operations.

Numerous health-related lawsuits have been filed against mobile telecommunications operators andmobile device manufacturers, including against us, in various jurisdictions, including India. Petitionshave also been filed against the installation of towers near residential areas owing to concerns relatingto the adverse effects of electromagnetic radiation in India. If any of these proceedings are decidedagainst us, we may be required to pay compensation and/or incur additional expenses in relation torelocating our telecommunications towers to new locations. Beginning on September 1, 2012, the DoTimplemented new standards in relation to electromagnetic radiation emitted by cell-sites. The DoTalso issued new guidelines to all state Governments with regard to clearance for the installation ofmobile towers. Further, the Rajasthan High Court had, pursuant to an order dated August 22, 2012,asked the state Government to remove telecommunications towers, including 203 towers owned byReliance Infratel, from areas near schools, hospitals and densely populated localities, as it wassuspected that they contain potentially hazardous radiation. This order of the Rajasthan High Courtwas challenged before the Supreme Court and its operation was stayed by an interim order of theSupreme Court, which is currently in force. This matter is currently pending before the Supreme Courtfor final hearing. If similar orders are passed by other courts in India, we may have to incur additionalexpenditure in relocating our telecommunications towers business. In October 2014, the DoT andDepartment of Science and Technology also launched a joint initiative to study the possible impact ofelectromagnetic field radiation exposure from mobile towers and handsets. If a scientific studyresulted in a finding that radio frequency emissions posed health risks to consumers, it may adverselyaffect the market for mobile telecommunications services, which may adversely affect our businessand results of operations.

Our ability to grow might be affected due to saturation of the telecommunications sector in India.

The telecommunications sector in India has grown at a significant pace in the past few years. As atSeptember 30, 2014, there were more than 930 million wireless subscribers in India. In the future, thetelecommunications market in India may experience saturation and it may not be possible to maintainhistoric growth rates. Further growth in the Indian telecommunications market is largely dependent onthe ability to tap the market in rural India. However, the relatively small size of the various pocketsof demand in rural India may not be able to fuel future growth in subscribers and revenue. A saturationin the Indian telecommunications sector may affect our ability to grow and this may have an adverseeffect on our business, results of operations and prospects.

Our telecommunications infrastructure service business may be adversely affected if wirelessservice providers consolidate, merge or enter into strategic alliances with each other to anysignificant degree.

We own and operate telecommunications infrastructure primarily comprising telecommunicationstowers and related assets through our subsidiary, Reliance Infratel. We provide thesetelecommunications infrastructure assets on a shared basis to wireless service providers and othercommunications service providers under long-term contracts. Reliance Infratel currently owns thesignificant portion of telecommunications towers used by our CDMA and GSM networks.

The Indian cellular telecommunications industry has experienced consolidation during the past fewyears. This may result in consolidation of cellular telecommunications networks and reduced capitalexpenditures due to the potential overlap in network coverage and in expansion plans. Pursuant to anysuch consolidation, certain parts of our existing or potential infrastructure customers’ mergednetworks may be deemed to be duplicative and these customers may attempt to eliminate theseduplications by terminating their contracts with us. Our ongoing contractual revenues and futureresults of operations may be adversely affected if this were to occur. We could face similarconsequences if wireless communications service providers begin to engage in extensive sharing,roaming or resale arrangements as an alternative to leasing passive infrastructure from third-party

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operators such as Reliance Infratel. In addition, the development and commercialisation of newtechnologies designed to improve and enhance the coverage and effectiveness of cellulartelecommunications networks may significantly decrease demand for additional passivetelecommunications infrastructure.

We cannot assure you that further consolidation of Indian cellular telecommunications operators willnot take place in the future or that new technologies designed to improve and enhance the coverageand effectiveness of cellular telecommunications networks will not affect our telecommunicationsinfrastructure business, which may adversely affect our business and results of operations.

We face pricing pressures from our competitors in our passive infrastructure business, which mayadversely affect our business and results of operations.

Our passive infrastructure business faces competition from other mobile telecommunicationsoperators that share their own passive infrastructure with other carriers, other tower infrastructurecompanies, site development companies that purchase antenna space on existing towers for mobiletelecommunications operators, and public sector entities. We believe that Indian mobiletelecommunications operators may increasingly share passive infrastructure which could adverselyaffect the pricing of our passive infrastructure business and consequently adversely affect our resultsof operations.

Competitive pricing pressures for tenants from these competitors could adversely affect our passiveinfrastructure business and results of operations. If we lose customers due to pricing or other reasons,we may not be able to find new customers, and our results of operations may be adversely affected.Increasing competition in this business could also make the acquisition of high quality tower assets,and securing the rights to land for the towers, more costly. We cannot therefore assure you that we willbe able to compete successfully within this increasingly competitive business sector.

Additionally, factors adversely affecting the demand for mobile telecommunications services alsoadversely affect the demand for tower space in India. If the Indian mobile telecommunicationsservices market does not grow or grows at a slower rate than we expect, or the behaviour of marketparticipants does not meet current expectations, the demand for our passive infrastructure services andgrowth prospects will be adversely affected, which may have an adverse effect on our business andresults of operations.

Reductions in prices for telecommunications services in India may have an adverse effect on ourbusiness and results of operations.

The prices for our telecommunications services in India may decrease:

• as a result of an increase in competition;

• as we and our competitors, existing and new, increase transmission capacity on existing and newnetworks;

• as a result of technological advances;

• as a result of synergies realised by us and our competitors; and

• as we and our competitors compete to acquire new subscribers or retain our existing subscriberbase.

Any decline in tariffs may adversely affect our business, results of operations and financial condition.

If we fail to lease sufficient satellite transmission capacity to deliver our programming contentofferings, our business and results of operations may be adversely affected.

Our DTH business requires that we have sufficient satellite transmission capacity for the programmingcontent we offer. We do not own any satellites and have entered into a lease agreement for transpondercapacity on the MEASAT 3 satellite, which is valid until 2017, with the Department of Space. Wecurrently lease nine transponders of 36 MHz each on this satellite.

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In the event that we breach a provision or fail to perform an obligation under this agreement, theDepartment of Space has the right to terminate this agreement. In the event of such termination by theDepartment of Space, we would be required to pay certain early termination charges.

If this lease agreement is terminated or expires and we are unable to secure suitable replacementtransponder capacity, our business and results of operations may be adversely affected.

If the MEASAT 3 satellite experiences technical failure, including electrical shutdown, or isdamaged or is lost, our business and results of operations may be adversely affected.

While the MEASAT 3 satellite has an estimated useful life up to 2028, it is subject to significantoperational risks while in orbit. These risks include malfunctions that may occur as a result of variousfactors, such as satellite manufacturer error or operational failures. Satellites are also subject to avariety of atmospheric risks while in orbit that may adversely affect operations, including meteoroidevents, electrostatic storms, increased solar activity and collisions with space debris. If this satelliteexperiences technical failure, including electrical shutdown, or is damaged or lost, our ability toprovide programming content to our DTH subscribers could be seriously disrupted or suspended,including for prolonged periods. As a result, our relationship with current subscribers and our abilityto attract new subscribers may be adversely affected, which may adversely affect our business andresults of operations.

In the event of such failure, damage or loss, we could be prevented from effectively operating ourbusiness and we may be required to incur significant capital expenditure to restore operations,including by obtaining replacement satellite capacity. We cannot assure you that we would be able torestore our operations or obtain such capacity in a timely manner, or at all, which may have an adverseeffect on our business and results of operations.

If additional capacity is not available on the MEASAT 3 satellite, we may not be able to enter intoagreements to obtain capacity on other satellites.

The MEASAT 3 satellite is located at a particular orbital slot. The satellite dishes we currently installat our subscribers’ premises can only receive signals from an additional satellite if such satellite islocated within one degree of the orbital slot of this satellite. In order for the satellite dishes to receivesignals from a satellite located outside the orbital slot, we would be required to install additionalequipment on the subscribers’ dishes. In addition, existing subscribers would be required to repositiontheir satellite dishes, which would require our personnel to travel to subscribers’ residences orlocations where the consumer premises equipment is installed, which would be time-consuming andexpensive. The installation of this equipment would require additional costs, part or all of which wewould be required to bear if we wish to encourage subscribers to subscribe to our additionalprogramming content offerings, which may adversely affect our business and results of operations.

We are dependent on third parties to provide us with programming content for our DTH services andany increase in programming costs or applicable laws may adversely affect our business, financialcondition and results of operations.

We depend on third parties to provide us with programming content. Our ability to competesuccessfully depends on our ability to continue to obtain competitive programming content and deliverit to our subscribers at competitive prices. We may be unable to obtain sufficient high-qualityprogramming content for our DTH services on satisfactory terms or at all. This may limit our abilityto attract new subscribers and migrate existing subscribers from lower tier subscription packages tohigher tier subscription packages, thereby inhibiting our ability to execute our business plans.

We have entered into agreements with content providers for the provision of programming content.Our programming content agreements generally have a term of one year and contain various renewaland termination provisions. Further, these agreements impose stringent obligations on us to conformto anti-piracy requirements. We may be unable to renew these agreements on favourable terms, in atimely manner, or at all, or these agreements may be terminated prior to the expiration of their originalterms. If we are unable to renew any of these agreements or if a counterparty terminates any of theseagreements, we may be unable to obtain appropriate substitute programming content at comparablecost, in a timely manner, or at all.

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When offering new programming content, or upon expiration of existing contracts, programmingcontent suppliers typically increase the rates they charge us for programming content, which increasesour programming content costs. An increase in programming content costs may cause us to increasethe rates that we charge our subscribers, which may increase subscriber churn and cause potentialsubscribers to refrain from subscribing to our services. In addition, in certain cases, we may be unableto pass increases in programming content cost on to our subscribers. If our programming content costsincrease, our business, financial condition and results of operations may be adversely affected.

Content procurement by DTH operators in India, including us, generally takes place through channeldistributors or owners. Under Indian interconnection regulations, all broadcasters and distributors arerequired to offer their content to all platforms and operators. We enter into agreements with channeldistributors and owners to licence channels for viewing by our subscribers. The major channeldistributors and owners, from whom we licence channels or to whom we pay content and programmingcontent costs, provide us with access to over 250 channels, including free-to-air channels. Any changein Indian interconnection regulations that would permit broadcasters and distributors to refuse toprovide such programming content to us or to impose discriminatory terms or conditions mayadversely affect our ability to acquire programming content on a cost-effective basis, or at all, whichwould adversely affect our business, financial condition and results of operations.

If we are unable to recover the consumer premises equipment, there could be an erosion of therealisable value of our consumer premises equipment and net tangible assets.

Consumer premises equipment comprises a significant portion of the net tangible assets of our DTHbusiness. As a result of discontinuance or termination of services, which is an industry-widephenomenon, we may not be able to recover our consumer premises equipment that we have providedon a rental basis to such subscribers. If we are unable to recover the consumer premises equipmentfrom such subscribers, there could be a significant erosion of the realisable value of our consumerpremises equipment, which may adversely affect our business and results of operations.

Risks relating to our Global Operations

The prices that we charge for our services have been decreasing, and we expect that such decreaseswill continue over time.

The prices that we charge for our capacity services and other related network services, such as IPtransit, have declined significantly in many markets around the world. Sharp declines in price levelsin the United States and Europe starting in 2000 were the principal factor that led to FLAG TelecomGroup Limited, our predecessor entity, to file for bankruptcy protection in the United States in April2002 before it was acquired by us. In the late 1990s, several companies invested in constructing asignificant amount of cable capacity. However, adoption of broadband services was significantlyslower than expected, resulting in an oversupply of capacity and rapidly declining data transmissionprices. Although the submarine cable market environment has recovered in the recent past, there isstill a substantial amount of unused capacity in markets such as Asia.

We target emerging markets for a significant portion of our future growth. These markets have alsoexperienced price erosion. If the prices for our capacity and related network services continue todecrease and we are unable to increase volumes or sell new services or we are unable to reduce ouroperating and capital expenditure costs, our results of operations may be adversely affected. Inaddition, price erosion may also affect our ability to raise financing or to obtain pre-buildcommitments for capacity purchases, which are necessary to allow us to fund the expansion of ournetwork. Any failure to do so may adversely affect our business and results of operations.

Our costs may be impacted by global commodity prices and demand for network equipment.

We use marine maintenance contractors whose prices are impacted by oil prices to develop, expandand maintain our subsea cable networks. Although we enter into fixed price contracts with the marinemaintenance contractors, the fixed price element does not apply to items such as fuel, and it is likelythat the contractors will pass on any increases in fuel costs to us during the validity of the contract.The volatility of global commodity prices, especially oil prices, may also adversely affect the cost of

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transportation and the purchase price of equipment for our network development, expansion andmaintenance, and we may not be able to pass on these increased costs to our customers because ofincreased competition. Continued increases and volatility in global commodity and equipment pricescould adversely affect our capital expenditure and operational costs.

If we are unable to successfully expand our business by deploying new products and services, ourbusiness, results of operations and financial condition could be adversely affected.

An important component of our strategy is to further complement our traditional capacity and networkservices by continuing to expand into higher-margin managed services and other value-added services.This portion of our business depends, in large part, on our ability to enhance our platform for theprovision of innovative network products and services and to maintain a lower cost base than ourcompetitors. If we are not able to successfully complete the development and introduction of newproducts and services in a timely manner or at all, our business, financial condition and results ofoperations may be adversely affected.

In addition, new product and service offerings may not be widely accepted by our customers. If thisoccurs we may terminate those product and service offerings and be required to write off, in wholeor in part, any assets or information technology used to develop or offer those services, which mayadversely affect our business, results of operations and financial condition.

System failures may significantly disrupt the availability and quality of the services that we provide.

Our global subsea network is subject to the risks inherent in large-scale, complex subsea fibre-optictelecommunications systems (which we identify as being systems that provide seamless connectivitysolutions across multiple data traffic routes, countries and continents) including design defects,equipment breakdowns, security breaches, computer viruses and physical damage to subsea cables andequipment. Our subsea network operations depend on its ability to avoid and mitigate anyinterruptions in service or reduced capacity for customers. Unless properly resolved, interruptions inservice or performance problems, due to physical damage to the subsea cable systems from naturaldisasters, power losses, fishing nets, anchors or other factors or other reasons, could undermineconfidence in our services and cause us to lose customers or make it more difficult to attract new ones.Although the network structure used in our subsea network systems is intended to minimise serviceinterruptions by rerouting traffic, rerouting may not always be possible or successful. Because manyof our services are critical to the businesses of many of our customers, if a particular cable systembecomes subject to serial or chronic outages, there would eventually be a loss of confidence in suchcable system.

In addition, any failure of our operational support systems could adversely affect our ability to processorders and bill for services efficiently and accurately, all of which could cause customerdissatisfaction and adversely affect our ability to add customers on a timely basis. Although wedisclaim liability for losses for interruptions in services in our service agreements (especially thosecaused by force majeure events), a court may not enforce a limitation on liability under certaincircumstances, which could expose us to financial losses. In addition, we often provide customers withguaranteed service level agreements. If we fail to meet these, except for force majeure events, we maybe obligated to provide our customers with credits, generally in the form of free service for a limitedperiod of time and cash rebates, which could negatively affect our results of operations.

If customers’ buying patterns change such that those who traditionally buy ROUs switch to leasedcapacity, which is also provided by other service providers, our business and financial conditionmay be adversely affected.

We provide capacity services, which entail the sale of capacity on our network, to customers underlong-term contracts, as well as associated operations and maintenance services. Historically, capacityservices have accounted for a significant portion of our revenues. Customers pay a one-time fee topurchase the ROU and an annual operations and maintenance fee, which typically ranges from 3% to4% of the purchase fee. A downturn in the economic conditions among other conditions could causecustomers to change their buying patterns away from making capital investments in ROUs in order toreduce initial cash payments. If our customers’ buying patterns change, such that those traditionally

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buying ROUs switch to buying leased capacity on monthly payment plans from other service providersor from us, our business and results of operations may be adversely affected. Further, certain of theagreements with our customers have expired and we cannot assure you that we will be able to renewsuch agreements on acceptable terms, or at all.

If we fail to obtain and maintain access to terrestrial networks in key markets, we may not be ableto remain competitive or provide the solutions and services our customers seek.

If we fail to connect our submarine cables or maintain access with terrestrial networks in key marketssuch as the United States, the United Kingdom, the Middle East, Hong Kong and Singapore, we maynot be able to retain our existing customers or attract new customers. In certain jurisdictions, we relyon third parties to procure terrestrial networks, including backhaul links between our cable landingstations and PoPs for regulatory or other reasons. However, in the future we may not be able to procurebackhaul or other terrestrial networks on terms acceptable to us, or at all. This could prevent us fromoffering our services on competitive terms, which may adversely affect our business, financialcondition and results of operations.

We may not be able to obtain additional capacity for our network from other service providers onterms acceptable to us or at all.

We use network resources owned by other companies for portions of our network by leasing andoperating a variety of network connectivity, including backhaul networks, international backbonenetworks, domestic networks and local access networks to provide service coverage beyond the reachof our networks and enter into interconnection arrangements for Internet sharing and for voice callorigination and/or termination. We obtain the right to use such network portions, including bothtelecommunications capacity and rights to use dark fibre, through operating leases and other sharingarrangements. If we are unable to enter into or renew our existing agreements with such providers oncommercially acceptable terms or in a timely manner or at all, it may result in a delay in providingservices to our customers and disrupt our operations. In several of those agreements, the counterpartyis responsible for network maintenance and repair. If a counterparty to a lease or an ROU suffersfinancial distress or bankruptcy, we may not be able to enforce our rights to use these network assetsor even if we could continue to use these network assets, we could incur material expenses related tomaintenance and repair if the counterparty fails to maintain or repair the network adequately. We couldalso incur material expenses if we were required to locate alternative network assets. We may not besuccessful in obtaining reasonable alternative network assets, if needed. Failure to obtain usage ofalternative network assets, if necessary, may affect our ability to meet our customers’ requirementsand may have an adverse effect on our business and results of operations.

We rely on third parties for the construction and maintenance of, and upgrade of, capacity on ournetwork and the failure of such parties to perform their contractual obligations to our satisfaction,or at all, may have an adverse effect on our business and results of operations.

We are and will continue to be dependent upon third parties to: (a) provide access to certainorigination and termination points of our systems in various jurisdictions; (b) construct and operatelanding stations in certain jurisdictions; (c) construct, operate, maintain, upgrade, repair and/orreplace our systems pursuant to contractual arrangements; (d) provide backhaul and other networkservice through contractual arrangements with such parties; (e) provide business support services suchas accepting customer orders and billing; and (f) provide content-based VAS. We cannot assure youthat the third parties providing the services described above will perform their contractual obligationsto our satisfaction, or at all, or that there will not be any political or economic events in relation tosuch parties which may prevent them from providing services to us, which in turn could have anadverse effect on our business and results of operations.

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If we fail to maintain co-operative relationships with landing parties, our operations may beimpaired.

We utilise a number of different landing parties to provide access to the origination and terminationpoints necessary for continued operations and any future upgrades, such as cable landing stations, atvarious locations on our global network. Our ability to offer end-to-end services and new services isdependent on the landing parties’ willingness to provide cost-effective terrestrial services, to agree toconnect other terrestrial networks to our systems and to provide us with access to their facilities forthe purpose of upgrading the network.

Despite their contractual obligations and other commitments, we cannot assure you that the landingparties will perform their contractual obligations or that there will not be any political events orchanges in relation to the landing parties that may have adverse effects on our ability to operate ournetwork, which may have an adverse effect on our business and results of operations. Further, if wefail to pay the required fees within the prescribed time, the landing party has the right under ouragreements with them to suspend services or terminate the agreement, which may adversely affect ourbusiness.

Risks relating to India

Currency exchange rate fluctuations could have an adverse effect on our results of operations.

We have currency exposures related to our revenues, expenditures and financing in currencies otherthan the local currencies in which we operate. Our Company also has significant borrowings incurrencies other than Rupees. Further, we also import various equipment for our India operations forwhich we make payment in foreign currencies. As at June 30, 2014, foreign currency exposures thatare not hedged by derivative instruments, or otherwise, primarily included contracts aggregating toUS$ 3.91 billion, equivalent to `235.30 billion, and Euro 40,151, equivalent to `3.30 million.

We report our results of operations in Rupees, which has experienced significant fluctuations in recentyears. To the extent that we are unable to match income received in foreign currencies with costs paidin the same currency, exchange rate fluctuations in any such currency could have an adverse effect onour revenues and financial results.

If terrorist attacks or social unrest in India increase, our business and our ability to pay principaland interest on the Notes could be adversely affected and the trading price of our Notes coulddecrease.

India has from time to time experienced instances of civil unrest and terrorist attacks. These eventscould lead to political or economic instability in India and may adversely affect the Indian economy,our business, results of operations, financial condition, our ability to pay principal and interest on theNotes and the trading price of our Notes. India has also experienced social unrest, naxalite violenceand communal disturbances in some parts of the country. If such tensions occur in places where weoperate or in other parts of the country, leading to overall political and economic instability, it couldadversely affect our business, results of operations, financial condition, our ability to pay principaland interest on the Notes and the trading price of our Notes.

Natural disasters could have an adverse effect on the Indian economy, our business and the tradingprice of our Notes.

India has experienced natural disasters such as earthquakes, a tsunami, floods and droughts in the pastfew years. As we operate a consumer-centric business, in the event of a natural disaster of a significantscale, we could suffer significant losses. The extent and severity of these natural disasters determinestheir impact on the Indian economy and infrastructure. Prolonged spells of below normal rainfall orother natural calamities could adversely affect the Indian economy, and, in turn, our business, ourability to pay principal and interest on the Notes and the trading price of our Notes.

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A decline in economic growth in India could adversely affect our business.

We derive a substantial portion of our revenue from our operations in India and so the performanceand the growth of our business is dependent on the performance of the Indian economy. In the recentpast, the Indian economy has been affected by global economic uncertainties and liquidity crisis, thedomestic policy and political environment, volatility in interest rates, currency exchange rates,commodity and electricity prices, adverse conditions affecting agriculture, rising inflation rates andvarious other factors. GDP growth for the financial year 2014 increased marginally to 4.7% from 4.5%for the financial year 2013. In the event that inflation related concerns are experienced, then the RBImay take interest rate tightening measures, which may affect our interest costs adversely.

Risk management initiatives by banks and lenders in such circumstances could affect the availabilityof funds in the future or the withdrawal of our existing credit facilities. The Indian economy isundergoing many changes and it is difficult to predict the impact of certain fundamental economicchanges on our business. Conditions outside India, such as a slowdown or recession in the economicgrowth of other major countries, especially the United States, have an impact on the growth of theIndian economy. Additionally, an increase in trade deficit, a downgrading in India’s sovereign debtrating or a decline in India’s foreign exchange reserves could negatively affect interest rates andliquidity, which could adversely affect the Indian economy and our business. Any downturn in themacroeconomic environment in India could adversely affect our business, results of operations,financial condition, our ability to pay principal and interest on the Notes and the trading price of ourNotes.

Political instability in India or in the states where we operate could cause us significant adverseeffects.

Our Company is incorporated in India and a substantial portion of our operations, assets and personnelare located in India. The central Government has traditionally exercised, and continues to exercise, asignificant influence over many aspects of the economy. Further, our business is also affected byregulations and conditions in the various states in India in which we operate. Our business and themarket price and liquidity of our Notes may be affected by interest rates, changes in central or stateGovernment policies, taxation and other political, economic or other developments in or affectingIndia. Since 1991, successive central Governments have pursued policies of economic liberalisationand financial sector reforms. We benefit from demand drivers in rural India such as governmentexpenditure on rural schemes, minimum support prices and agriculture growth. Any slowdown in thesedemand drivers or change in Government policies may adversely impact our business and operations.A new Government was elected in the recently concluded parliamentary elections in May 2014.Generally, a significant adverse change in the central Government’s policies, in particular, thoserelating to the telecommunications industry in India, could adversely affect our business, results ofoperations, financial condition and our ability to pay principal and interest on the Notes, and couldcause the trading price of our Notes to decline.

We may be affected by competition law in India and any adverse application or interpretation of theCompetition Act could adversely affect our business.

The Competition Act regulates practices having an appreciable adverse effect on competition(“AAEC”) in the relevant market in India. Under the Competition Act, any formal or informalarrangement, understanding or action-in-concert which causes or is likely to cause an AAEC isconsidered void and results in the imposition of substantial monetary penalties, which may extend upto 10% of the average of the turnover for the last three financial years. Further, any agreement amongcompetitors which directly or indirectly involves the determination of purchase or sale prices, limitsor controls production, supply, markets, technical development, investment or provision of services,shares the market or source of production or provision of service by way of allocations of geographicalarea or types of goods or services or number of customers in the relevant market or directly orindirectly results in bid-rigging or collusive bidding is presumed to have an AAEC in the relevantmarket in India and is considered void. The Competition Act also prohibits abuse of a dominantposition by any enterprise.

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On March 4, 2011, the Government issued and brought into force the combination regulation (mergercontrol) provisions under the Competition Act with effect from June 1, 2011. These provisions requireacquisitions of shares, voting rights, assets or control or mergers or amalgamations that cross theprescribed asset- and turnover-based thresholds to be mandatorily notified to and pre-approved by theCompetition Commission of India (the “CCI”). Additionally, on May 11, 2011, the CCI issued theCompetition Commission of India (Procedure for Transaction of Business Relating to Combinations)Regulations, 2011, as amended, which sets out the mechanism for implementation of the mergercontrol regime in India.

The Competition Act aims, among others things, to prohibit all agreements and transactions whichmay have an AAEC in India. Consequently, all agreements entered into by us could be within thepurview of the Competition Act. Further, the CCI can investigate any agreement, abusive conduct orcombination if such agreement, conduct or combination has an AAEC in India. In the event that ourCompany or any of its Subsidiaries enters into any agreements or transactions that are held to havean AAEC in the relevant market in India, the provisions of the Competition Act will apply. If we areaffected, directly or indirectly, by the application or interpretation of any provision of the CompetitionAct, or any enforcement proceedings initiated by the CCI, or any adverse publicity that may begenerated due to scrutiny or prosecution by the CCI or if any prohibition or substantial penalties arelevied under the Competition Act, it would adversely affect our business, results of operations andprospects.

India’s infrastructure is less developed than that of many developed nations and any materialdeterioration of such infrastructure may interrupt our business operations.

India’s infrastructure is less developed than that of many developed nations and problems with its port,rail and road networks, electricity grid, communication systems or other public facilities could disruptour normal business activity. Any material deterioration of India’s physical infrastructure could harmthe national economy, disrupt the transportation of goods and supplies, and add costs to doing businessin India. These problems could interrupt our business operations and reduce demand for our services,which may have an adverse effect on our business and results of operations.

Public companies in India, including our Company, are required to prepare financial statementsunder Ind AS. The transition to Ind AS in India is very recent and still unclear and our Companymay be negatively affected by such transition.

Our financial statements, including the restated financial information included in this OfferingCircular are prepared in accordance with Indian GAAP. We have not attempted to quantify the impactof IFRS or U.S. GAAP on the financial data included in this Offering Circular, nor do we provide areconciliation of our financial statements to those of U.S. GAAP or IFRS. U.S. GAAP and IFRS differin significant respects from Indian GAAP.

Public companies in India, including our Company, are required to prepare annual and interimfinancial statements under Indian Accounting Standard 101 “First-time Adoption of Indian AccountingStandards” (“Ind AS”). On January 2, 2015, the Ministry of Corporate Affairs, Government of India(the “MCA”) announced the revised roadmap for the implementation of Ind AS for companies otherthan banking companies, insurance companies and non-banking finance companies through a pressrelease. On February 16, 2015, the MCA issued the Companies (Indian Accounting Standards) Rules,2015 (the “Indian Accounting Standard Rules”) to be effective from April 1, 2015. The IndianAccounting Standard Rules provide for voluntary adoption of Ind AS by companies in financial year2015 and, implementation of Ind AS will be applicable from April 1, 2016 to companies with a networth of `5,000 million or more. Accordingly, our Company may have to convert its opening balancesheet as on April 1, 2016 in accordance with Ind AS. Further, our Company may also be required toconvert its balance sheet as on April, 2015 in accordance with Ind AS for preparing comparablefinancial statements for the previous year. Further, in addition, any holding, subsidiary, joint ventureor associate companies of the companies specified above shall also comply with such requirementsfrom the respective periods specified above.

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Additionally, Ind AS differs in certain respects from IFRS and therefore financial statements preparedunder Ind AS may be substantially different from financial statements prepared under IFRS. There canbe no assurance that our Company’s financial condition, results of operation, cash flow or changes inshareholders’ equity will not be presented differently under Ind AS than under Indian GAAP or IFRS.When our Company adopts Ind AS reporting, it may encounter difficulties in the ongoing process ofimplementing and enhancing its management information systems. Our management may also have todivert its time and other resources for successful and timely implementation of Ind AS. There can beno assurance that the adoption of Ind AS by our Company will not adversely affect its results ofoperation or financial condition. Any failure to successfully adopt Ind AS in accordance with theprescribed timelines may have an adverse effect on the financial position and results of operation ofour Company.

The Companies Act, 2013 has effected significant changes to the existing Indian company lawframework and SEBI has introduced changes to the Listing Agreement, which are effective fromOctober 1, 2014, which may subject us to higher compliance requirements and increase ourcompliance costs.

A majority of the provisions and rules under the new Companies Act have recently been notified andhave come into effect from the date of their respective notification, resulting in the correspondingprovisions of the Companies Act, 1956 ceasing to have effect. The Companies Act, 2013 has broughtinto effect significant changes to the Indian company law framework, such as the provisions relatedto the issue of capital (including provisions in relation to the issue of securities on a private placementbasis), disclosures in offer documents, corporate governance norms, accounting policies and auditmatters, related party transactions, introduction of a provision allowing the initiation of class actionsuits in India against companies by shareholders or depositors, a restriction on investment by Indiancompanies through more than two layers of subsidiary investment companies (subject to certainpermitted exceptions), prohibitions on loans to directors, insider trading and restrictions on directorsand key managerial personnel from engaging in forward dealing. We may also need to spend, in eachfinancial year, at least 2% of our average net profits during the three immediately preceding financialyears towards corporate social responsibility activities and disclose our corporate social responsibilitypolicies and activities on our website. Further, the Companies Act, 2013 imposes greater monetary andother liability on our Company and Directors for any non-compliance. To ensure compliance with therequirements of the Companies Act, 2013, we may need to allocate additional resources, which mayincrease our regulatory compliance costs and divert management attention.

The Companies Act, 2013 has introduced certain additional requirements which do not havecorresponding equivalents under the Companies Act, 1956. Accordingly, we may face challenges ininterpreting and complying with such provisions due to limited jurisprudence on them. In the eventthat our interpretation of such provisions of the Companies Act, 2013 differs from, or contradicts with,any judicial pronouncements or clarifications issued by the Government in the future, we may faceregulatory actions or we may be required to undertake remedial steps. Additionally, some of theprovisions of the Companies Act, 2013 overlap with other existing laws and regulations (such as thecorporate governance norms and insider trading regulations issued by the SEBI). The SEBI has issuedrevised corporate governance guidelines which have been made effective from October 1, 2014.Pursuant to the revised guidelines, we are required to establish a vigilance mechanism for directorsand employees and reconstitute certain committees in accordance with the revised guidelines. We mayface difficulties in complying with any such overlapping requirements. Further, we cannot currentlydetermine the impact of provisions of the Companies Act, 2013 or the revised SEBI corporategovernance norms. Any increase in our compliance requirements or in our compliance costs may havean adverse effect on our business and results of operations.

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Our ability to raise foreign debt may be constrained by Indian law.

Companies incorporated in India are subject to regulatory restrictions in relation to borrowing inforeign currencies, including restrictions in relation to eligibility, the amount of borrowings whichmay be incurred, end-use and creation of security and may require the prior approval of Indianregulatory authorities. Such restrictions could limit our ability to raise finance on competitive termsand refinance existing indebtedness. We cannot assure you that any approval required to raiseborrowings will be granted. Such limitations on debt may have an adverse impact on our business,results of operations, financial condition and cash flows.

Risks relating to the Notes

The Notes will contain terms and conditions limiting the financial and operating flexibility of theCompany and its subsidiaries; GCX and its subsidiaries have been designated as UnrestrictedSubsidiaries under the Trust Deed.

The terms and conditions governing the Notes will restrict, among other things, the ability of theCompany and its restricted subsidiaries to:

• incur or guarantee additional indebtedness and issue disqualified stock and certain preferredstock;

• pay dividends on capital stock or purchase or redeem capital stock;

• create or incur certain liens on assets to secure indebtedness;

• make investments or other restricted payments;

• enter into agreements that restrict the Issuer’s Restricted Subsidiaries’ ability to pay dividends;

• consolidate or merge with other entities;

• sell or issue capital stock of Restricted Subsidiaries;

• engage in transactions with affiliates and certain shareholders;

• enter into sale and leaseback transactions; and

• transfer or sell assets.

All of these terms and conditions are subject to the limitations, exceptions and qualificationsdescribed in “Terms and Conditions of the Notes”. These terms and conditions could limit theCompany’s ability to pursue growth plans, restrict its flexibility in planning for, or reacting to,changes in its business and industry, and increase its vulnerability to general adverse economic andindustry conditions. The Company or any of its subsidiaries may also enter into additional financingarrangements in the future, which could further restrict their flexibility.

Any defaults under these terms and conditions may lead to an event of default under the Notes andthe Trust Deed governing the Notes and may lead to cross-defaults under other indebtedness of theCompany or its subsidiaries. No assurance can be given that the Company will be able to pay anyamounts due to holders of the Notes in the event of such default, and any default may significantlyimpair the Company’s ability to pay, when due, the interest of and principal on the Notes.

GCX and its subsidiaries, through which we operate a substantial portion of our Global Operations,have been designated as Unrestricted Subsidiaries (as defined under “Terms and Conditions of theNotes”) under the Trust Deed. As a result, GCX and its subsidiaries will not be subject to therestriction of the Trust Deed, including restrictions on the ability of GCX and its subsidiaries to incuradditional indebtedness or sell assets.

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The Company and its subsidiaries may incur additional indebtedness, including securedindebtedness.

Subject to restrictions in the terms and conditions governing the Notes, the Company and itssubsidiaries may incur substantial additional indebtedness, including secured indebtedness, whichcould increase the risks that the Company may not be able to satisfy its obligations under the Notes,and the ability of holders of Notes to recover their investment in a distressed situation. In addition,GCX and its subsidiaries, and any additional subsidiaries that we designate to be UnrestrictedSubsidiaries in accordance with the Trust Deed, will not be subject to restrictions on their ability toincur additional indebtedness under the terms and conditions of the Notes. Covenants in agreementsgoverning debt that the Company and its subsidiaries may incur in the future may also materiallyrestrict the operations of the Company and its subsidiaries, including their ability to incur debt, paydividends, make certain investments and payments, and encumber or dispose of assets.

The Company may not have the ability to raise the funds necessary to finance an offer to purchasethe Notes upon the occurrence of certain events constituting a Change of Control.

Not later than 30 days following the occurrence of a Change of Control (as defined under “Terms andConditions of the Notes”), the Company must make an offer to purchase any and all outstanding Notes.Pursuant to this offer, the Company must offer to purchase the outstanding Notes at 101 per cent. oftheir principal amount plus accrued and unpaid interest, if any, up to (but excluding) the date ofpurchase. However, the Company may not have enough funds available at the time of any Change ofControl to pay the purchase price of the tendered outstanding Notes. The Company’s failure to makethe offer to purchase or purchase tendered Notes would constitute an event of default under the Notes.

Such an event of default may, in turn, constitute an event of default under other indebtedness, any ofwhich could cause the related debt to be accelerated after any applicable notice or grace periods. Ifsuch other debt were accelerated, the Company may not have sufficient funds to purchase the Notesand repay the debt so accelerated.

Interest rate, exchange rate and currency risks and exchange controls.

The Company will pay principal and interest on the Notes in United States dollars. This presentscertain risks relating to currency conversions if a holder’s financial activities are denominatedprincipally in a currency or currency unit (the “Holder’s Currency”) other than United States dollars.These include the risk that exchange rates may significantly change and the risk that authorities withjurisdiction over the Holder’s Currency may impose or modify exchange controls. An appreciation inthe value of the Holder’s Currency relative to United States dollars would decrease (1) the Holder’sCurrency-equivalent yield on the Notes, (2) the Holder’s Currency-equivalent value of the principalpayable on the Notes and (3) the Holder’s Currency-equivalent market value of the Notes.

The terms and conditions of the Notes are subject to changes of law.

The terms and conditions of the Notes are based on laws in effect as at the date of this OfferingCircular. No assurance can be given as to the impact of any possible judicial decision or change torelevant law or administrative practice after the date of this Offering Circular.

An active trading market may not develop for the Notes, in which case your ability to transfer theNotes will be more limited.

The Notes are new securities for which there is currently no existing trading market. The liquidity ofany market for the Notes will depend on a number of factors, including general economic conditionsand the Company’s own financial condition, performance and prospects, as well as recommendationsof securities analysts. We have been informed by the Joint Lead Managers that they may make amarket in the Notes after we have completed this offering. However, they are not obligated to do soand may discontinue such market-making activity at any time without notice. In addition,market-making activity by the Lead Manager’s affiliates may be subject to limits imposed byapplicable law. As a result, there can be no assurance that any market in the Notes will develop or,if it does develop, that it will be maintained. If an active market in the Notes fails to develop or besustained, you may not be able to sell the Notes or may have to sell them at a lower price.

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Developments in other markets may adversely affect the market price of the Notes.

The market price of the Notes may be adversely affected by declines in the international financialmarkets and world economic conditions. The market for Indian securities is, to varying degrees,influenced by economic and market conditions in other markets, especially those in Asia. Althougheconomic conditions are different in each country, investors’ reactions to developments in one countrycan affect the securities markets and the securities of issuers in other countries, including India. Sincethe sub-prime mortgage crisis in 2008, the international financial markets have experiencedsignificant volatility. If similar developments occur in the international financial markets in the future,the market price of the Notes could be adversely affected.

The Notes are subject to restrictions on resales and transfers.

The Notes have not been registered under the Securities Act or any U.S. state securities laws or underthe securities laws of any other jurisdiction and are being issued and sold in reliance upon exemptionsfrom registration provided by such laws. No Notes may be sold or transferred unless such sale ortransfer is exempt from the registration requirements of the Securities Act (for example, in relianceon the exemption provided by Regulation S under the Securities Act) and applicable state securitieslaws. For certain restrictions on resales and transfers, see “Transfer Restrictions”.

The Notes may not be a suitable investment for all investors.

Each prospective investor in the Notes must determine the suitability of that investment in light of itsown circumstances. In particular, each potential investor should:

• have sufficient knowledge and experience to make a meaningful evaluation of the Notes, themerits and risks of investing in the Notes and the information contained in this Offering Circular;

• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of itsparticular financial situation, an investment in the Notes and the impact such investment willhave on its overall investment portfolio;

• have sufficient financial resources and liquidity to bear all of the risks of an investment in theNotes, including where the currency for principal or interest payments is different from thepotential investor’s currency;

• understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevantindices and financial markets; and

• be able to evaluate (either alone or with the help of a financial adviser) possible scenarios foreconomic, interest rate and other factors that may affect its investment and its ability to bear theapplicable risks.

We will follow the applicable corporate disclosure standards for debt securities listed on theSGX-ST, which standards may be different from those applicable to debt securities listed in certainother countries.

In addition to our reporting obligations under the Trust Deed, we will be subject to reportingobligations in respect of the Notes to be listed on the SGX-ST. The disclosure standards imposed bythe SGX-ST may be different from those imposed by securities exchanges in other countries or regionssuch as the United States and the Republic of India. As a result, the level of information that isavailable may not correspond to what you are accustomed to.

An investment in the Notes may expose you to foreign exchange risks.

The Notes will be denominated in U.S. dollars. If you measure your investment returns by referenceto a currency other than U.S. dollars, an investment in the Notes will involve foreign exchange-relatedrisks due to, among other facts, possible significant changes in the value of the Notes relative to thecurrency reference to which you measure the return on your investments due to economic, politicaland other facts over which the Issuer has no control. A decrease in the value of the Notes relative toother currencies could thereby result in an effective translated yield on the Notes that is below theirstated coupon rate.

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The ratings of the Notes may be lowered, suspended or withdrawn depending on some factors,including the rating agency’s assessment of our financial strength and Indian sovereign risk.

The Notes have been provisionally rated “Ba3” by Moody’s and “BB-” by Fitch. The ratings assignedto the Notes may be lowered, suspended or withdrawn entirely in the future. The ratings of the Notesaddress the likelihood of payment of principal on the relevant maturity dates of the Notes. The ratingsalso address the timely payment of interest on each payment date. A rating of the Notes is not arecommendation to purchase, hold or sell the Notes, and the rating will not comment on market priceor suitability for a particular investor. We cannot assure you that the ratings of the Notes will remainfor any given period of time or that the ratings will not be lowered, suspended or withdrawn. Adowngrade in the rating of the Notes will not be an event of default under the terms and conditionsof the Notes. The assigned ratings may be raised or lowered depending, among other factors, on therating agency’s assessment of our financial strength as well as its assessment of Indian sovereign riskgenerally. In addition, any ratings downgrade may adversely affect our ability to access the debtcapital markets.

The failure of the Issuer to properly create, perfect and register the security interests in theCollateral securing the Notes could result in an event of default under the Notes, and could impairthe ability of the holders of the Notes to seek repayment.

Under the terms of the Trust Deed, the Issuer will be obligated to create, perfect and register thesecurity interests in the Collateral securing the Notes within specified time periods following theclosing date. See “Description of Collateral”. If the Issuer fails to do so, an event of default may occurunder the Trust Deed, which could give the Trustee and the holders of the Notes the right to declarethe Notes immediately due and payable. In such circumstances, there can be no assurance that theIssuer would have sufficient resources to repay the Notes, in full or at all. Moreover, any claim of theholders of the Notes in a bankruptcy or similar proceeding would be unsecured to the extent that theIssuer has failed to create, perfect and register the security interests in the Collateral securing theNotes, which could limit any recovery holders of the Notes receive in any such proceeding.

Holders of Notes may not have control over decisions regarding the Collateral.

In accordance with the terms and conditions of the Notes, the Company is required to create, perfectand register security over the Collateral within specified time periods after the closing date, whichmay not be completed in such time periods or at all. Further, such security will be created in favourof the Collateral Agents. See “Description of Collateral”. The ability of the holders of the Notes toenforce such security may be adversely affected if the Collateral is not created, perfected andregistered in the specified time periods. In order to create such security, the Trustee (acting for theholders of the Notes) will be required to accede to the following documents:

(i) the master security trustee agreement, dated March 4, 2011, executed between our Company,RTL, Reliance Infratel and RCIL, the existing creditors and Axis Trustee Services Limited forcreation of a first pari passu charge on the movable plant and machinery, both present and future,and all the rights, benefits and claims in respect of all insurance contracts relating thereto of theCompany, RTL, Reliance Infratel, and RCIL;

(ii) the share pledge master security trustee agreement, dated February 21, 2013, executed betweenour Company, the existing creditors and Axis Trustee Services Limited for creation of a pledgeover the aggregate shareholding of our Company in RCIL, and the aggregate shareholding of ourCompany and RIIL in RTL; and

(iii) the lenders’ agent agreement, dated April 27, 2011, executed between our Company, the existingcreditors of our Company and IDBI Bank Limited.

Since the security over the Collateral will be shared pari passu with other existing lenders of ourCompany, Axis Trustee Services Limited and IDBI Bank Limited (acting as the Collateral Agent forthe Trustee (acting for the holders of the Notes)) will not act solely at the direction of the Trustee. Themaster security trustee agreement and the share pledge master security trustee agreement provide fora period of 60 days (from the date a lender decides to enforce the security) for the lenders to decidethe enforcement action, and the Trustee may have to wait for a period of 60 days before it can initiate

51

action for enforcement of Collateral. Similarly, under the Lenders’ Agent Agreement, all the lendershave to agree on the enforcement action to be taken under the tripartite agreements, before it can beconveyed to the DoT. The holders of the Notes may therefore not be able to control or influencedecisions regarding enforcement of the Collateral.

The interests of the Collateral Agent and the other creditors may not coincide with the interests of theholders of the Notes and, among other things, the Collateral Agent may take actions that protect andpreserve the interest of other creditors ahead of or at the expense of the holders of the Notes.

The tripartite agreements can only be executed by our Company and the Collateral Agent only afterthe receipt of approval from the DoT, which could take a significant amount of time to be obtainedor may not be obtained at all. Our Company will apply for the approval of DoT for execution of thesetripartite agreements only after the issue of Notes. The execution of the tripartite agreements andrights of the Lenders’ Agent under the tripartite agreements will depend on the terms and conditionsof the approval of the DoT and applicable law and regulations at the time of execution of suchagreements. Our Company and the Lenders’ Agent may not be able to execute the tripartite agreementand security over the Licences may not be created in the form and manner as described in this OfferingCircular if there is any change in policy by DoT in relation to creation of security over the Licences.Further, the Collateral Agent’s ability to enforce security upon the instructions of the Trustee will belimited by the need to meet certain requirements, such as obtaining consent of other creditors and/orthe DoT, as the case may be. We cannot assure you that any such required consents can be obtainedon a timely basis or at all. Non-receipt of or delay in receipt of these consents will adversely affectthe interest of the holders of the Notes.

For a more detailed description of the process of creation and enforcement of security over theCollateral and the meanings assigned to the capitalised terms used in this section, see “Description ofCollateral”.

There may not be sufficient Collateral to pay all or any portion of the Notes.

The Collateral provided to secure the Notes is and will be shared with existing and other futurecreditors of our Company on a pari passu basis. No appraisals of any Collateral have been preparedon behalf of the holders of the Notes in connection with this Offering. The value of the Collateral atany time will depend on market and other economic conditions, including the availability of suitablebuyers for the Collateral. By its nature, the Collateral may be illiquid and may have no readilyascertainable market value. Likewise, we cannot assure you that the Collateral will be saleable or, ifsaleable, that there will not be substantial delays in its liquidation.

In the event of a foreclosure, liquidation, bankruptcy or a similar proceeding, we cannot assure youthat the proceeds from any sale or liquidation of the Collateral will be sufficient to pay our obligationsunder the Notes, in full or at all, after first satisfying our obligations in full under claims that may havelegal priority over the holders of the Notes. If the proceeds of any sale of the Collateral are notsufficient to repay all amounts due on the Notes, the holders of the Notes (to the extent not repaid fromthe proceeds of the sale of the Collateral) would have only an unsecured claim against our remainingassets and, in the context of a bankruptcy case by or against us, the holders of the Notes may not beentitled to receive interest payments or reasonable fees, costs or charges due under the Notes, and maybe required to repay any such amounts already received by such holder.

The rights of holders of the Notes to receive payments under the Notes is junior to any tax liabilitiesof the Company that are preferred by law.

The Notes will rank subordinated to certain liabilities preferred by law, such as claims of theGovernment on account of taxes, and certain liabilities incurred in the ordinary course of theCompany’s business. In particular, in the event of bankruptcy, liquidation or winding-up, theCompany’s assets will be available to pay obligations on the Notes only after all of the tax liabilitiesand other liabilities which rank senior to the Notes have been paid. In the event of bankruptcy,liquidation or winding-up, there may not be sufficient assets remaining, after paying amounts relatingto these proceedings, to pay amounts due on the Notes.

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Further, under section 281 of the IT Act, a charge or pledge created by a person over certain types ofassets (including plant, machinery and shares) shall be void as against any claim in respect of any taxor other sum payable by such person under any proceedings or claims under the IT Act which werepending at the time of creation of the charge, unless the permission of the relevant tax authorities isobtained prior to the creation of the charge. The security over the Collateral will be shared on a paripassu basis with the holders of long-term Indebtedness (as defined under “Terms and Conditions ofthe Notes”) of the Issuer and the Pledgor Group (as defined under “Terms and Conditions of theNotes”) existing on the Issue Date and certain additional long-term Indebtedness that may be incurredin the future in compliance with the Trust Deed. However, though the Company will apply forpermission under section 281 of the IT Act prior to execution of the Collateral Documents, suchpermission of relevant tax authorities has not been and may not be received under section 281 of theIT Act prior to the execution of the collateral documents in connection with the Notes, and the chargeso created shall be void as against any claim in respect of any tax or other sum payable as a result ofthe completion of any proceedings which are either pending under the IT Act at the time of executionof the collateral documents or which have been completed but no notice has been served in respectof such proceedings under the IT Act.

Early redemption of the Notes prior to their stated average maturity may require the prior approvalof the RBI/AD Bank in accordance with the ECB Guidelines.

An early redemption of the Notes (whether due to certain tax events described in Condition 5(c)(Redemption for tax reasons), a redemption upon a change of control described in Condition 5(d)(Purchase at the option of the Noteholders upon a Change of Control), an Event of Default asspecified in Condition 8 (Events of default) or otherwise) will be subject to limitations on the abilityof the Company to redeem the Notes prior to their Maturity Date, including obtaining the prior writtenapproval of the RBI/AD Bank, and compliance with any conditions that the RBI/AD Bank may imposein accordance with ECB Guidelines at the time of such written approval. There can be no assurancethat the RBI/AD Bank will provide such written approval in a timely manner or at all.

Remittance of funds outside India pursuant to indemnification by the Company in relation to theNotes requires prior RBI approval.

Remittance of funds outside India by the Company pursuant to indemnity clauses under the Trust Deedor any other agreements in relation to the Notes requires prior RBI approval under the ForeignExchange Management Act, 1999. Any RBI approval, if and when required, for the remittance of fundsoutside India is at the discretion of the RBI and the Company can give no assurance that it will be ableto obtain such approval.

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USE OF PROCEEDS

The total proceeds of the Offer are expected to be US$300 million. The fees, commissions andexpenses for the Offering will be paid separately by the Company.

Subject to compliance with applicable laws and regulations, including without limitation the ECBGuidelines, we intend to use the net proceeds of the Offer for capital expenditure or any otherpermissible end-use as prescribed by the RBI.

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CAPITALISATION AND INDEBTEDNESS

As of the date of this Offering Circular, our Company’s authorised share capital is `25,000 millionconsisting of 5,000,000,000 Equity Shares of `5 each. As of December 31, 2014, our Company’sissued, subscribed and paid up capital is `12,012 million divided into 2,402,313,078 Equity Shares of`5 each. On January 20, 2015, pursuant to conversion of warrants held by our Promoters, our Companyissued 86,666,667 Equity Shares of `5 each.

The following table sets forth our capitalisation (including indebtedness) on a consolidated basis (i)as at June 30, 2014 on the basis of our financial statements and as adjusted; (ii) as at December 31,2014 on the basis of our financial statements; and (iii) to give effect to the Offer and the applicationof the net proceeds thereof. This table should be read in conjunction with the sections titled“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and“Financial Statements” included elsewhere in this Offering Circular.

As at June 30, 2014 As at December 31, 2014As adjusted

for the OfferActual Actual

(` billion)(US$

millions)1 (` billion)(US$

millions)1 (` billion)(US$

millions)1

Loan Funds

Secured Loans . . . . . . . . . . . . . 381.74 6,056.00 375.84 5,962.40 375.84 5,962.40

Notes Offered Hereby2 . . . . . . . . — — — — 18.91 300.00

Unsecured Loans . . . . . . . . . . . . 38.31 607.76 14.62 231.93 14.62 231.93

Total Debt . . . . . . . . . . . . . . . . 420.05 6,663.76 390.46 6,194.33 409.37 6,494.33


Share Capital3 . . . . . . . . . . . . . 10.32 163.72 12.02 190.69 12.02 190.69

Reserves and Surplus . . . . . . . . . 314.54 4,989.93 358.34 5,684.78 358.34 5,684.78

Money received against ShareWarrants . . . . . . . . . . . . . . . — — 6.50 103.12 6.50 103.12

Total Shareholders’ Funds . . . . . . 324.86 5,153.65 376.86 5,978.59 376.86 5,978.59

Total Capitalization . . . . . . . . . 744.91 11,817.41 767.32 12,172.92 786.23 12,472.92

1. Exchange rate used for conversion is 1 USD = Rs 63.035 as provided by the FEDAI, as at December 31, 2014.

2. Notes offered hereby of US$300 million shall be used for capital expenditure and other end-use as permitted by the RBI.

3. Our Company has instituted ESOS Scheme, ESOP 2008 and ESOP 2009. As at the date of this Offering Circular, there

are an aggregate of 1,337,632 options outstanding and all options are vested but yet not exercised.

4. Please refer Note no. 2 of “Notes to Unaudited Results (Consolidated) for the nine months ended December 31, 2014”

on page 21.

Note: The paid-up share capital, securities premium account and surplus in statement of profit and loss account include `106

million, `3,800 million and `40 million respectively, on account of Equity Shares held by RCOM ESOS Trust and has

not been adjusted to Share Capital and Reserves and Surplus, for the purpose of the above Capitalisation and

Indebtedness statement.

55

CORPORATE STRUCTURE

The following chart sets forth a simplified corporate structure of our Company and certain of our keysubsidiaries as well as our direct or indirect shareholding in such subsidiaries. In addition, the chartindicates the Issuer and security providers to the Notes as well as the Restricted Subsidiaries that,along with the Issuer, will be bound by the Conditions of the Notes.

100%

100%(c)

79.71%

10.74%

100%

21.20%(c)

100%

100%

100%

100%

100%

100% 78.80%(c)

Reliance Communications Limited(a)(b)

Reliance IDC Limited

Reliance BIG TV Limited

Reliance Webstore Limited

Reliance Infratel

Limited(a)

Reliance Globalcom B.V., The Netherlands

Global Cloud XChange Limited,

Bermuda

GCX Limited, Bermuda

Reliance Communications Inc.

USA

Issuer group security providers

Overseas Subsidiaries

Restricted Subsidiaries

(a) Charge over movables*

(b) Assignment of 20 UASL and the NLD and ILD license

(c) Pledge of entire shareholding

Reliance Communications

Infrastructure

Limited(a)

Reliance Infocomm Infrastructure

Limited

Reliance Telecom

Limited(a)

* Moveables consists of: plant and machinery, both present and future, and all the rights, benefits and claims in respect

of all insurance contracts relating thereto of the Issuer, RTL, Reliance Infratel and RCIL.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with our audited consolidated financialstatements as at and for the financial years ended March 31, 2012, 2013 and 2014 and the relatednotes, included elsewhere in this Offering Circular (the “audited Financial Statements”). OurFinancial Statements are prepared in accordance with Indian GAAP, which differ in certain materialrespects from IFRS and U.S. GAAP. Our financial year ends on March 31 of each year. Accordingly,all references to a particular financial year are to the 12-month period ended March 31 of that year.This discussion contains forward-looking statements that involve risks and uncertainties and reflectsour current view with respect to future events and financial performance. See “Risk Factors” and“Forward Looking Statements”.

Overview





Our Global Operations comprise the provision of voice, data and Internet network and services, andthe lease of submarine cable infrastructure and metropolitan city networks. We have approximately650 enterprise customers throughout developed markets such as the United States, the UnitedKingdom, the Netherlands and Singapore. We own and operate a widespread submarine fibre opticcable network spanning 68,698 RKm and connecting North America, Europe, the Middle East and

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Asia through 46 landing points in 27 countries. The total installed capacity of our five subsea cablesystems is over 21 Tbps. We also have owned and leased metropolitan networks in 27 cities across 13countries. We are one of the leading managed Ethernet service providers in the United States and havean established position in the global enterprise data market.

Significant Factors Affecting Our Results of Operations and Financial Condition

Our results of operations and financial condition have been affected and will continue to be affectedby a number of significant factors, including the following:

Schemes of Amalgamation and Arrangements

Our Company, during the past years, has undertaken several schemes of amalgamation andarrangement under Sections 391 to 394 of the Companies Act, 1956, including the restructuring ofownership structure of our telecommunications business in order to align the interest of ourshareholders, which were approved by the High Courts of the respective jurisdictions. The accountingeffects of such schemes as at March 31, 2014 include:

(i) `80.47 billion was recorded in our securities premium account, which was earlier a part of thesecurities premium of erstwhile Reliance Infocomm Limited, the transferor company;

(ii) `123.45 billion was recorded as part of the general reserve, on fair valuation of assets andliabilities of our Company in accordance with the scheme of amalgamation of Reliance GatewayNet Limited into our Company (the “Reliance Gateway Scheme”);

(iii) pursuant to the Reliance Gateway Scheme, on account of the fair valuation during the financialyear 2009, additions or adjustments to the fixed assets of our Company included an increase infreehold land by `2.25 billion, buildings by `1.30 billion and telecommunications licences by`141.45 billion;

(iv) additional depreciation of `96.53 billion arising on fair value of the assets was adjusted from ourgeneral reserve and from provisions for business restructuring;

(v) `12.87 billion, being the balance was transferred to our reserve for business restructuring inaccordance with the scheme of arrangement for demerger of our passive infrastructure assets toReliance Infratel;

(vi) `0.07 billion being, goodwill arising on consolidation pursuant to the scheme of amalgamationbetween certain of our erstwhile subsidiaries was deducted from our general reserve;

(vii) additional depreciation of Subsidiaries of `17.56 billion consequent upon revaluation of assetscarried was adjusted to our general reserve;

(viii) `4.70 billion, being excess of liabilities over assets was adjusted from our general reservepursuant to demerger of BPO division to RCIL; and

(ix) pursuant to the demerger of telecommunications assets of Reliance Industries Limited, ourCompany computed goodwill of `26.59 billion arising on consolidation using the step-up methodbased on date of the original investment by Reliance Industries Limited prior to demerger insteadof considering the date of demerger as the date of investment in the absence of specific guidancein AS 21 “Consolidated Financial Statements” in a demerged scenario.

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Further, pursuant to the direction of the Bombay High Court and option exercised by the boards ofdirectors of the respective companies, in accordance with the schemes of arrangements approved bythe respective High Courts under different schemes of arrangement binding on our Company and threeof our Subsidiaries, namely, RCIL, Reliance Infratel and RTL, certain expenses or losses, wereidentified by the boards of directors of the respective companies as exceptional or otherwise subjectto the accounting treatment prescribed in the schemes of arrangement and were withdrawn fromgeneral reserves in the manner set out below:

Financial Year

2012 2013 2014

(` in billion)

(% of totalincome for

the financialyear) (` in billion)


the financialyear) (` in billion)


the financialyear)

Exceptional Items

Bad Debts and Subsidy written off . 11.07 5.4 — — — —

Equivalent amount withdrawn fromgeneral reserve . . . . . . . . . . . (11.07) 5.4 — — — —

Capital Work in Progress writtenoff . . . . . . . . . . . . . . . . . . — — 3.25 1.5 — —

Equivalent amount withdrawn fromgeneral reserve . . . . . . . . . . . — — (3.25) 1.5 — —

Depreciation on account of changein exchange rate . . . . . . . . . . — — 2.75 1.3 3.85 1.7

Equivalent amount withdrawn fromgeneral reserve . . . . . . . . . . . — — (2.75) 1.3 (3.85) 1.7

Foreign currency exchangefluctuation (Gain) / Loss (net) . . 15.73 7.7 8.41 3.9 5.95 2.7

Equivalent amount withdrawn fromgeneral reserve . . . . . . . . . . . (15.73) 7.7 (8.41) 3.9 (5.95) 2.7

Fuel Expenses . . . . . . . . . . . . . 0.7 0.3 0.62 0.3 — —

Equivalent amount withdrawn fromgeneral reserve . . . . . . . . . . . (0.7) 0.3 (0.62) 0.3 — —

Provision for Deferred Tax . . . . . . 6.51 3.2 3.54 1.6 — —

Equivalent amount withdrawn fromgeneral reserve . . . . . . . . . . . (6.51) 3.2 (3.54) 1.6 — —

Demand for our Products and Services

Our results of operations depend on the continued existence, success and growth of, and demand for,our various products and services.

For our India operations, we attract subscribers based on the strength of our network, our brandrecognition and our focus on subscribers and processes. We believe that the Indiantelecommunications market has one of the lowest tariffs in the world. However, as a result of recentchanges in the competitive landscape, we believe that tariffs may stabilise in the medium term. Overthe last few months, the increase in data volume and an increase in tariffs have improved our RPM.Our RPM for the quarters ended March 31, 2014, June 30, 2014, September 30, 2014 and December31, 2014 was `0.43, `0.44, `0.44 and `0.45, respectively. The increase in data volumes is due to anincrease in smartphone penetration as well as use of data services by subscribers. For our GlobalOperations, we depend on multinational enterprises. We continue to focus on high quality, scalable IPand value added services that have had high levels of customer acceptance in the past. As we expandour offerings in new markets, our success will depend on customer acceptance.

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Further, the telecommunications industry is characterised by technological changes, including anincrease in the pace of change of existing mobile systems, industry standards and ongoingimprovements in the capacity and quality of technology. As new technologies develop, our equipmentmay need to be replaced or upgraded, or our networks may need to be rebuilt in whole, or in part, inorder to sustain our competitive position. Our capital expenditure for the financial years 2012, 2013and 2014 was `58.48 billion, `39.21 billion and `33.42 billion, respectively.

Cost of Network Maintenance and Repair

The operation, administration, maintenance and repair of our systems require the coordination andintegration of sophisticated and highly specialised hardware and software technologies and equipmentand significant operating and capital expenses. Although we seek to use advanced technologies toensure our network’s reliability, such as self-healing networks and built-in redundancies, our networkremains subject to risks inherent in large-scale telecommunications systems employing advancedtechnologies including, among others, defects in design, equipment and network breakdowns andphysical damage to our network and equipment as a result of natural disasters and man-made factors,including damage caused by fishing nets or anchors. Due to these factors, our systems may notcontinue to function as expected in a cost-effective manner. Moreover, the actual usable lives of oursystems may differ from our estimates and as our network elements become obsolete or reach the endof their design life, our operating expenses could significantly increase depending on the nature andextent of the required repairs or replacements. For the financial years 2012, 2013 and 2014, weincurred expenses of `30.50 billion, `34.39 billion and `34.53 billion, respectively, for network repairand maintenance and other network operating expenses. With respect to our India operations, we haveoutsourced most of our network and infrastructure management, including operations andmaintenance, to third-party vendors for the various regions of India for a five-year term, beginningJanuary 25, 2013. These outsourcing agreements cover functions such as network management andmaintenance services, field operations, service delivery and compliance with benchmark keyperformance indicators and service level assurances.

Capital Requirements and Availability of Funding

Our business is capital intensive, as a substantial amount of capital is required to build, maintain andoperate our telecommunications and DTH networks. We also require a significant amount of capitalto develop, market and distribute our services and products, to develop and implement newtechnologies, to acquire and invest in new businesses and to acquire telecommunications licences andspectrum rights. We estimate that our capital expenditure requirement for the financial year 2015 willbe up to `20 billion, excluding payments for the spectrum, if any. We intend to incur this expenditurefor network expansion, including the expansion of our GSM, CDMA, 3G and high-speed datanetworks, expansion of our enterprise business including development of new IDCs, expansion of ourGlobal Operations and upgrading our information technology systems. Our earliest licences due forrenewal in the financial year 2016 relate to the Category ‘C’ Circles of Assam, Bihar, HimachalPradesh, North East, Odisha and the Category ‘B’ Circles of Madhya Pradesh and West Bengal.

The actual amount and timing of our future capital requirements are also dependent on the scheduleand estimated costs of establishing, expanding or upgrading our networks, acquisition of licences andrights and engineering, design and technological changes. To the extent that our capital requirementsexceed available resources, we will be required to seek additional debt or equity financing. Additionaldebt financing could increase our interest expense and may require us to comply with additionalrestrictive covenants under our financing agreements. As at March 31, 2012, 2013 and 2014, our totaloutstanding borrowing was `383.03 billion, `415.47 billion and `419.78 billion, respectively. For thefinancial years 2012, 2013 and 2014, our finance costs accounted for 8.0%, 11.5% and 13.5% of ourtotal income, respectively.

Our ability to obtain additional financing will depend on a number of factors, including our futurefinancial condition, results of operations and cash flows, general market conditions fortelecommunications companies and economic, political and other conditions in the markets where weoperate. Our ability to finance our capital needs, and secure other financing when needed, onacceptable terms, is a key factor in the operation of our business.

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Government Regulations

The telecommunications industry is highly regulated and the regulatory environment has been subjectto frequent changes in India in the recent past and it varies substantially in each country in which weoperate. If we fail to comply with any of the regulatory requirements applicable to us, we may not beable to conduct our business. We operate in several countries and we may be required to obtain landinglicences, operator licences and other permits to run our operations in each jurisdiction. Obtaining andmaintaining telecommunications licences involve substantial financial costs and our inability toobtain, maintain or renew certain licences may substantially affect our business and results ofoperations. Currently, we have spectrum in the 800 MHz, 900 MHz, 1800 MHz and 2100 MHz bandsand we are required to pay licence and spectrum charges in accordance with the terms of grant of suchlicences and spectrum. For the financial years 2012, 2013 and 2014, the licence fees (which includespectrum charges) paid by us were `11.32 billion, or 5.6% of our total income, `11.15 billion, or 5.1%of our total income, and `12.03 billion, or 5.4% of our total income, respectively. Also, see “Overviewof the Regulatory Regime in India” and “Legal Proceedings” for details.

Effects of Fluctuations in Foreign Currency Exchange Rates

Our Financial Statements are presented in Rupees, which is our functional and reporting currency. Wehave several Subsidiaries that operate in countries other than India and which use reporting currenciesother than Rupees. In the case of such foreign Subsidiaries, revenue and expenditure items aretranslated at the average exchange rate prevailing during the relevant financial period and themonetary assets and liabilities are translated at the exchange rate prevailing at the end of such year.Non-monetary assets and liabilities are translated at the exchange rate prevailing on the date of thetransaction or closing rate, as applicable. Any exchange difference arising on consolidation of integralforeign operations and non-integral foreign operations is recognised in our statement of profit and lossand exchange fluctuation reserve, respectively.

We face exchange rate risk because certain of our obligations and certain receivables pertaining tointernational roaming and ILD charges are denominated in foreign currencies, certain debt repaymentobligations and equipment supply contracts are in US$. For our Global Operations, we typically billour customers in their local currencies and as a result fluctuation in the exchange rates of suchcurrencies against the US$ (and, in turn, against the Rupees) will affect our revenues. However, as wealso incur some costs in local currencies, the effect to our revenues as a result of foreign exchangerate fluctuations is partially offset by countervailing changes in our cost of sales and other costs.

While we enter into certain hedging transactions with respect to our foreign currency exchange riskexposure, see “— Exchange Rate Risk” for our unhedged foreign currency exposure as at March 31,2014.

Our Significant Accounting Policies

The principles of consolidation and the critical accounting policies followed by us in the preparationof our Financial Statements are set out below. Except as set out under financial year 2013 comparedto financial year 2012 — Depreciation, Impairment and Amortisation, we have not changed any of ouraccounting policies during the last three financial years.

Basis of Preparation of Financial Statements

Our Financial Statements are prepared under historical cost convention or under fair valuationmechanism provided under schemes of arrangement approved by the respective High Courts, inaccordance with the generally accepted accounting principles in India and the provisions of theCompanies Act, 2013 (to the extent notified) and the provisions of the Companies Act, 1956 (to theextent applicable) read with the Companies Accounting Standard Rules as well as any applicablepronouncements of the ICAI.

All assets and liabilities have been classified as current or non-current in accordance with our normaloperating cycle and other criteria set out in Schedule VI to the Companies Act, 1956. Based on thenature of the services and their realisation in cash and cash equivalents, we have ascertained ouroperating cycle as twelve months for the purpose of current or non-current classification of assets andliabilities.

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Principles of Consolidation

Our Financial Statements relate to our Company and all of its Subsidiaries, the companies controlledby us, that is, the companies over which our Company exercises control or joint control overownership and voting power, and its associates and joint venture. Our Financial Statements have beenprepared as set out below:

• The financial statements of our Company and its Subsidiaries are consolidated on a line-by-linebasis, by adding together the book values of like items of assets, liabilities, incomes andexpenses after fully eliminating intra-group balances and intra-group transactions resulting inunrealised profits or losses in accordance with the AS 21 — Consolidated Financial Statementsas referred to in the Companies Accounting Standards Rules, 2006 (Accounting Standard Rules).

• For the foreign Subsidiaries and companies controlled by our Company, revenue and expenditureitems are consolidated at the average exchange rate prevailing during the financial year. Allmonetary assets and liabilities are converted at the exchange rate prevailing at the end of thefinancial year. Non-monetary assets and liabilities are recorded at the exchange rate prevailingon the date of the transaction or closing rate, as applicable. Any exchange difference arising onconsolidation of integral foreign operation and non-integral foreign operation is recognised inour statement of profit and loss and exchange fluctuation reserve, respectively.

• Investments in Subsidiaries are eliminated and differences between the cost of investment overthe net assets on the date of investment or on the date of the financial statements immediatelypreceding the date of investment in Subsidiaries are recognised as goodwill or capital reserve,as the case may be.

• The difference between the proceeds from disposal of investment in a subsidiary or in a companycontrolled by our Company and the proportionate carrying amount of its assets decreased by theliabilities as at the date of disposal, is recognised in our statement of profit and loss as profit orloss on disposal of investment in Subsidiaries.

• Minority interest’s share of net profit or loss of consolidated Subsidiaries for the financial yearis identified and adjusted against our income in order to arrive at the net income attributable tothe equity shareholders of our Company.

• Minority interest’s share of net assets of consolidated Subsidiaries is identified and presented inour consolidated balance sheet as a separate item from liabilities and the shareholders’ equity.

• For associates, where our Company directly or indirectly through Subsidiaries holds 20% ormore of the equity shares, investments in associates are recorded using equity method inaccordance with “AS 23 — Accounting for Investments in Associates in Consolidated FinancialStatements”. Our Company accounts for its share in the change in the net assets of the associates,post acquisition, after eliminating unrealised profits and losses resulting from transactionsbetween our Company and its associates to the extent of its share, through its statement of profitand loss, to the extent such change is attributable to the associates’ statement of profit and loss,based on available information.

• Interest in a jointly controlled entity is reported using proportionate consolidation in accordancewith the “AS 27 — Financial Reporting of Interests in Joint Ventures”.

• As far as possible, our Financial Statements are prepared using uniform accounting policies forlike transactions and other events in similar circumstances and are presented in the same manneras the unconsolidated financial statements of our Company.

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Use of Estimates

The preparation and presentation of our Financial Statements requires estimates and assumptions tobe made that affect the reported amount of assets and liabilities and disclosure of contingent liabilitieson the date of the Financial Statements and the reported amount of revenues and expenses during thereporting period. The difference between the actual results and estimates is recognised in the periodin which the results are known or materialised.

Fixed Assets

Fixed assets are divided into tangible assets and intangible assets.

• Fixed assets are stated at cost or fair value less of Modvat, Cenvat or VAT, as the case may be,and include the amount added on revaluation less accumulated depreciation, amortisation andimpairment loss, if any.

• For the accounting period after April 1, 2011, the cost of depreciable capital assets includesforeign exchange differences arising on translation of long-term foreign currency monetary itemsas at the balance sheet date, in so far as they relate to the acquisitions of such assets.

• All costs including financing cost of qualifying assets till commencement of commercialoperations, net charges of foreign exchange contracts and adjustments arising up to March 31,2007 from exchange rate variations relating to borrowings attributable to fixed assets arecapitalised.

• Expenses incurred relating to project, prior to commencement of commercial operation, areconsidered as project development expenditure and shown under capital work-in-progress.

• Telecommunications licences are stated at fair value or at cost as applicable, less accumulatedamortisation.

• Indefeasible rights of connectivity are stated at cost less accumulated amortisation.

Lease

Operating leases are expensed on a straight line basis with reference to the term of lease, except forlease rentals concerning the period up to the date of commencement of commercial operations, whichare capitalised.

Where the lessor effectively retains substantially all risk and benefits of ownership of the leasedassets, they are classified as operating lease. Operating lease payments are recognised as an expensein the statement of profit and loss.

In respect of finance leases on or after April 1, 2001, the lower of the fair value of the assets andpresent value of the minimum lease rentals is capitalised as fixed assets with corresponding amountsshown as liabilities for the leased assets. The principal component in lease rental is adjusted againstliabilities for the leased assets and the interest component is recognised as an expense in the financialyear in which it is incurred, except in the case of assets used for capital projects, where it iscapitalised.

Depreciation and Amortisation

Depreciation on fixed assets is provided on a straight-line method as prescribed under the CompaniesAct, 1956, except in the case of the following assets which are depreciated over their useful life asset out below:

• telecommunications electronic equipment — 18 years;

• telecommunications towers — 35 years;

• furniture, fixtures and office equipment — five years or ten years;

• customer premises equipment — three years;

• vehicles — five years;

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• leasehold improvements — shorter of the remaining lease term or useful life; and

• cable systems — shorter of 15 years or remaining useful life.

The useful life of our submarine cable network and terrestrial network is estimated at 25 years and15 years, respectively.

Intangible assets, namely telecommunications licences and brand licences are amortised over theperiod of the licences. IRC and software are amortised from the date of the acquisition orcommencement of commercial services, whichever is later. The life of amortisation of intangibleassets is set out below:

• telecommunications licences — 12.5 to 20 years;

• brand licence — 10 years;

• DTH licence — 10 years;

• indefeasible right of connectivity — from the year of purchase, 15 or 20 years;

• software — five years;

• trade names and trademarks — five years to 10 years;

• intellectual property — seven years; and

• building access rights — five years.

Depreciation on foreign exchange differences, including depreciation that is attributable to interestcapitalised pursuant to paragraph 46A of “AS 11 — The Effects of Changes in Foreign ExchangeRate”, is provided over the balance of the useful life of the depreciable capital assets.

Depreciation on additions is calculated pro rata from the month following the addition.

Asset Retirement Obligation

Asset retirement obligations relate to the removal of cable systems and equipment when they areretired from active use. Provision is based on the best estimate of the management of the eventualcosts (net of recovery) that relates to such obligations and is adjusted to the cost of such assets.

Impairment of Assets

An asset is treated as impaired when the carrying cost of an asset exceeds its recoverable value. Animpairment loss is charged to the statement of profit and loss in the year in which an asset is identifiedas impaired. The impairment loss recognised in the prior accounting period is increased or reversedwhere there is a change in the estimate of recoverable value. The recoverable value is the higher ofnet selling price and value in use.

Investments

Current investments are carried at the lower of cost and market value computed investment-wise.Long-term investments are stated at cost. Provision for diminution in the value of long-terminvestments is only made if such a decline is other than temporary, in our opinion.

Inventories of Stores, Spares and Communication Devices

Inventories of stores, spares and communication devices are accounted for at costs, determined onweighted average basis or net realisable value, whichever is less, except in the case of certainSubsidiaries, where cost is determined on a first-in, first-out basis.

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Employee Benefits

All employee benefits payable wholly within 12 months of rendering the service are classified asshort-term employee benefits. These benefits include compensated absences, such as paid annual leaveand sickness leave. The undiscounted amount of short-term employee benefits expected to be paid inexchange for the services rendered by employees is recognised as an expense during such period.

Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets arecapitalised as part of the cost of such assets up to the commencement of commercial operations. Aqualifying asset is one that takes a substantial period of time to prepare for its intended use. Otherborrowing costs are recognised as an expense in the year in which they are incurred.

Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at thetime of the transaction. Monetary items denominated in foreign currencies at the end of a financialyear are restated at year-end rates. For monetary items that are covered by forward exchange contracts,the difference between the financial year-end rate and the rate on the date of the contract is recognisedas exchange difference and the premium paid on forward contracts is recognised over the life of thecontract.

Non-monetary foreign currency items are carried at cost. Any income or expense on account ofexchange difference in the case of monetary items other than as mentioned above, either on settlementor on translation, is recognised in the statement of profit and loss. Any loss arising out of marking aclass of derivative contracts to market price is recognised in the statement of profit and loss. Income,if any, arising out of marking a class of derivative contracts to market price is not recognised in thestatement of profit and loss.

All long-term foreign currency monetary items consisting of loans, which relate to the acquisition ofdepreciable capital assets, have been restated at the rate prevailing on the balance sheet date. Theexchange difference, including that attributable to interest arising as a result, has been added to ordeducted from the cost of the assets in accordance with the notification issued by the Ministry ofCorporate Affairs and depreciated over the balance life of the capital asset. Exchange difference onother long-term foreign currency loans is accumulated in the “Foreign Currency Monetary ItemTranslation Difference Account” which will be amortised over the balance period of monetary assetsor liabilities.

Revenue Recognition

Revenue is recognised as and when the services are provided on the basis of actual usage of ournetwork. Revenue on upfront charges for services with lifetime validity and fixed validity periods ofone year or more are recognised over the estimated useful life of subscribers and the specified fixedvalidity period. The useful life is estimated based on the estimated churn of subscribers.

We sell ROUs that provide customers with network capacity, typically over a 10 year to 15 yearperiod, without transferring the legal title or giving an option to purchase the network capacity.Capacity services revenues are accounted as operating lease and recognised in our profit and lossstatement over the life of the contract. Bills raised on customers or payments received from customersfor long-term contracts and for which revenue is not recognised are included in deferred revenue.Revenue on non cancellable ROUs is recognised upfront as licensing income on activation of services.

Standby maintenance charges are invoiced separately from capacity sales. Revenues relating tostandby maintenance are recognised over the period in which the service is provided. Any amountsbilled prior to the provision of service are included in deferred revenue.

Network services include capacity lease services, IP transit, IPLC, back-up service for other networkoperators and all other services. The customer typically pays the charges for the network servicesperiodically over the life of the contract, which may be up to three years. Network revenue isrecognised in our statement of profit and loss over the term of the contract.

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Sales of handsets and accessories are recognised when goods are supplied and are recorded net of tradediscounts, rebates, commissions to distributors and dealers and sales taxes. It does not includeinter-company transfers.

Interest income on investments is recognised on a time proportion basis. Dividend is considered whenright to receive is established. We recognise income from the dividend from units in the fixed incomeschemes of Mutual Funds where income accrued is held, till the declaration or payment thereof, forthe benefit of the unit holders.

With respect to our telecommunications towers, revenue is recognised net of taxes when the BaseTransceiver Station (“BTS”) tower is ready for the installation of customer equipment and inaccordance with the terms of the agreements.

Activation fees in respect of DTH services are recognised on an upfront basis at the time of activationof services in the customer premises. Subscription revenue of initial customers is recognised upfrontas and when it is realised and the monthly subscription is recognised on accrual basis, net of servicetax, entertainment tax and trade discount.

Taxes on Income and Deferred Tax

Provision for income tax is made on the basis of taxable income for the financial year at current rates.Our tax expense comprises current tax and deferred tax at the applicable enacted or substantivelyenacted rates. Current tax represents the amount of income tax payable or recoverable in respect ofthe taxable income or loss for the reporting period. Deferred tax represents the effect of timingdifference between taxable income and accounting income for the reporting period that originate inone period and are capable of reversal in one or more subsequent periods. Deferred tax asset isrecognised and carried forward only to the extent that there is a reasonable certainty that the asset willbe realised in future. However, where there is unabsorbed depreciation or carried forward loss undertaxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation ofassets. MAT credit is recognised as an asset only if there is convincing evidence that we will paynormal income tax during the specified period.

Government Grants

Subsidies granted by the Government for providing telecommunications services in rural areas arerecognised as other operating income in accordance with the relevant terms and conditions of suchscheme and agreement.

Provisions and Contingent Liabilities and Contingent Assets

Provisions involving a substantial degree of estimation in measurement are recognised when there isa present obligation as a result of past events and it is likely that there will be an outflow of resources.A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. When there is a possibleobligation or a present obligation where likelihood of outflow of resources is remote, no provision ordisclosure is made. Contingent assets are neither recognised nor disclosed in the Financial Statements.

Segment Information

During the financial year 2014, we reorganised our internal financial reporting, performanceevaluation and organisational structure by geographical locations of our operations based on where theservice rendering activities are based. Accordingly, we have identified geographic segments as ourprimary segments and have disclosed segment information as “India Operations” and “GlobalOperations”.

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Our segment-wise net revenue and results, before exceptional and non-recurring items, interest andtax, are presented below for the periods indicated and are also expressed as a percentage of totalincome (before inter-segment eliminations) for such periods:

Financial Year

2012 2013 2014

Net Revenue*

Result beforeExceptional andNon-recurringItems, Interest

and Tax* Net Revenue*


and Tax* Net Revenue*


and Tax*

(` inbillion) (%)

(` inbillion) (%)

(` inbillion) (%)

(` inbillion) (%)

(` inbillion) (%)

(` inbillion) (%)

Primary Segments:

India Operations . . . . . . . 173.87 85.3 18.34 9.0 177.84 81.7 18.08 8.3 185.69 83.2 23.85 10.7

Global Operations. . . . . . . 42.07 20.6 6.79 3.3 49.28 22.6 9.56 4.4 46.21 20.7 3.65 1.6

Unallocable . . . . . . . . . . — — 5.50 2.5 5.50 2.5 4.41 2.0 4.41 2.0

Total . . . . . . . . . . . . . 215.94 25.13 232.62 33.14 236.31 31.91

Elimination** . . . . . . . . . (12.12) (5.9) — — (14.84) (6.8) — — (13.10) (5.9) — —

Total Income . . . . . . . . . 203.82 25.13 217.78 33.14 223.21 31.91

* Before considering inter-segment elimination.

** Represents inter-segment revenue.

Income and Expenditure

Our income and expenditure is reported in the following manner:

Total Income. Total revenue consists of revenue from operations and other income.

Revenue From Operations. Revenue from operations consists of sale of services, less service tax, andother operating income. Revenue from operations accounted for 96.5%, 94.4% and 95.1% of our totalincome for the financial years 2012, 2013 and 2014, respectively. Revenue from sale of servicecomprises prepaid and post-paid wireless services, interconnect usage charges, international andnational ICR charges, broadband and lease lines, capacity lease services, IP transit services, IPLCservices (private lines leased to customers), backup service for other network operators, IRUs ofsubmarine cables, Internet data centres, DTH services and passive infrastructure charges(telecommunications towers and OFC network).

Other Operating Income. Other operating income comprises refunds from the DoT, sale ofcommunication equipment and sale of telecommunications terminals and accessories.

Other Income. Other income comprises net gain on sale of investments, profit on disposal of fixedassets or capital work in progress, interest income, dividend income and miscellaneous income. Otherincome accounted for 3.5%, 5.6% and 4.9% of our total income for the financial years 2012, 2013 and2014, respectively.

Total Expenditure. Total expenditure consists of:

• access charges, licence fees and network expenses;

• employee benefit expenses;

• finance cost;

• depreciation, impairment and amortisation; and

• sales and general administration expenses.

Access Charges, Licence Fees and Network Expenses. This includes access charges, licence fees(which includes spectrum charges), rent, rates and taxes, network repairs and maintenance charges,

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stores and spares consumed, power, fuel and utilities charges, cost of service contents and applicationsand other network operating expenses. Access charges, licence fees and network expenses accountedfor 47.4%, 47.6% and 47.3% of our total income for the financial years 2012, 2013 and 2014,respectively.

Access charges include the pass-through and termination charges payable to other operators, includinglong-distance operators, for our subscribers accessing these operators’ networks. Licence fees consistof payments made to the DoT. Licence fees payable is calculated as a percentage of our Adjusted GrossRevenue, at a pre-determined rate prescribed by the DoT. In connection with the interpretation of thedefinition of adjusted gross revenue, there is currently a dispute between the mobiletelecommunications operators and the DoT. See “Legal Proceedings”. It also includes spectrum usagecharges, which relate to the payments made to the DoT for the use of allotted frequency of spectrumfor operating our mobile network. Cost of service contents and applications relate to content feespayable to content providers for our mobile and DTH businesses.

Our other network operating expenses include:

• access and bandwidth charges which are termination charges paid to other operators for ourGlobal Operations;

• transponder charges with respect to our DTH business and content cost;

• content and VAS charges;

• insurance, security and rent for tower sites and PoIs; and

• leased line charges.

Our network repairs and maintenance costs include:

• network electronics and equipment maintenance and support expenses relating to the annualmaintenance contracts for our electronic equipment;

• managed service costs relating to the cost of outsourcing end-to-end maintenance of the network,which includes active and passive infrastructure assets;

• landing stations and costs relating to our submarine cable systems;

• Terrestrial Cable, Inland Amplifier and Regenerator Sites expenses;

• connectivity charges — local access which relate to last mile connectivity obtained at differentlocations for our Global Operations; and

• other repairs and maintenance.

Employee Benefit Expenses. Employee benefit expenses consist of salaries, contributions to providentfund, gratuity and superannuation fund and employee welfare and other amenities. Employee benefitexpenses accounted for 6.3%, 5.5% and 4.6% of our total income for the financial years 2012, 2013and 2014, respectively.

Finance Cost. Finance cost consists of interest payments made in relation to our borrowings and otherrelated expenses. Finance cost accounted for 8.0%, 11.5% and 13.5% of our total income for thefinancial years 2012, 2013 and 2014, respectively.

Sales and General Administration Expenses. Selling expenses include commissions, sales andmarketing expenses, advertisement expenses, customer acquisition and customer care expenses andcost of sale of telecommunications terminals and accessories, which relate primarily to:

• cost of SIMs and recharge vouchers;

• commission and discount to dealers and distributors, including payments of commission topost-paid and pre-paid distribution channel intermediaries for every new subscription and costsassociated with pre-paid packs purchased by existing subscribers;

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• subscriber verification expenses incurred for verifying subscriber details on application for ourservices;

• collection and telemarketing expenses incurred in respect of collection of bills, including costsassociated with sending reminders and the charges of external collection and recovery agencies;

• subscriber retention and loyalty expenses incurred for the purposes of churn management andexpenses incurred in respect of subscriber loyalty programmes;

• advertising and business promotion expenses relating to brand and product advertising, corporatecampaigns and business promotions expenses;

• cost of handsets, data cards and related accessories sold by us; and

• provision for doubtful debts, loans and advances.

General administration expenses consist primarily of expenses incurred on repairs and maintenance ofnon-network equipment and buildings, rates and taxes, non-network rentals, insurance fornon-network equipment, travel expenses, professional charges and other general and administrativeexpenses.

Sales and general administration expenses accounted for 14.5%, 14.1% and 13.5% of our total incomefor the financial years 2012, 2013 and 2014, respectively.

Depreciation, Impairment and Amortisation. Depreciation, impairment and amortisation costs relate tothe depreciation of our tangible fixed assets and amortisation of intangible assets. Depreciation,impairment and amortisation accounted for 19.5%, 17.7% and 20.3% of our total income for thefinancial years 2012, 2013 and 2014, respectively.

Our Results of Operations

Financial Years 2012, 2013 and 2014

The following table sets out select financial data from our audited consolidated statements of profitand loss for the financial years 2012, 2013 and 2014, the components of which are also expressed asa percentage of total income for such periods:

Year Ended March 31,

2012 2013 2014

(` inbillion) (%)

(` inbillion) (%)

(` inbillion) (%)

IncomeRevenue from Operations . . . . . . . . . . . . . 196.77 96.5 205.61 94.4 212.38 95.1

Other Income . . . . . . . . . . . . . . . . . . . . 7.05 3.5 12.17 5.6 10.83 4.9

Total Income . . . . . . . . . . . . . . . . . . . . 203.82 100.0 217.78 100.0 223.21 100.0

ExpenditureAccess Charges, Licence Fees and Network

Expenses . . . . . . . . . . . . . . . . . . . . . 96.52 47.4 103.68 47.6 105.50 47.3

Employee Benefits Expenses . . . . . . . . . . . 12.83 6.3 11.89 5.5 10.25 4.6

Finance Cost . . . . . . . . . . . . . . . . . . . . 16.30 8.0 24.99 11.5 30.19 13.5

Depreciation, Impairment and Amortisationas adjusted by / transfer from . . . . . . . . 39.78 19.5 38.45 17.7 45.35 20.3

Sales and General Administration Expenses . . 29.57 14.5 30.62 14.1 30.20 13.5

Total Expenses . . . . . . . . . . . . . . . . . . . 195.00 95.7 209.63 96.3 221.49 99.2

Prior period Adjustments . . . . . . . . . . . . — — — — 0.56 0.3

Profit before Exceptional Items, Tax andAdjustment . . . . . . . . . . . . . . . . . . . 8.82 4.3 8.15 3.7 1.16 0.5

Provision for Tax. . . . . . . . . . . . . . . . . . (1.06) (0.5) 0.71 0.3 (10.21) (4.6)

Profit After Tax (before adjustment ofMinority Interest/Associates) . . . . . . . . 9.88 4.8 7.44 3.4 11.37 5.1

Profit After Tax (after adjustment ofMinority Interest/ Associates) . . . . . . . 9.28 4.6 6.72 3.1 10.47 4.7

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Financial Year 2014 Compared to Financial Year 2013

Total Income. Total income increased by 2.5% to `223.21 billion for the financial year 2014 from`217.78 billion for the financial year 2013, primarily due to an increase in revenue from ouroperations.

Revenue from Operations. Revenue from operations increased by 3.3% to `212.38 billion for thefinancial year 2014 from `205.61 billion for the financial year 2013 primarily due to an increase insale of services by 8.5% to `209.40 billion for the financial year 2014 from `192.94 billion for thefinancial year 2013. Our sale of services increased for the financial year 2014, primarily as a resultof an increase in income from our India operations by `17.54 billion which was partially offset by adecrease in revenue from our Global Operations by `1.08 billion. Our revenue from India operationsfor the financial year 2014 increased primarily as a result of an increase in tariffs, which led to higherrealisation per minute. Our RPM for the quarters ended June 30, 2013, September 30, 2013 andDecember 31, 2013 and March 31, 2014 was 0.42, 0.43, 0.44 and 0.43, respectively. Revenue from ourGlobal Operations for the financial year 2014 decreased primarily as a result of lower revenue on ourIRU contracts and due to decreases in IP transit prices.

In addition to the above, our other operating income decreased to `2.98 billion for the financial year2014 from `12.67 billion for the financial year 2013, primarily as a result of a decrease in revenuefrom sale of communication equipment and a one-time income relating to a pending claim from MTNLin respect of a dispute with MTNL pertaining to reconciliation of call detail records for home countrydirect calls for the financial year 2013.

Other Income. Other income decreased by 11.0% to `10.83 billion for the financial year 2014 from`12.17 billion for the financial year 2013, primarily due to a decrease in the net gain on sale ofinvestments and a decrease in interest income. In addition, during the financial year 2014, we wroteback provisions made for business restructing to the extent of `4.41 billion, as compared to `5.50billion in the financial year 2013, resulting in a reduction of `1.09 billion of provisions made forbusiness restructuring. Pursuant to the schemes of amalgamation and arrangement under Sections 391to 394 of the Companies Act, 1956 approved by the Bombay High Court through orders dated July 21,2006 and August 10, 2006 and by the Gujarat High Court through order dated July 18, 2006, out ofthe excess of fair value of assets over liabilities, `30 billion was credited to and held as Provision forBusiness Restructuring (“PBR”) to meet increased depreciation cost, expenses and losses including onaccount of impairment or write down of assets which would be suffered by our Company, pursuant tothe scheme or otherwise in course of business or in carrying out such restructuring of the ouroperations. We reassessed the requirement for maintaining such PBR and reversed such balance of`4.41 billion during the financial year 2014, as no longer required. This amount on reversal of PBRhas been reflected as part of our Other Income. Further, write back of liabilities no longer requiredincreased to `5.60 billion for the financial year 2014 from `4.17 billion for the financial year 2013.

Total Expenses. Total expenses increased by 5.7% to `221.49 billion for the financial year 2014 from`209.63 billion for the financial year 2013, primarily due to an increase in finance cost anddepreciation, impairment and amortisation cost.

Access Charges, Licence Fees and Network Expenses. Access charges, licence fees and networkexpenses increased by 1.8% to `105.50 billion for the financial year 2014 from `103.68 billion for thefinancial year 2013, primarily as a result of:

• an increase in access charges to `27.91 billion for the financial year 2014 from `26.76 billionfor the financial year 2013, primarily due to the introduction of SMS termination charges duringthe financial year 2014 and an increase in ICR expenses and interconnect charges;

• an increase in licence fees to `12.03 billion for the financial year 2014 from `11.15 billion forthe financial year 2013, primarily due to an increase in our telecommunications revenue and alsoan increase in NLD and ILD rates and the rationalisation of UASL rates for various Circles to8.0% from 6.0%; and

• an increase in power, fuel and utilities costs to `18.56 billion for the financial year 2014 from`16.97 billion for the financial year 2013, primarily as a result of an increase in tariffs.

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Employee Benefits Expenses. Employee benefits and expenses decreased by 13.8% to `10.25 billionfor the financial year 2014 from `11.89 billion for the financial year 2013, primarily as a result of adecrease in salaries to `8.75 billion for the financial year 2014 from `10.57 billion for the financialyear 2013 due to rationalisation of employee base carried out by us and outsourcing of networkoperation and management services during the financial year 2014.

Finance Cost. Finance cost increased by 20.8% to `30.19 billion for the financial year 2014 from`24.99 billion for the financial year 2013, primarily as a result of an increase in interest and othercharges on term loans to `15.40 billion for the financial year 2014 from `11.32 billion for the financialyear 2013, due to an increase in our rupee denominated borrowings, which had a higher average rateof interest as compared to our foreign currency borrowings. As at March 31, 2014, our totalborrowings aggregated to `419.78 billion with our rupee denominated and foreign currencydenominated borrowings constituted 35.6% and 64.4% of our total borrowings, as compared to`415.47 billion and 29.9% and 70.1%, respectively as at March 31, 2013.

Depreciation, Impairment and Amortisation. Depreciation, impairment and amortisation increased by11.4% to `59.39 billion for the financial year 2014 from `53.31 billion for the financial year 2013,primarily as a result of a one-time depreciation of our OFC network in order to recognise the revenuefrom the grant of IRU on an upfront basis, in accordance with our accounting policy based onmatching cost principle. In addition, for the financial year 2014, we also adjusted depreciationaggregating to `0.47 billion and `13.57 billion against the provision made for business restructuringand general reserve respectively, as compared to `0.99 billion and `13.87 billion, for the financialyear 2013, in accordance with various schemes of arrangements sanctioned by the Bombay HighCourt. See “Significant Factors Affecting our Results of Operations and Financial Condition —Schemes of Amalgamation and Arrangements”.

Sales and General Administration Expenses. Our sales and general administration expenses decreasedby 1.4% to `30.20 billion for the financial year 2014 from `30.62 billion for the financial year 2013,primarily as a result of a decrease in the cost of telecommunications terminals and accessories to `2.60billion for the financial year 2014 from `4.22 billion for the financial year 2013 primarily due to adecrease in purchases of such telecommunications terminals made by us; a decrease in the customeracquisition and customer care to `0.94 billion for the financial year 2014 from `1.49 billion for thefinancial year 2013 and a decrease in selling and marketing costs to `4.56 billion for the financial year2014 from `5.28 billion for the financial year 2013 primarily due to various cost optimisationmeasures such as controlling wastage in accessories and rationalisation of sales benefits andpromotional plans.

Exceptional Items. In accordance with various schemes of arrangement sanctioned by the BombayHigh Court, we identified and adjusted certain expenses and losses as exceptional against generalreserves created under such schemes of arrangements. Had such write-off of expenses, losses anddeferred tax not been met from our general reserve, the Financial Statements would have reflected aprofit after tax of `0.66 billion for the financial year 2014 as compared to a loss of `11.85 billion forthe financial year 2013 and the consequential effect of this on the consolidated profit after tax wouldhave been of `9.80 billion for the financial year 2014 as compared to `18.57 billion for the financialyear 2013. See “Significant Factors Affecting our Results of Operations and Financial Condition —Schemes of Amalgamation and Arrangements”.

Provision for Tax. We had a tax credit of `10.21 billion for the financial year 2014 consisting ofdeferred tax asset of `10.57 billion which was partially offset by provision for current tax of `0.46billion, as compared to provision for tax of `0.71 billion for the financial year 2013.

Profit After Tax. Our profit after tax increased by 55.8% to `10.47 billion for the financial year 2014from `6.72 billion for the financial year 2013.

Financial Year 2013 Compared to Financial Year 2012

Total Income. Total income increased by 6.8% to `217.78 billion for the financial year 2013 from`203.82 billion for the financial year 2012, primarily due to an increase in our revenue fromoperations.

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Revenue from Operations. Revenue from operations increased by 4.5% to `205.61 billion for thefinancial year 2013 from `196.77 billion for the financial year 2012, primarily as a result of anincrease in sale of services by 3.1% to `192.94 billion for the financial year 2013 from `187.16 billionfor the financial year 2012, due to an increase in revenues from our India operations by `0.92 billionand our Global Operations by `4.86 billion. Our revenue from India operations for the financial year2013 increased primarily as a result of increase in minutes of use to 424 billion for the financial year2013 from 406 billion for the financial year 2012. Our revenue from our Global Operations for thefinancial year 2013 increased by `4.86 billion primarily as a result of higher revenue on IRU for thefinancial year 2013 and higher IP transit price yield for the financial year 2013.

In addition to the above, our other operating income increased by 31.8% to `12.67 billion for thefinancial year 2013 from `9.61 billion for the financial year 2012, primarily as a result of a one-timeincome relating to a pending claim from MTNL in respect of a dispute with MTNL pertaining to homecountry direct calls during the financial year 2013.

Other Income. Other income increased by 72.6% to `12.17 billion for the financial year 2013 from`7.05 billion for the financial year 2012, primarily as a result of write back of provisions aggregatingto `5.50 billion made in respect of business restructuring no longer required and an increase in interestincome which related to interest received on refund due of `1.17 billion from the DoT, and partiallyoffset by a decrease in write back of liabilities.

Total Expenses. Total expenses increased by 7.5% to `209.63 billion for the financial year 2013 from`195.00 billion for the financial year 2012, primarily as a result of increases in access charges, licencefees and network expenses and finance costs.

Access Charges, Licence Fees and Network Expenses. Access charges, licence fees and networkexpenses increased by 7.4% to `103.68 billion for the financial year 2013 from `96.52 billion for thefinancial year 2012, primarily as a result of:

• an increase in access charges to `26.76 billion for the financial year 2013 from `24.77 billionfor the financial year 2012, primarily due to an increase in minutes of usage resulting fromhigher voice traffic;

• an increase in rental rates and leases to `9.65 billion for the financial year 2013 from `8.26billion for the financial year 2012, primarily due to an increase in rents payable under ourcell-site lease agreements; and

• an increase in network repair and maintenance charges to `15.95 billion for the financial year2013 from `14.30 billion for the financial year 2012, primarily as a result of an increase in repairexpenses of OFC network due to increased construction activities near our OFC network.

Employee Benefit Expenses. Employee benefits and expenses decreased by 7.3% to `11.89 billion forthe financial year 2013 from `12.83 billion for the financial year 2012, primarily as a result of adecrease in salaries to `10.57 billion for the financial year 2013 from `11.48 billion for the financialyear 2012 as a result of rationalisation of employee base.

Finance Cost. Finance cost increased by 53.3% to `24.99 billion for the financial year 2013 from`16.30 billion for the financial year 2012, primarily as a result of an increase in our rupeedenominated borrowings, which had a higher average rate of interest as compared to foreign currencyborrowings. As at March 31, 2013, our total borrowings aggregated to `415.47 billion with our rupeedenominated and foreign currency denominated borrowings constituting 29.9% and 70.1%,respectively of our total borrowings, as compared to `383.03 billion and 23.9% and 76.1%,respectively as at March 31, 2012.

72

Depreciation, Impairment and Amortisation. Depreciation, impairment and amortisation decreased by2.2% to `53.31 billion for the financial year 2013 from `54.50 billion for the financial year 2012.During the financial year 2012, we had one-time impairment of certain assets and reversal of excessdepreciation pursuant to the implementation of an order of the Ministry of Corporate Affairs,Government of India, which increased the useful life of telecommunications towers from 18 years to35 years. During the financial year 2012, pursuant to an approval by the Ministry of Corporate Affairs,Government of India under Section 205 (2)(d) of the Companies Act, 1956, Reliance Infrateldepreciated telecommunications towers at 2.72% under the straight line method over the useful life ofasset as compared to 5.5% for the financial year 2011. As a result, depreciation for the financial year2012 was lower by `1.73 billion and consequently, profit for the financial year 2012 was higher bysuch amount. Further, RTL aligned its policy of depreciation with our Company and accordingly,recorded depreciation based on the straight line method. As a result, excess depreciation of `3.06billion accounted during the previous period up to September 30, 2011 was reversed during thefinancial year 2012. As a result, the depreciation charge was lower and profit was higher by suchamount for the financial year 2012. In addition, for the financial year 2013, we also adjusteddepreciating aggregating to `0.99 billion and `13.87 billion against the provision made for businessrestructuring and general reserve, respectively, as compared to `1.02 billion and `13.70 billion, forthe financial year 2012, in accordance with various schemes of arrangement sanctioned by the BombayHigh Court. See “Significant Factors Affecting our Results of Operations and Financial Condition —Schemes of Amalgamation and Arrangements”.

Sales and General Administration Expenses. Our sales and general administration expenses increasedby 3.6% to `30.62 billion for the financial year 2013 from `29.57 billion for the financial year 2012,primarily as a result of one-time loss incurred in respect of sale or disposal of certain assetsaggregating to `0.3 billion, to an increase in professional fees to `1.61 billion for the financial year2013 from `1.36 billion for the financial year 2012 and an increase in provision of doubtful debts forthe financial year 2013.

Exceptional Items. In accordance with various schemes of arrangement by the Bombay High Court, weidentified and adjusted certain expenses and losses as exceptional have been adjusted against generalreserves. Had such write off to expenses, losses and deferred tax not been met from our generalreserve, the Financial Statements would have reflected a loss after tax of `11.85 billion as comparedto a loss of `24.73 billion for the financial year 2012 and the consequential effect of this on theconsolidated profit after tax would have been of `18.57 billion as compared to `34.01 billion for thefinancial year 2012. See “Significant Factors Affecting our Results of Operations and FinancialCondition — Schemes of Amalgamation and Arrangements”.

Provision for Tax. We made a provision for tax of `0.71 billion for current tax for the financial year2013 as compared to tax credit of `1.06 billion for the financial year 2012, which was recognised inthe previous financial year in relation to certain disallowance of expenses. In addition, we haddeferred tax liabilities of `3.54 billion and `6.51 billion for the financial years 2013 and 2012,respectively, which were adjusted against our general reserve in accordance with a scheme ofarrangement between Reliance Infratel and one of its erstwhile subsidiaries sanctioned by the BombayHigh Court.

Profit After Tax. Our profit after tax decreased by 27.6% to `6.72 billion for the financial year 2013from `9.28 billion for the financial year 2012.

73

Financial Condition, Liquidity and Capital Resources

Cash Flows

The table below summarises our cash flows for the financial years 2012, 2013 and 2014:

For the Year Ended March 31,

2012 2013 2014

(` in billion)

Net cash generated from operating activities . . . . . . . . . . . . . . . 57.51 38.25 68.39

Net cash (used in) investing activities . . . . . . . . . . . . . . . . . . . . (45.71) (20.69) (21.00)

Net cash generated from / (used in) financing activities . . . . . . . (54.97) (15.76) (49.67)

Net increase / (decrease) in cash and cash equivalents . . . . . . (43.17) 1.80 (2.28)

Operating Activities

Net cash generated from operating activities increased to `68.39 billion for the financial year 2014from `38.25 billion for the financial year 2013, primarily due to a reduction in trade payables andother liabilities as a result of payment to creditors and settlement of other payables during thefinancial year 2013 as compared to an increase in trade payables and other liabilities by `5.59 billionduring the financial year 2014.

Net cash generated from operating activities decreased to `38.25 billion for the financial year 2013from `57.51 billion for the financial year 2012, primarily due to a reduction in trade payables andother liabilities as a result of payment to creditors and settlement of other payables during thefinancial year 2013.

Investing Activities

Net cash used in investing activities was `21.00 billion for the financial year 2014, consisting ofpurchase of investments of `115.88 billion for the financial year 2014 and addition of fixed assets of`21.65 billion which comprised capital expenditure incurred for upgrade and replacement of networkassets in our ordinary course of business, which was partially offset by the sale of investments of`116.04 billion.

Net cash used in investing activities was `20.69 billion for the financial year 2013, consisting ofpurchase of investments of `128.76 billion for the financial year 2013 and addition of fixed assets of`21.14 billion which comprised capital expenditure incurred for upgrade and replacement of networkassets in our ordinary course of business, which was partially offset by the sale of investments of`129.11 billion.

Net cash used in investing activities was `45.71 billion for the financial year 2012, consisting ofpurchase of investments of `269.41 billion for the financial year 2012 and addition of fixed assets of`48.50 billion which comprised capital expenditure incurred for upgrade and replacement of networkassets in our ordinary course of business, which was partially offset by the sale of investments, fixedassets and capital work in progress of `271.80 billion.

Financing Activities

Net cash used in financing activities was `49.67 billion for the financial year 2014, consistingprimarily of repayment of long-term borrowings of `39.95 billion and interest and other finance costof `30.18 billion, partially offset by proceeds from long-term borrowings of `24.99 billion.



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Indebtedness

As at December 31, 2014, our consolidated total indebtedness was `390.46 billion, as set out below:

As at June 30,

2014

As at December

31, 2014

(` in billion)

Short-term Borrowings

Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.43 59.55

Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.62 9.49

Total Short-term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95.05 69.04

Long-term Borrowings

Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243.27 248.78

Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.04 0.62

Total Long-term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244.31 249.40

Current Maturities of Long-Term Borrowings . . . . . . . . . . . . . . . . 80.69 72.02

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420.05 390.46

The financing agreements in respect of our indebtedness contain certain customary restrictivecovenants, including restrictions on:

• borrowing additional funds or accepting deposits, issuing bonds, debentures or commercialpapers (in some instances, only when an event of default is subsisting);

• effecting adverse changes in the capital structure or accessing capital markets for mobilisingadditional resources;

• changing management control or making substantial changes to the management set-up of ourCompany;

• declaring dividends when an event of default is subsisting;

• making substantial changes to the accounting policies;

• undertaking any guarantee, incurring additional liens or other obligations on behalf of entitiesbelonging to the Reliance Group;

• making capital expenditures and investments;

• selling or disposing of certain assets, including land;

• undertaking mergers, acquisitions and other corporate restructuring transactions;

• entering into any contractual obligations of a long-term nature that are not in the ordinary courseof our business; and

• repaying deposits, loans, advances brought in by the promoters, directors, principal shareholdersand other related parties of the Reliance Group.

We may need to obtain the consent of some or all of our lenders to undertake some or all of theseactivities.

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In addition to the above, we are required to maintain certain financial ratios under our indebtednessagreements such as asset cover ratio, net debt to EBITDA ratio, EBITDA to interest expenses ratio,minimum net worth and debt service cover. In addition:

• we have granted security in favour of our lenders over our movable fixed assets (whether existingor future);

• all of our telecommunications licences are assigned to the lenders as security under certainlong-term financing agreements and we are also required to ensure that our licence conditions arenot adversely modified;

• our Company’s entire shareholding in two of our Subsidiaries and some of the shares held by ourSubsidiaries in 10 of our Subsidiaries have been pledged in favour of the lenders under certainlong-term financing arrangements; and

• there is a negative lien on assets other than those mentioned above, of our Company.

Capital and Other Commitments

As at March 31, 2014, our estimated amount of contracts remaining to be executed (net of advances)and not provided for was `7.08 billion. These contracts primarily related to network infrastructuremanagement and purchase and installation of electronic equipment.

Operating and Financing Leases

As at March 31, 2014, estimated future minimum payments under our non-cancellable operating leaseswas `0.86 billion, as set out below:

Particulars

Not later than one

year

Later than one

year and not later

than five years

Later than five

years

(` in billion)

Minimum lease payments . . . . . . . . . . . . . . . . . . 0.32 0.46 0.08

The details of minimum lease rentals outstanding as at March 31, 2014 in respect of our fixed assetsacquired through finance leases is set out below:

Particulars

Not later than one

year

Later than one

year and not later

than five years

Later than five

years

(` in billion)

Lease rentals of fixed assets . . . . . . . . . . . . . . . 0.37 1.48 2.09

Capital Expenditures

Our capital expenditure for the financial years 2012, 2013 and 2014 was `58.48 billion, `39.21 billionand `33.42 billion, respectively.

Our capital expenditure for the financial year 2014 primarily included `17 billion of foreign exchangevariations which were capitalised and capital expenditure of `16.42 billion incurred in the ordinarycourse of our business such as expenses incurred for maintenance and repair of our network.

Our capital expenditure for the financial year 2013 primarily included `17.89 billion of foreignexchange variations which were capitalised, currency translation effects of `9.8 billion in our overseascompanies and capital expenditure of `11.51 billion incurred in the ordinary course of our businesssuch as expenses incurred for maintenance and repair of our network.

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Our capital expenditure for the financial year 2012 primarily included `17.5 billion of foreignexchange variations which were capitalised, currency translation effects of `16.73 billion in ouroverseas companies and capital expenditure of `24.25 billion incurred in the ordinary course of ourbusiness such as expenses incurred for maintenance and repair of our network.

We estimate that our capital expenditure requirement for the financial year 2015 will be up to `20billion.

Contingent Liabilities

Our contingent liabilities as at June 30, 2014 are set out below:

Particulars As at June 30, 2014

(` in billion)

- Disputed liabilities not provided for Sales Tax and VAT, Customs, Excise andService Tax, Entry Tax and Octroi, Income Tax and Other Litigationsincluding Regulatory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79.71

- Estimated amounts of contracts remaining to be executed on capital advances(net of advances) and not provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.35

- Guarantees given including on behalf of other companies for businesspurposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.30

As a consequence of the investigations by an investigative agency (Central Bureau of Investigation)in relation to the entire telecommunications sector in India, certain preliminary charges have beenframed by a trial court against our Subsidiary, RTL, and three executives of the Reliance Group. A writpetition has been filed before the Supreme Court of India against such charges, which is pending forhearing. In addition, there are certain disputes pending with respect to licence fees, access deficitcharges, spectrum charges and show cause notices issued pursuant to a special audit of our Companyby the DoT. See “Legal Proceedings”.

Related Party Transactions

We have in the past engaged, and in the future may engage, in transactions with related parties,including with our affiliates. Such transactions could be for, among other things, purchase and sale ofservices, rent or lease of certain properties, sale and purchase of fixed assets, dividends, remuneration,the purchase or sale of investments and deposits. We believe each of these arrangements has beenentered into on arm’s length terms, or on terms that we believe are at least as favourable to us assimilar transactions with unrelated parties. For additional details of our related party transactions inaccordance with the requirements under AS 18 issued by the ICAI, see our audited FinancialStatements as at and for the years ended March 31, 2012, 2013 and 2014, and the related notes.

Off-Balance Sheet Commitments and Arrangements

We do not have any off-balance sheet arrangements, derivative instruments, swap transactions orrelationships with affiliates or other unconsolidated entities or financial partnerships that would havebeen established for the purpose of facilitating off-balance sheet arrangements, except as set outbelow.

Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss related to adverse changes in market prices, including interest rate riskand commodities risk. We are exposed to interest rate risk, commodity risk, credit risk and inflationrisk in the normal course of our business.

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Exchange Rate Risk

We face exchange rate risk because certain of our obligations and certain receivables pertaining tointernational in-roaming and ILD charges denominated in foreign currencies, repayment obligationsunder our US$ denominated borrowings and equipment supply contracts. Further, our FinancialStatements are presented in Rupees, which is our functional and reporting currency. We have severalSubsidiaries that are incorporated in countries other than India and which use various reportingcurrencies other than Rupees.

To manage our exchange rate risks, we enter into forward and swap contracts with variouscounterparties to protect against the volatility of the Rupee. As at June 30, 2014, foreign currencyexposures that are not hedged by derivative instruments, or otherwise, included contracts aggregatingto US$3.91 billion, equivalent to `235.30 billion, and Euro 40,151, equivalent to `3.30 million and£4,000, equivalent to `0.17 million.

Also, see “Risk Factors — Risks relating to India — Currency exchange rate fluctuations could havean adverse effect on our results of operations.”

Interest Rate Risk

We are subject to interest rate risk, primarily because some of our borrowings and our deposits of cashand cash equivalents with banks and other financial institutions are at floating interest rates. As atMarch 31, 2014, 88.1% of our indebtedness consisted of floating rate indebtedness. The followingtable sets out the details of certain derivative instruments entered into by us in respect of interest rates:

Particulars As at March 31, 2014

(Amount in million)

US$ `

Principal Only Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.00 1,270.00

Interest Rate Swaps (foreign currency). . . . . . . . . . . . . . . . . . . . . 160.00 9,470.00

Interest Rate Swaps (`) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.00 2,250.00

In respect of foreign currency swap and interest rate swap transactions, which are linked with LIBORrates and exchange rates during the binding period of contract, the gains or losses, if any, arerecognised on the settlement day or the reporting day, whichever is earlier, at the rate prevailing onsuch day.

Interest rates are highly sensitive to many factors beyond our control, including the monetary policiesof the RBI, deregulation of the financial sector in India, domestic and international economic andpolitical conditions, inflation and other factors. Upward fluctuations in interest rates increase the costof servicing existing and new debts, which adversely affects our results of operations.

Credit Risk

We are exposed to credit risk on trade receivables from subscribers and other counterparties. We tryto control our credit risk by assessing the credit quality of our subscribers, taking into account theirfinancial position, past experience and other factors.

Inflation Risk

In the recent past, India experienced high inflation, which contributed to an increase in interest rates,adversely affecting both sales and margins. Recently, with the fall in inflation partly attributable toreduction in global oil prices, interest rates have been showing downward trend. See “Risk Factors —Risks relating to India — A decline in economic growth in India could adversely affect our business.”

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INDUSTRY OVERVIEW

The information in this section has been extracted from several government publications and industrysources. None of us, the Joint Lead Managers, or any other person connected with the Offer hasverified this information. Industry sources and publications generally state that the informationcontained therein has been obtained from sources generally believed to be reliable, but that theaccuracy, completeness and underlying assumptions of these sources are not guaranteed and theirreliability cannot be assured and, accordingly, your investment decision should not be based on suchinformation.

Indian Telecommunications Industry

India has the second largest number of mobile cellular subscriptions in the world according tostatistics published by the International Telecommunications Union, World Telecommunications ICTDevelopment Reported database and World Bank Estimates (“ITU”). However, mobile cellularsubscriptions per 100 population (mobile cellular penetration) is relatively low. The table below showsthe top 10 countries in terms of mobile cellular subscriptions and their mobile cellular penetration asat December 31, 2013:

Country

Mobile Cellular

Subscriptions

Mobile Cellular

Penetration

(million)

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,229.1 88.7%India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 886.3 70.8%United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305.7 95.5%Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303.7 121.5%Brazil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271.1 135.3%Russia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218.3 152.8%Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146.5 115.2%Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127.7 70.1%Nigeria. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127.2 73.3%Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120.0 130.9%

(Source: ITU, available at http://data.worldbank.org/indicator/IT.CEL.SETS andhttp://data.worldbank.org/indicator/IT.CEL.SETS.P2)

Subscription growth from rural subscribers

Within the top 10 countries above, India has recorded the highest compounded annual growth rate(CAGR) in the number of mobile cellular subscriptions during the five-year period from 2008-2013.India’s CAGR of 20.6% compares to the next two highest, Indonesia, at 16.7%, and Nigeria, at 15.1%.The high growth in mobile cellular subscriptions has been largely driven by the increase in ruralwireless subscribers, while urban subscribers have decreased. The number of urban subscribers hasdecreased primarily due to elimination of unused subscriptions; however, the decrease in urbansubscribers has been partially offset by the increase in rural subscribers during this period, and ruralpenetration remains relatively low compared to urban penetration. The table below shows the numberof urban and rural wireless subscribers as at September 30, 2012 and 2014 and relative penetration asat such dates:

As at September 30, 2012 2014 Change (2012-2014)

Subscribers (Million)Rural . . . . . . . . . . . . . . . . . . . . . . . . . . . 334.9 382.5 47.6Urban . . . . . . . . . . . . . . . . . . . . . . . . . . 571.7 547.7 (24.0)Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 906.6 930.2 23.6

Penetration (%)Rural . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.5 44.3 4.8Urban . . . . . . . . . . . . . . . . . . . . . . . . . . 154.6 142.4 (12.3)Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.5 74.6 0.1

(Source: TRAI)

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Wireless 2G subscription from different technologies

There are two kinds of 2G wireless technology deployed in India — GSM and CDMA. In terms ofglobal trends, GSM is the more popular mobile technology in terms of mobile subscriptions as wellas the number of networks and operators deploying the technology. This is also reflected in India. Thetable below shows the number of GSM and CDMA wireless subscribers in India as at September 30,2012 and 2014:

As at September 30, 2012 2014 Change (2012-2014)

Subscribers (Million)

GSM . . . . . . . . . . . . . . . . . . . . . . . . . . . 808.8 876.2 67.4

CDMA . . . . . . . . . . . . . . . . . . . . . . . . . . 97.8 54.1 (43.8)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 906.6 930.2 23.6

Percentage of Subscribers (%)

GSM . . . . . . . . . . . . . . . . . . . . . . . . . . . 89.2 94.2 5.0

CDMA . . . . . . . . . . . . . . . . . . . . . . . . . . 10.8 5.8 (5.0)

(Source: TRAI)

Growth in data consumption

Wireless is the primary form of data access in India, as the reach and quality of the wireline networksare relatively poor compared to wireless networks, and the number of wireline subscribers is small anddeclining. According to TRAI data, there were 254.4 million Internet subscribers in India as atSeptember 30, 2014, 235.7 million, or 92.6%, of whom were wireless Internet subscribers. Followingthe successful auctions of spectrum for 3G and broadband wireless access by the DoT in 2010,wireless operators have rolled out 3G networks and improved the data handling capacity of their 2Gnetworks. As a result, there has been a substantial increase in data usage across the wireless networksas reflected in the chart below:

(Source: Nokia Networks MbiT Report, 2014)

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According to Cisco’s annual Global Visual Networking Index (“Cisco VNI”), Mobile ForecastHighlights, 2013-20181, Indian mobile data traffic is projected to grow 24-fold between 2013 and2018 to reach 1.2 exabytes per month, representing a CAGR of 88%. Indian mobile data traffic isexpected to grow two times faster than Indian fixed IP traffic during the same period. Indian mobiledata traffic growth between 2013 and 2018 is projected to lead China (15-fold at a CAGR of 73%),the Asia Pacific region (13-fold at a CAGR of 67%) and globally (11-fold at a CAGR of 61%).

Reduced wireless competition and increase in usage and revenue per user

In addition to the increase in rural penetration, and wireless data usage, a reduction in the number ofcompeting operators has also been positively influencing industry revenue growth. The Indiantelecommunications market is geographically divided into 22 Circles, and operators receivetelecommunications access licences and wireless spectrum for individual Circles. Prior to 2012,India’s telecommunications market was highly fragmented with approximately 15 operators. Thefollowing table shows the number of wireless operators for each individual Circle as at the datesindicated:

Number of Operators

Circles

December 31,

2008

December 31,

2011

September 30,

2014

Andhra Pradesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 11 8

Assam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 11 6

Bihar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 13 8

Delhi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 9 8

Gujarat. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 12 10

Himachal Pradesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 11 7

Haryana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 12 8

Jammu and Kashmir . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 9 6

Karnataka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 12 8

Kerala . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 11 8

Kolkata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 11 8

Madhya Pradesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 12 8

Maharashtra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 12 8

Mumbai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 12 8

North East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 11 6

Orissa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 12 7

Punjab . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 12 8

Rajasthan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 12 8

Tamil Nadu (including Chennai) . . . . . . . . . . . . . . . . . . 6 11 8

Uttar Pradesh (East) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 11 8

Uttar Pradesh (West) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 12 9

West Bengal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 10 8

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 249 171

(Source: TRAI; Number of operators in a Circle was calculated on the basis of whether a licensee reported subscribers in that

particular Circle as at the respective month end)

1 Available at http://www.cisco.com/c/dam/assets/sol/sp/vni/forecast_highlights_mobile/index.html. �2014 Cisco and/orits affiliates. All rights reserved. The document is Cisco public.

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The reduction in competition has been accompanied by an increase in the average MoU and monthlyARPU, as set out in the table below:

Quarter Ending

September 30,

2012

Quarter Ending

September 30,

2014

MoU (minutes per average subscriber)

GSM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342 376

CDMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 267

ARPU (` per average subscriber)

GSM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 116

CDMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 110

(Source: TRAI)

Overall industry revenue growth

Overall, industry gross revenue has increased from `529.4 billion for the quarter ending September30, 2012 to `624.5 billion for the quarter ending September 30, 2014. The following table shows thegrowth in industry gross revenue across various quarters:

Quarter Ending

Industry Gross

Revenue

Growth from

Previous Quarter

(` in billion) (%)

September 30, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529.4 0.8

December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 528.6 (0.2)

March 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542.8 2.7

June 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572.6 5.5

September 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 574.5 0.3

December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583.9 1.6

March 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607.2 4.0

June 30, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629.2 3.6

September 30, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624.5 (0.8)

(Source: TRAI)

Global Data Communications Industry

Global data traffic growth

The global data services industry has grown rapidly due to the significant growth in global Internettraffic over the last two decades. According to Cisco VNI, The Zettabyte Era: Trends and Analysis2,global Internet networks carried approximately 100 GB of traffic per day in 1992. Ten years later,

2 Available at http://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/VNI_Hyperconnectivity_WP.pdf. �2014 Cisco and/or its affiliates. All rights reserved. The document is Cisco public.

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global Internet traffic amounted to 100 Gbps. By 2012, global Internet traffic reached 12,000 Gbps.In the following year, from 2012 to 2013, this number more than doubled to 28,875 Gbps. The tablebelow sets out the historical growth of global Internet traffic for the periods indicated:

Year Global Internet Traffic Multiplier

1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 GB per day

1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 GB per hour 24x

2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Gbps 3,600x

2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 Gbps 20x

2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,875 Gbps 14x

(Source: Cisco VNI, The Zettabyte Era — Trends and Analysis)

Cisco VNI expects global IP traffic, which includes both Internet and managed IP or non-Internet IPtraffic, to increase by a factor of 2.6x between 2013 and 2018. Consumer IP traffic, which makes up80% of total IP traffic, is expected to grow at a CAGR of 21.4% between 2013 and 2018, and businessIP traffic is expected to grow at a CAGR of 18.1% between 2013 and 2018.

Key trends driving the growth of consumer data traffic

Four key trends are contributing to unprecedented growth of global consumer IP traffic:

Faster broadband speed

Broadband speed improvements result in increased consumption of high-bandwidth content andapplications such as social networking, online gaming, file sharing, remote file storage and video. Theglobal average broadband speed continues to grow and is expected to nearly triple from 16.1 Mbps in2013 to 42.2 Mbps in 2018, according to Cisco VNI.

An important factor driving the increase in broadband speed is the increased proliferation ofbroadband mobile networks. Cisco VNI expects the global average mobile network connection speedto increase from 1.4 Mbps in 2013 to over 2.5 Mbps by 2018.

Device transitions altering network demand

New devices that generate higher IP traffic, such as smartphones and tablets, are expected to continueto proliferate at a rapid rate. Tablets are the fastest-growing device category at a CAGR of 29% from2013 to 2018 (3.6-fold growth), followed by M2M connections with 26% CAGR (three-fold growth).The changing mix of devices and connections and growth in multi-device ownership is driving theglobal increase in IP traffic.

According to Cisco VNI, devices and connections are growing at a CAGR of 10.7% from 2013 to2018, which is faster than the growth of both population (1.1% CAGR) and the number of Internetusers (9.2% CAGR). This trend is accelerating the increase in the average number of devices andconnections per household and per Internet user. Each year, various new devices in different formfactors with increased capabilities and intelligence are introduced and adopted in the market. Agrowing number of M2M applications are also causing growth in connections.

M2M growth

The Internet of Everything phenomenon, or the next wave of the Internet in which people, processes,data, and things connect to the Internet and each other, is showing tangible growth. According to CiscoVNI, there will be nearly one M2M connection for each member of the global population by 2018.

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Applications such as video surveillance, smart meters, smart cars, asset and package tracking, chippedpets and livestock, digital health monitors, and a host of other next-generation M2M services aredriving this growth.

M2M connections M2M traffic growth

2.3

2.9

3.7

4.7

5.9

7.3

0

2

4

6

8

2013 2014 2015 2016 2017 2018

(Mill

ions

)

2013 – 2018 CAGR: 26%

0.20.3

0.6

1.2

2.1

3.7

0

1

2

3

4

(Exa

byte

s pe

r m

onth

)

2013 – 2018 CAGR: 84%

2013 2014 2015 2016 2017 2018

(Source: Cisco VNI, The Zettabyte Era:Trends and Analysis)

(Source: Cisco VNI, The Zettabyte Era:Trends and Analysis)

While Cisco VNI expects the number of M2M connections to grow three-fold between 2013 and 2018,global M2M IP traffic is expected to grow 11-fold over the same period. The higher traffic growth thanconnections’ growth is due to more video applications being deployed on M2M connections as wellas the use of applications, such as telemedicine and smart car navigation that require higher bandwidthand lower latency.

IP video to accelerate IP traffic growth

Cisco VNI expects IP video to contribute 79% of all IP traffic by 2018, a significant increase from 65%in 2013. The video impact of the devices on the traffic is more pronounced due to the introduction ofultra-high-definition or 4K video streaming. The bit rate for 4K video is more than double the HDvideo bit rate and 9 times more than standard-definition video bit rate.

Global video IP traffic

1224

21

79

33

104

0

20

40

60

80

100

120

E81023102

(Exa

byte

s pe

r m

onth

)

Managed IP video Internet video

42%

23%

60%

19%

CAGR (2013 – 2018E ): 25.8%

(Source: Cisco VNI, The Zettabyte Era: Trends and Analysis)

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Key trends driving growth of enterprise data traffic

The manner in which data and IT are being handled by enterprises is changing rapidly. In the new ITenvironment, the Chief Information Officers and other key decision makers are investing more heavilyin data and applications as opposed to installation and infrastructure.

The development of cloud computing technologies increases opportunities for data services providersby increasing the demand for high bandwidth and low latency global networks. The followingdevelopments lend long-term support to the increased demand:

• movement of functions to externally-hosted networks from user-owned premises-basedenvironments;

• use of platforms for new digital services, content and applications such as infrastructure as aservice, including data centre and server virtualisation, application platform as a service,software as a service and unified communications, including video conferencing;

• redesign of Wide Area Networks and Local Area Networks for the cloud by removing bottlenecksand complexity in the network (flattening the network) by providing additional egress points andtouch points between all networks;

• availability of enterprise applications to be available on mobile platforms;

• requirement for security to be an integral part of user access networks; and

• increased focus on monitoring and managing end-to-end application performance as opposed tolooking at pieces, such as server performance or network performance.

Impact of data traffic growth on the subsea cable market

The supply of subsea cable systems was traditionally a stable, high-cost infrastructure businessmanaged by the world’s incumbent telecommunications operators. This arrangement shifted in the late1990s due to the rise of private, entrepreneurial cable-laying companies, which transformed the subseabandwidth market from one of shared resources and risks to one of speculative investment andcommoditisation. However, initial demand could not keep up with the vast amount of sudden supply,resulting in the bankruptcy of most private cable operators. This allowed a new set of investors toacquire these cables at a fraction of their build costs.

Demand growth has now significantly depleted the existing inventories of unused capacity on manysubsea cables. Price declines continue, but the subsea cable industry has stabilised with revenue gainsfounded on robust demand growth and modest price declines.

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The historical growth of used international bandwidth varies geographically based on the level ofnetwork adoption in the region. The table below shows used bandwidth by region for the principalroutes on which GCX operates.

(Gbps) 2009 2014 2009-2014 CAGR

Asia (excl Oceania and Middle East) . . . . . . . . . 3,775 34,485 56%

Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,596 155,418 47%

Middle East . . . . . . . . . . . . . . . . . . . . . . . . . . . . 728 6,893 57%

US and Canada . . . . . . . . . . . . . . . . . . . . . . . . . 9,831 62,616 45%

Note: Data represent used bandwidth connected across international borders and excludes domestic bandwidth.(Source: TeleGeography Global Bandwidth Research Service)

The projected growths of purchased and used capacity and revenue trend on the principal routes onwhich GCX operates or plans to operate are summarised below:

Purchased capacity(Gbps)

Used capacity(Gbps)

Price declineCAGR

(2014-2021E) Total AnnualRevenueCAGR

(2014-2021E)Routes 2014 2021ECAGR

(2014-2021E) 2014 2021ECAGR

(2014-2021E)Lease

Price(a)

IRUPrice(b)

Trans-Atlantic . . 30,881 329,672 40.3% 24,705 263,738 40.3% (26)% (26)% 4%

Trans-Pacific . . 21,148 219,655 39.7% 16,330 175,724 40.4% (26)% (25)% 5%

Intra-Asia . . . . 20,469 225,999 40.9% 16,204 180,799 41.1% (25)% (25)% 4%

Europe-MiddleEast & Egypt 6,430 44,385 31.8% 3,114 26,606 35.9% (27)% (23)% 0%

Europe-Asia . . . 3,307 25,056 33.5% 1,977 18,534 37.7% (27)% (24)% 2%

(a) 10 Gbps lease price equivalent

(b) 10 Gbps IRU price equivalent

(Source: TeleGeography Global Bandwidth Forecast Service)

Note: To gauge historical and forecasted revenues on each route, TeleGeography uses a benchmark city-to-city route forprices. The benchmarks are London-New York for trans-Atlantic, Los Angeles-Tokyo for trans-Pacific, HongKong-Tokyo for intra-Asia, Fujairah-London for Europe-Middle East & Egypt, and London-Singapore for Europe-Asia.

Trans-Atlantic route

On the trans-Atlantic route, the use of 100 Gbps will play a major role in allowing existing cables toincrease their capacity to meet the demand as will the possible introduction of new cables. As salesof 100 Gbps become commonplace, the lower unit price of these products will dampen revenuegrowth. On the trans-Atlantic route, TeleGeography forecasts revenues to grow at a CAGR of 4%between 2014 and 2021.

Trans-Pacific route

Trans-Pacific demand is expected to increase at a CAGR of 40% between 2014 and 2021. Demandgrowth on trans-Pacific routes is expected to offset projected rapid price erosion to yield an expectedrevenue CAGR of approximately 5% between 2014 and 2021.

Intra-Asia route

The pace of demand growth is expected to be rapid on the intra-Asia route, with an expected increaseto 41% annually. Demand growth is expected to counter the rapid pace of price erosion on theintra-Asian route leading to 4% revenue CAGR between 2014 and 2021.

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Europe-Middle East & Egypt route

Demand on the Europe-Middle East & Egypt route is expected to increase at a 32% CAGR between2014 and 2021. This route is well-served by several recently-launched systems including IMEWE,Europe-India Gateway, Hawk, Gulf Bridge and TE North, among others. Two additional cables on theroute, SeaMeWe-5 and Africa Asia Europe-1, are planned for launch in 2016. Price erosion is expectedto offset demand growth with Europe-Middle East & Egypt capacity revenues growing at a compoundannual rate of 0.3% between 2014 and 2021.

Europe-Asia route

Europe-Asia demand is expected to increase at a 34% CAGR between 2014 and 2021. The route willalso see the introduction of new competition with SeaMeWe-5 and AAE-1. In addition, the plannedBay of Bengal Gateway cable will be linked with the Europe Persia Express Gateway cable to createadditional competition on the route. Europe-Asia revenues on submarine cables connected via theMediterranean and Red Seas are expected to grow at a 2% CAGR between 2014 and 2021 as demandgrowth balances price erosion. (Source: TeleGeography Global Bandwidth Forecast Service)

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OVERVIEW OF THE REGULATORY REGIME IN INDIA

The following is an overview of the important laws, regulations and policies which are relevant to ourbusiness in India. The information provided below has been obtained from sources available in thepublic domain. The description of laws, regulations and policies set out below is not exhaustive, andis only intended to provide general information to the investors and is neither designed nor intendedto be a substitute for professional legal advice. The statements below are based on the currentprovisions of Indian law and the judicial and administrative interpretations thereof, which are subjectto change or modification by subsequent legislative, regulatory, administrative or judicial decisions.In addition to the regulations and policies already specified in this Offering Circular, taxation statutessuch as the IT Act, various labour laws, environmental laws and other miscellaneous laws apply tous as they do to any other Indian company.

Overview — Telecommunications Industry Regulation

The telecommunications industry in India is subject to extensive government regulation. TheGovernment holds the exclusive power to provide telecommunications services and issue licences forthe same. In the initial stages, the Government had monopoly in the industry, and the services wereprovided by the Department of Telegraphs and Posts. In 1991, the Government began privatising thesector with de-licensing of telecommunications equipment manufacturing.

The DoT established under the Ministry of Communication and Information Technology, Governmentof India is the primary regulator for the telecommunications sector. The DoT, together with theTelecom Commission, is responsible for formulating development policies for the accelerated growthof telecommunications services, licensing, wireless spectrum management, promotion of privateinvestment in telecommunications, research and development as well as standardising and validatingequipment. In 1997, the Government set up the TRAI, an independent statutory regulator, withextensive powers to regulate the telecommunications sector in India. Subsequently, a separate disputeresolution body namely the TDSAT was set up in 2000, to settle disputes between a licensor and alicensee, between two or more service providers, between a service provider and a group of consumerspertaining to the telecommunications sector. The WPC wing of the Ministry of Communication andInformation Technology, created in 1952, is responsible for frequency spectrum management. TheWPC issues licences to establish, maintain and operate wireless stations. The wireless licence is anindependent licence and any UASL holder intending to offer mobile services is required to obtain aseparate wireless licence from the WPC wing. The WPC is divided into (i) licensing and regulations,(ii) new technology group, and (iii) the Standing Advisory Committee for Frequency Allocation (the“SACFA”). The SACFA, a high level committee, issues approvals for the use of radio frequency(spectrum) by telecommunications service providers, which involves a detailed technical evaluationof certain factors, including possible aviation hazards and interference (electro-magneticinterference/electromagnetic compatibility) to existing and proposed networks.

Key regulations in the telecommunications sector

Indian Telegraph Act, 1885 and Indian Wireless Telegraphy Act, 1933

The Indian Telegraph Act, 1885 is the principal legislation regulating telegraphs, which include anyappliance, instrument, material or apparatus used or capable of use for transmission or reception ofsigns, signals, writing, images and sounds or intelligence of any nature by wire, visual or otherelectro-magnetic emissions, radio waves or hertzian waves, galvanic, electric or magnetic means.Under this legislation, the Government has the power to grant licences and make rules applicable topersons licensed under the Act. Under the Indian Wireless Act, 1933 no person is permitted to possessa wireless telegraphy apparatus without obtaining a licence.

Pre-National Telecom Policy Regulation

In 1991, India adopted the new economic policy of liberalisation. The Government initiated theprocess of liberalising the telecommunications industry by inviting bids from private service providersto provide cellular services in the four metropolitan cities of Chennai, Delhi, Kolkata and Mumbai.Foreign participation was limited to 49% ownership and such participants had to be an entity with

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prior experience in the telecommunications sector. As at the date of this Offering Circular, foreigndirect investment up to 49% is allowed in the telecommunications services sector without the priorapproval of the Government. Any foreign direct investment in excess of 49% requires prior approvalof the Government.

In 1992, the Government deregulated the telecommunications sector by unbundling the domestic basicservices and value-added services and allowing private sector participation in the provision ofvalue-added services such as cellular and paging services.

National Telecom Policy 1994

In 1994, the Government announced the National Telecommunications Policy, 1994 (“NTP 1994”)formulated for further liberalisation and deregulation of the Indian telecommunications sector. Theobjectives sought to be achieved by the year 1997 under NTP 1994 included:

• Telephones were to be available on demand;

• All villages in India were to have access to basic telephone services;

• In urban areas, a public call office was to be provided for every 500 persons; and

• To make available value-added services and to raise telecommunications services in India tointernational standards within the 8th Five Year Plan (1992-1997), preferably by 1996.

In order to implement the NTP 1994, licences were granted to eight cellular mobile telephone service(“CMTS”) operators. Two licences were granted in each of the four metropolitan cities. In the secondphase of implementation of the policy in December 1995 through a competitive bidding process 14CMTS licences were issued in 18 State Circles and 6 basic telephone service licences were issued in6 State Circles and paging licences were awarded in 27 cities and 18 State Circles. The Circles wereclassified into three categories (‘A’ to ‘C’) based principally on their revenue generating potential withthe Category ‘A’ Circle having the highest revenue potential. The Government also invited bids fromIndian companies for providing basic (fixed-line) services in 21 Circles.

New Telecom Policy 1999

In March 1999, the Government announced the New Telecommunications Policy 1999 (“NTP 1999”).NTP 1999 laid down a clear roadmap for future reforms, contemplating the opening up of varioussegments of the telecommunications sector for private sector participation. It clearly recognised theneed for strengthening the telecommunications regulatory regime and for restructuring the Departmentof Telecommunication Services (“DTS”) into a corporate organisation, in order to separate thelicensing and policy-making functions of the Government from that of being an operator. It alsorecognised the need for resolving the prevailing problems faced by the operators so as to restore theirconfidence and improve the investment climate.

Key features of the NTP 1999 include the following:

• Opening up of national long-distance (“NLD”) services and international long-distance (“ILD”)services to private operators;

• Licensing of private telecommunications operators on a revenue sharing basis in addition to aone-time entry fee;

• Direct interconnectivity and network sharing with other operators within the service areapermitted; and

• Spectrum management made transparent and more efficient.

From 2000, DTS operated as a telecommunications service provider through Bharat Sanchar NigamLimited (“BSNL”) and Mahanagar Telephone Nigam Limited (“MTNL”). BSNL was to providetelecommunications services in the entire country except in Delhi and Mumbai where MTNL was tobe the service provider. BSNL and MTNL were permitted to provide mobile services in those serviceareas where each was already providing fixed-line services. Accordingly, BSNL and MTNL becamethe third cellular services operators in such service areas.

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In January 2001, based on the TRAI’s recommendations, the Government issued guidelines to permitfixed-line services providers to provide limited mobility services using wireless local loop (“WLL”)technology, within the specified short distance charging area, in which the relevant subscriber wasregistered. It also published guidelines concerning the fourth licence to be awarded for each servicearea.

In October 2003, the TRAI recommended to the Government that basic services (i.e. fixed-lineservice) providers providing limited mobility services using WLL technology pay a specified amountas an additional entry fee.

In November 2003, an addendum to NTP 1999 was issued to include the following categories oflicences for telecommunications services:

• A unified licence for telecommunications services, permitting the licensee to provide alltelecommunications/telegraph services covering various geographical areas using anytechnology; and

• A licence for unified access (fixed-line and cellular) services, or a UASL, permitting the licenseeto provide basic and/or wireless services using any technology in a defined service area.

There was to be no limitation on the number of UASLs that could be granted in any Circle althoughavailability of spectrum would limit the number of service providers who propose to provide wirelessservices. The salient features of the unified access licensing regime were as follows:

• The country was divided into 23 service areas for providing unified access services. Thiscomprised 19 Circles (comprising the States) and 4 metro service areas.

• A licensee under the UASL could provide wireline and wireless services in a service area.Wireless services include full mobile, limited mobile and fixed wireless services. The licenseecould also provide various value-added services such as voice-mail, audiotex services, videoconferencing, e-mail, etc. on a non-discriminatory basis.

• No additional entry fee was charged from the fourth cellular mobile service providers formigrating to the UASL. Existing basic service operators would pay the difference between (a)the entry fee paid by the fourth cellular mobile service providers for that service area and (b) theentry fee already paid by the basic service operators (“BSOs”). In service areas where there wasno fourth cellular operator, the migrating BSO would not be charged any extra entry fee.

• The licence fee was 10% of AGR for metros and category A, 8% for category B and 6% forcategory C service areas, with effect from April 1, 2004. Spectrum charges are to be leviedseparately.

• Existing operators had the option of continuing under the existing licensing regime (with existingterms and conditions) or migrating to the UASL regime in existing service areas, with theexisting allocated/contracted spectrum.

• The licence fee, service area, rollout-obligations and performance bank guarantee under theUASL would be the same as for the fourth cellular mobile service providers.

• Service providers migrating to UASL would continue to provide wireless services in alreadyallocated/contracted spectrum and no additional spectrum would be allotted under the migrationto the UASL regime.

• UASL service providers were free to use any technology without any restriction.

As part of the second stage of unified licensing for all services, the TRAI released two consultationpapers in November 2003 and March 2004 and subsequently, draft recommendations on unifiedlicensing in August 2004. After getting the views of all stakeholders, the TRAI released its finalrecommendations on unified licensing for all telecommunications services in January 2005.

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According to the TRAI, the key objective behind the recommendations for UASL was to encouragefree growth of new applications and services, leveraging on technological developments. Therecommendations aimed at enabling interested parties to provide any telecommunications service inthe service area of their choice by obtaining a single licence. The other objectives of the draftrecommendations are to simplify the procedure of licensing in the telecommunications sector, ensureease of entry, ensure flexibility and efficient utilisation of resources keeping in mind technologicaldevelopments and increase the penetration of telecommunications services in rural/remote/lessdeveloped areas. The salient features of the TRAI’s recommendations were as follows:

• The TRAI recommended a four tier hierarchical licensing regime consisting of (i) UASL, (ii)class licence, (iii) licensing through authorisation and (iv) standalone broadcasting and cable TVlicence. The UASL regime except for stand-alone broadcasting and cable TV licences will be atthe highest level of hierarchy.

• The UASL regime will enable a licensee to provide any or all telecommunications services byacquiring a single licence. All public networks irrespective of media and technology capable ofoffering voice and non-voice data services, including Internet telephony, cable TV, direct tohome, TV and radio broadcasting would be covered under the UASL. Therefore, a customercould receive all the above mentioned types of telecommunications services from a singlelicensee who could operate using a wireline or wireless media.

• The class licence would cover services such as satellite services which do not have two-wayconnectivity to public networks. Licensing through authorisation would cover services for theprovision of passive infrastructure and bandwidth services to service providers, radio paging,voice-mail, audiotex, video conferencing, videotext, e-mail, e-commerce, unified messagingservices, tele-banking, tele-medicine, tele-education and restricted Internet telephony.

• To increase penetration of telecommunications services, niche operators would be allowed toprovide fixed wireline or wireless telecommunications services in areas where the fixed ruraltele-density was lower than 1% without paying any entry fee.

• For UASL, class licence and niche operators, the annual licence fee was decreased to 6% ofAGR. In addition, it has proposed changing the definition of AGR to exclude allnon-telecommunications revenues such as revenues earned from the sale of handsets and capitalgoods, income from interest and dividends, etc.

• For class licence, niche operators and licensing through authorisation, there would be noregistration charge. For UASL service providers, registration charge would be levied.

• For a period of five years it would not be mandatory for existing telecommunications serviceproviders to obtain a UASL, after which it would become mandatory to switch to the UASLregime.

• Internet service providers (“ISP”) could not offer unrestricted Internet telephony. ISPs offeringrestricted Internet telephony would require a licence through authorisation only.

In October 2007, the DoT announced the following:

• There would be no cap on the number of access providers in any service area.

• The UASL was to be technology neutral and the licensees were required to provide accessservices and meet the stipulated rollout obligations using wireline and/or wireless technologiesby utilising network equipment that met the prescribed standards. The allocation ofradio-spectrum and grant of wireless licence would be subject to availability. If a UASL licenseewas not allocated spectrum due to non-availability, the licensee must endeavour to roll-outservices using wire line technologies. It was also decided that the roll-out for wireless serviceswould be reckoned from the date of spectrum allocation. This would also apply to those licenseeswho are awaiting initial spectrum allotment.

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• In order to further enhance the penetration of access services for rapid expansion of tele-density,it was also decided that the existing private UASL licensees would be permitted to expand theirexisting networks by using alternate wireless technology i.e. an existing licensee using GSMtechnology for wireless access may be permitted to use CDMA technology and vice-versa. Thespectrum for the alternate technology, CDMA or GSM (as the case may be) would be allocatedin the applicable frequency band subject to availability after payment of a prescribed fee.Spectrum may be allocated for alternate technology in favour of private UASL licensees on thepayment of the prescribed fee, which would equal the entry fee for obtaining a new UASL in thesame service area. Existing UASL licensees, who had already applied for allocation of spectrumfor alternate technology would also be considered for allocation of spectrum for alternatetechnology from the date of payment of the prescribed fee. BSNL and MTNL, being incumbentoperators, would be permitted usage of alternative technology and allocated spectrum foralternate technology without paying the prescribed fee. For the purpose of payment of the licencefee and spectrum charges, the stream-wise revenue of different technologies would beconsidered.

• At the time of further allotment of spectrum in any technology, if the licensee’s eligibility forallocated spectrum in the other technology fell below the criterion set for spectrum allotment forthe last consecutive six months, then a corresponding chunk of spectrum in that technologywould be surrendered by the licensee before any further allotment of spectrum was to beconsidered.

• For failure to meet rollout obligations within the prescribed time schedule, the existingstipulation of termination of the licence under the UASL agreement would continue. In addition,performance bank guarantee could also be forfeited and the service provider may be asked toresubmit performance bank guarantee of the same amount. No additional spectrum would beallocated to the licensees without fulfilling the rollout obligations. In the case of spectrumauction, a licensee who had not met his its rollout obligations against an existing licence wouldnot be eligible to participate in any spectrum auction till the rollout obligations were met. Anyproposal for permission for merger would not be entertained until the rollout obligations weremet; however, a request for permission for acquisition would be entertained. Rollout for eachlicensed service area was to be dealt with separately. In case of violation of rollout conditions,the Government could consider termination of the licence.

3G and BWA Spectrum Auction

In 2010, the Government decided to auction the 3G and BWA spectrum. The DoT had floated a noticeinviting applications dated February 25, 2010. After finalisation of eligible bidders, the e-auctionstarted on April 9, 2010 and the BWA e-auction started after the 3G auction was completed. The 3Gspectrum was made available for commercial use from September 1, 2010. Accordingly, operatorslaunched the 3G services across the country.

Mobile Number Portability

On November 25, 2008, the DoT issued tenders for MNP services and in 2009, the DoT issued theTelecommunication Mobile Number Portability Regulations. Intra-Circle MNP was implementedacross the country in January 2011. Subsequently, the TRAI held a consultation on the issue ofinter-Circle MNP and released a pre-consultation paper on pan-India MNP on February 20, 2013 andsubsequently issued recommendations on September 25, 2013. In October 2014, the TelecomCommission accepted the recommendations and the inter-Circle (nationwide) MNP is proposed to beimplemented from May 2015.

Auction of Spectrum

• In November 2012, the Government conducted an auction for the 800 MHz and 1800 MHzspectrum band. The auction allowed operators whose licence has been cancelled by the SupremeCourt of India to participate and acquire spectrum. There were no bidders for the 1800 MHzspectrum in Delhi, Mumbai, Rajasthan and Karnataka. There were no bidders for the 800 MHzspectrum in any of the Circles.

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• In March 2013, auctions were held for spectrum in 800 MHz, 900 MHz and 1800 MHz bands.While there were no bidders for 900 MHz and 1800 MHz, only one bidder put in a bid for 800MHz, which was accepted for eight Circles.

• In February 2014, the DoT auctioned 2G telecommunications spectrum for 900 and 1800 MHz.The successful bidders were awarded spectrum in February 2014. There were seven bidders whowere awarded the 1800 MHz spectrum and three bidders who were awarded the 900 MHzspectrum.

• The Government of India concluded in March 2015 the auctioning of spectrum in the 800 Mhz,900 Mhz, 1800 Mhz and 2100 Mhz bands. The spectrum allocation is provisional and is subjectto the approval of the Government of India and the final result of a proceeding pending beforethe Supreme Court of India.

National Telecommunications Policy, 2012

The NTP 2012 envisions providing secure, reliable, affordable and high-quality convergedtelecommunications services for an accelerated and inclusive socio-economic development. The mainareas at thrust of the NTP 2012 include:

• Increase rural tele-density from approximately 39 to 70 by the year 2017 and 100 by the year2020.

• Reposition the mobile phone as an instrument of empowerment that combines communicationwith proof of identity, fully secure financial and other transaction capability, multilingualservices and other services that transcend the literacy barrier.

• Provide affordable and reliable broadband-on-demand by the year 2015 and to achieve 175million broadband connections by the year 2017 and 600 million by the year 2020 at minimum2 Mbps download speed and make available higher speeds of at least 100 Mbps on demand.

• Make India a global hub for telecommunications equipment manufacturing and a centre forconverged communications services.

• Deliver high quality services in voice, data, multimedia and broadcasting services on convergednetworks.

• Liberalise usage of spectrum to enable use of spectrum in any band to provide any service in anytechnology through spectrum pool, sharing and trading.

• Put in place a simplified mergers and acquisition regime for the telecommunications sector thatensures adequate competition.

• Simplify the licensing regime by extending further converged high quality services across Indiaincluding rural and remote areas.

• Achieve “One Nation - Full Mobile Number Portability” and work towards “One Nation - FreeRoaming”.

• Recognise the role of cloud computing in the future and new Internet protocol version 6 (i.e.IPv6) and its applications in different sectors of the Indian economy.

TRAI’s Guidelines for Unified Licence/Class licence and Migration of Existing Licences

The DoT had sought the TRAI’s recommendations on modalities for enabling existingUAS/CMTS/ISP/NLD/ILD/Global Mobile Personal Communications by Satellite licensees to migrateto national/service area level unified licence. On April 6, 2012, the TRAI released recommendationswhich included:

• There will be three levels of unified licences; national level, service area level and district level.An applicant can either apply for national level unified licence or service area level unifiedlicence or district level unified licence.

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• Subject to satisfaction of eligibility conditions, licences will be issued on a non-exclusive basiswithout any restriction on the number of licences.

• At the time of applying for the unified licence, no access spectrum will be given. A holder ofunified licence other than district level unified licence may separately obtain spectrum as per theprevailing policy.

Unified Licence

Based on the recommendations received from the TRAI, the Government decided to move to theunified licence regime. The spectrum will be delinked from the licence and the licence will cover allthe voice and data services, such as mobile, fixed-line, NLD, ILD, ISP, etc. The spectrum will beallotted by the Government from time to time through an auction process. The operator may opt forthe full unified licence covering all telecommunications services or select the telecommunicationsservices they would like to offer and, accordingly, the authorisation will be provided in the licence.On August 19, 2013, the DoT issued the guidelines for the unified licence (the “UL Guidelines”) andalso the migration path for existing operators to move to the unified licence. ISPs with BWA spectrumwould also be allowed to migrate to the unified licence after paying an additional fee equal to thedifference between the entry fee for UASL and entry fee paid for ISP licence in addition to entry feeas applicable for the new unified licence. The unified licence will be issued on a non-exclusive basisfor a period of 20 years.

In June 2012, the DoT decided to move to uniform licence fees for UASL, NLD, ILD and ISP licences.In the event of holding or obtaining access spectrum, no licensee or its promoters may directly orindirectly have any beneficial interest in any other licensee holding access spectrum in the sameservice area. Further, the minimum capital requirements have been prescribed under the ULGuidelines. The licence fee has been prescribed as 8% of the AGR. However, from the second yearof the effective date of respective authorisation, the licence fee shall be subject to a minimum of 10%of entry fee of the respective authorised service and service area. Further, no other licence for any ofthe services covered under the unified licence shall be issued/extended/renewed. In addition, the ULGuidelines impose certain restrictive conditions in relation to equity holding in other companies andsecurity conditions. Pursuant to an amendment to the UL Guidelines dated December 2013, theexisting telecommunications service providers are now required to migrate only their relevant licenceto unified licence at the time of renewal/extension of the licence. On January 8, 2014, the DoT issuedconsolidated guidelines for grant of unified licence.

Service July 1, 2012 to March 31, 2013 April 1, 2013 onwards

UASL

Metro & A category . . . . . . . . . . . . 9% 8%

B category . . . . . . . . . . . . . . . . . . . 8% 8%

C category . . . . . . . . . . . . . . . . . . . 7% 8%

NLD . . . . . . . . . . . . . . . . . . . . . . . 7% 8%

ILD . . . . . . . . . . . . . . . . . . . . . . . . 7% 8%

ISP

Under 19981 guidelines (withoutInternet telephony) . . . . . . . . . . . 4% 8%

Under 2002 guidelines (withInternet telephony) and theAugust 24, 2007 guidelines. . . . . 7% 8%

1 The TRAI has held a consultation exercise on this and is yet to submit its recommendations to the DoT.

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One-time Spectrum Charge

• On December 28, 2013, the DoT has issued an order for levying a one-time spectrum charge onGSM operators holding spectrum beyond 6.2 MHz between July 1, 2008 and December 31, 2012and beyond 4.4 MHz from January 1, 2013 and accordingly demands have been issued to theoperators.

• On March 15, 2013, the DoT has also issued an order for levying a one-time spectrum charge onCDMA operators holding spectrum beyond 2.5 MHz from January 1, 2013 and accordinglydemands have been issued to the operators.

• The orders and the demands have been challenged by the operators and the matter is currentlybeing heard by the Supreme Court. See “Legal Proceedings”.

EMF Norms

In 2008, the DoT adopted the international electromagnetic field (“EMF”) norms in respect of mobiletowers prescribed by the International Commission on Non-Ionising Radiation Protection(“ICNIRP”). The DoT required operators to meet the ICNIRP norms. The operators were required tosubmit self certification for meeting the ICNIRP norms. The DoT has now revised the EMF norms toone-tenth of the limit prescribed by ICNIRP norms. Operators are required to comply with the newnorms with effect from September 1, 2012. Now telecommunications enforcement resource andmonitoring cells have been entrusted with auditing the self certification issued by the operators.

Preferential Market Access for Domestic Products

• The DoT has issued a notification dealing with a Government procurement policy for purchasingdomestically manufactured electronic products for its own use and for products that have securityimplications and do not involve resale. The DoT has prescribed a list of products as well as theminimum value addition required from manufacturers each year for each item.

• The Government has decided to defer the extension of the preferential market access policy toprivate operators.

TRAI Recommendations on Exit Policy for Various Telecommunications Licences

The DoT had sought the TRAI’s recommendations on exit policy for all types of licences. Based onan analysis of the comments received on the draft response paper from the stakeholders and its ownanalysis, on April 18, 2012, the TRAI decided that there was presently no need for a separate exitpolicy for telecommunications licences and the present conditions in various licences for surrender oflicence, whereby a licensee can surrender the licence by giving a notice of at least 60 calendar days(30 calendar days in case of ISP licence) in advance, will continue to be applicable.

Enforcement of Regulations and Orders issued by TRAI - Prescription of Financial Disincentives

For better enforcement of various regulations and orders issued by the TRAI, financial disincentivesfor infringements have been prescribed by the TRAI, inter alia, in the following cases:

• telecommunications service provider’s poor quality standards in case of basic telephone services(wireline), cellular mobile telephone services and broadband services for non-compliance withthe prescribed service quality parameters and customer service quality parameters;

• wrong rejection of porting requests by telecommunications service providers;

• telecommunications service providers who fail to comply with tariff reporting requirements orlevy excess charges on consumers;

• telecommunications service providers’ delay in submission of, or for submission of falseinformation in, accounting separation reports.

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Merger and Acquisition

Pursuant to the National Telecommunications Policy, 2002 and the Companies Act, 2013, the DoT, theMinistry of Communications and Information Technology on February 20, 2014 issued guidelines fortransfer/merger of various categories of telecommunications service licences/authorisation underunified licence on compromises, arrangements and amalgamation of telecommunications serviceproviders. Some of the significant guidelines are set out below:

• The DoT has to be notified of any proposal filed for compromise, arrangement and amalgamationof the licensees and any representation/objection has to be made by the DoT within 30 days ofthe receipt of the notice.

• Following the approval of the scheme under the Companies Act, 2013, a period of one year isavailable for transfer/merger of different licences in different service areas subsequent to theappropriate approval by the National Company Law Tribunal or Company Judge.

• Following a merger or a particular scheme under the Companies Act, 2013,licences/authorisations of the transferor company will be subsumed into the resultant entity. Thevalidity of the various licences/authorisations will be equal to the higher of the validity oflicences/authorisations of the merging entities on the date of the merger. Pro-rata payment mayneed to be made for the extended period of the licence/authorisation.

• The transfer/merger of licences will be allowed only if the market share of the resultant entityfor access services in respective service areas does not exceed 50%. In case the market shareexceeds 50%, the resultant entity is required to reduce its market share to the limit of 50% withinone year from the date of approval of the merger or acquisition or amalgamation by thecompetent authority. The DoT is empowered to initiate suitable action for failure to limit theresultant entity’s market share to 50% within one year.

• The market share of the subscriber base and the AGR of the licensee in the relevant market (i.e.,the entire access market including wireline and wireless customers) will be considered fordetermining market share.

• If the transferor holds a part of the spectrum pursuant to payment of entry fee, the transfereecompany at the time of the merger is required to pay the Government the differential betweenthe entry fee and the market determined price of spectrum from the date of approval of sucharrangement on a pro rata basis for the remaining period of validity of the licence.

• The DoT has assigned certain thresholds for the resultant entity formed pursuant to compromise,arrangement or amalgamation and merger of licences in specified service areas. The totalspectrum held by the resultant entity must not exceed 25% of the total spectrum assigned foraccess areas and 50% of the spectrum assigned in a given band, by way of auction or otherwisefor a specific service area.

• If the total spectrum held by the resultant entity is beyond the prescribed thresholds, the excessspectrum needs to be surrendered within one year of the permission being granted.

• All demands raised by the Government/the DoT in relation to the licences of the merging entitieswill have to be cleared by either of the two licensees before issue of permission for merger ortransfer of licences/authorisations.

• Pursuant to transfer/merger of licences in a service area, if the resultant entity becomes asignificant market power as defined in the Telecommunications Interconnect (ReferenceInterconnect Offer) Regulations, 2012, it has to comply with the rules and regulations applicablefor significant market powers.

• Dispute resolution will be handled by the Telecommunications Dispute Settlement and AppellateTribunal in terms of the Telecommunications Regulatory Authority of India Act, 1997.

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Interconnection Usage Charges

The TRAI has issued the Interconnection Usage Charges Regulations, 2003 regulating arrangementsamongst service providers for telecommunications services and payment of interconnection usagecharges such as termination charges, carriage charges and access deficit charges.

National Frequency Allocation Plan, 2011

The National Frequency Allocation Plan, 2011 (“NFAP”) was developed by the WPC in line with thepolicies of the World Radiocommunication Conference, 2007 of the International TelecommunicationUnion (“ITU”). The NFAP was developed with a view to (i) cater to emerging technologies, (ii) ensureequitable and optimum utilisation of scarce natural resources of radio frequency spectrum and (iii)encourage or promote indigenous technologies/manufacturing by provisioning of a small chunk ofspectrum in certain frequency bands/sub-bands in limited geographical areas. The ITU formulates theinternational frequency table based on which the member countries can formulate their own frequencyallocation plan. Accordingly, the WPC formulates the national frequency allocation plan for theallocation of spectrum frequencies in India.

Installation of Mobile Towers

The DoT issued a letter dated December 11, 2012, to all telecommunications service providersrequiring all telecommunications towers erected or used by telecommunications service providers toconform to the generic requirements of towers issued by Telecommunications Engineering Centre,with effect from April 1, 2014. Further, the DoT has issued Advisory Guidelines for State Governmentfor Offer of Clearance for Installation of Mobile Towers. These guidelines provide for, inter alia,procedure for obtaining clearance from local bodies and/or State Governments for installation ofmobile towers and the power accorded to the State Government and/or local body in this regard. Inaddition to the above, permission from various authorities such as the municipal authorities, zillaparishad, gram panchayat or any other local authority would be required for setting up towers andother infrastructure. Further, permission from State pollution control boards would be also requiredfor the operating DG sets.

Quality of Service of Broadband Service

The Broadband Policy, 2004, was issued by the Government for fixing the service quality standardsfor broadband services. Pursuant to the Broadband Policy, 2004, the TRAI on October 6, 2006 issuedthe Quality of Service of Broadband Service Regulations, 2006 for all ISPs, UAS providers, basicservice providers and CMTS providers providing broadband services including MTNL and BSNL.

The Quality of Service of Broadband Service Regulations, 2006 seek to achieve the followingobjectives:

• creating transparent and monitorable standards for broadband services to be provided by serviceproviders;

• measuring and assessing the quality of broadband service provided; and

• protecting the interests of consumers and enhancing consumer satisfaction.

Some of the key obligations of service providers include, inter-alia:

• meeting the benchmarks for the prescribed quality of service in relation to broadband services.The parameters include service provisioning, fault repair, billing performance and bandwidthutilisation;

• submitting quarterly performance monitoring reports on the prescribed benchmarks formeasuring the quality of service;

• registering all demands for broadband connections and providing registration numbers toprospective customers;

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• maintaining complete and accurate records which are to be audited/inspected by the TRAI; and

• making available a facility for measuring broadband connection speed at the ISP node.

On September 24, 2014, the TRAI has issued a consultation paper titled “Delivering BroadbandQuickly: What do we need to do?” and has invited feedback on ways to boost broadband penetrationin India including on issues such as involving private telecommunications companies and thetimeframe for auctioning spectrum in the 700 MHz band.

Telecommunication Tariff Order, 1999

The TRAI does not fix tariffs for various telecommunications services and permits thetelecommunications service providers to fix the tariffs for such services themselves, except for ruralfixed-line services, national roaming services, leased circuits and use of USSD for USSD-basedmobile banking services, where a ceiling has been fixed by the TRAI. Tariff regulation fortelecommunications services was initiated with the Telecommunication Tariff Order, 1999. The TRAIhas since, through subsequent amendments, introduced various regulatory measures for the protectionof subscribers. Service providers must provide a standard package to all subscribers. Where there isno tariff fixed by the TRAI, either as a floor or a ceiling, the service provider may provide, in additionto the standard package, alternative combinations of tariffs to different classes of subscribers in anon-discriminatory manner and such classification shall not be done in an arbitrary manner. Otherprotective measures stipulated by the TRAI include a prohibition on increase in tariffs of a tariff plan,inter alia, during the validity period of a tariff plan which has a validity period of more than sixmonths or which requires the subscriber to make an upfront payment for such validity period,prohibition on termination of existing tariff plans without notice and reporting to the TRAI in the caseof alteration of tariffs, etc.

On September 24, 2014, the TRAI has released draft amendments to the Telecommunication TariffOrder, 1999 for comments. The amendment proposed to exempt ISPs from reporting requirement ina financial year if the total number of its subscribers is less than 10,000. The comments had to besubmitted by October 14, 2014.

Guidelines for Internet Services Providers

According to the guidelines for the unified licence issued on August 19, 2013, the authorisation forthe provision of Internet services is now granted under the unified licence. The ISP-authorisedlicensees may provide Internet service by using the cable network of an authorised cable operator, aslast mile linkage, subject to the Cable Television Networks (Regulation) Act, 1995. The serviceprovider may install and operate an international Internet gateway in the service area using satelliteor submarine cable after obtaining a security clearance from the DoT. The ISP-authorised licenseesmust update online Internet lease line customers’ data, set up lawful interception and monitoringsystems of requisite capacities and inform the DoT of any change in their topology/configuration. Thelicensees must provide periodic reports on the details of ISP nodes and give prior intimation of theinstallation of new nodes. Under the unified licence, the scope of Internet telephony that can beprovided by a licensee with ISP authorisation is limited and the licensee must regularly provide to theDoT data on the volume of Internet telephony traffic flowing through its network and details ofsubscribers using Internet telephony services.

Directions on Implementation of Green Technologies in Telecom Sector, 2012

The DoT, in January 2012, directed all NLD service providers to adopt energy efficient networkplanning and technology, infrastructure sharing and adopt renewable energy technology. Some of thekey directions to the service providers are to, inter alia: (i) ensure that at least 50% of all towers arepowered by hybrid power in rural areas and 20% in urban areas by 2015 and 75% of all towers in ruralareas and 33% in urban areas by 2020; (ii) develop a carbon credit policy for the achievement ofcertain targets by 2020; (iii) submit carbon footprints of their network operations on a bi-annual basis;

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(iv) ensure that all telecommunications products, services and equipment in the telecommunicationsnetwork are assessed for their energy consumption and performance and certified to be ‘green’ by2015; and (v) evolve, through their industry associations, a voluntary code of practice in relation tothe adoption of green technologies.

Registration as Infrastructure Provider Category — I

Telecommunications infrastructure service providers are required to be registered with the DoT as IP-IProviders and obtain a certificate in this regard from the DoT (“IP-I Registration Certificate”). AnIP-I Provider can provide infrastructure such as dark fibre, right of way, duct space and towers on alease/rent/sale basis to licensed telecommunications services providers on mutually agreed terms onlyin accordance with the terms and conditions set out in the IP-I Registration Certificate and theGuidelines for Registration of Infrastructure Providers Category-I issued by the DoT. An IP-I Providermust provide its infrastructure in a non-discriminatory manner to telecommunications serviceproviders. An IP-I Provider is required to protect the privacy of all communications and prevent theunwarranted interception of messages. In addition, an IP-I Provider must ensure that anytelecommunications installation should not create a safety hazard or contravene any statute, rule,regulation or public policy. Under the provisions of the IP-I Registration Certificate, the DoT mayeither take over the equipment and networks of the IP-I Provider or revoke, suspend or terminate theIP-Registration Certificate either in part or in whole as it deems fit, in the public’s interest, in the caseof emergency or war or low intensity conflict or in any other eventuality.

Infrastructure Sharing Guidelines

The DoT issued Guidelines for Infrastructure Sharing on April 1, 2008 (the “Infrastructure SharingGuidelines”) which are applicable to telecommunications service providers and telecommunicationsinfrastructure providers. The Infrastructure Sharing Guidelines are intended to reduce the input costsof telecommunications service providers which would facilitate reduced tariffs and increasedtele-density in rural areas. Under the Infrastructure Sharing Guidelines, IP-I providers are required toseek siting clearance from the SACFA to erect towers. Infrastructure providers are permitted to sharepassive infrastructure in accordance with the provisions in the licences of BSOs, cellular mobileservice providers and the UASL. To incentivise infrastructure providers to provide services to moretelecommunications service providers in urban areas, State Governments have been asked to ensurethat fees charged to infrastructure providers are at a flat rate, irrespective of the number oftelecommunications service providers to whom they provide infrastructure services to.

Spectrum sharing and spectrum trading guidelines

On January 28, 2014, the TRAI issued its recommendations on the working guidelines for spectrumtrading (the “Spectrum Trading Guidelines”). Spectrum trading will allow a user to transfer itsspectrum authorisation to a new user at a price determined by the market. Some of the keyrecommendations of TRAI are as follows:

• When a block of spectrum is traded, the associated rights and obligations of the spectrum blockshall be transferred from the seller to the buyer.

• Spectrum trading will not alter the original validity period of spectrum.

• For the present, spectrum trading shall be permitted only on a pan-LSA (licensed service area)basis i.e. spectrum cannot be traded for a part of the LSA.

• The seller and the buyer shall be required to inform the licensor regarding the spectrum trade,six weeks prior to the effective date of trade.

• Spectrum trading will be available only for notified bands and will be permitted in prescribedblock sizes.

• The buyer of the spectrum should be in compliance with the spectrum cap (ceiling) of 25% ofits total spectrum holding in the 800/900/1800/2100/2300/2500 MHz bands with applicablepaired band put together and 50% within a given band in each of the LSA.

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On July 21, 2014, the TRAI issued its recommendations on “Guidelines of Spectrum Sharing” (the“Spectrum Sharing Guidelines”). The main objective of spectrum sharing is to enable thetelecommunications service providers to pool their spectrum holdings and gain better spectralefficiency. The salient features of the Spectrum Sharing Guidelines are as follows:

• All spectrum in the bands of 800/900/1800/2100/2300/2500 MHz will be sharable provided thatboth licensees are having spectrum in the same band.

• Both licensees willing to share the spectrum shall inform the licensor at the time of entering intospectrum sharing arrangement.

• A portion of additional capacity created on account of sharing shall be counted while counted forthe purpose of applying the prescribed caps of 25% of the spectrum assigned and 50% in a band.

The final Spectrum Trading Guidelines and Spectrum Sharing Guidelines have not been notified yet.

Universal Service Obligation Fund

The Indian Telegraph Act, 1885 was amended in 2003 through the Indian Telegraph (Amendment) Act,2003 to establish the Universal Service Obligation Fund (the “USOF”). The USOF was initiallyinstituted with the idea of establishing telegraph services, which was later expanded to include mobileservices, broadband connectivity and the creation of infrastructure for people in rural and remote areasat a reasonable price. The different schemes established include, provision of publictelecommunications and information services, provision of household telephones in rural and remoteareas, creation of infrastructure for provision of mobile services in rural and remote areas, provisionof broadband connectivity to villages in a phased manner, creation of general infrastructure in ruraland remote areas for development of telecommunications facilities and induction of new technologicaldevelopments in the telecommunications sector in rural and remote areas. A key scheme, the NationalOptical Fibre Network (the “NOFN”), was launched under the USOF is to connect 250,000 grampanchayats in India by utilising the existing fibre network of public sector telecommunications serviceproviders (such as BSNL, Railtel Corporation of India Limited and Power Grid Corporation of IndiaLimited) and laying incremental fibre to connect to villages wherever necessary. Non-discriminatoryaccess to the NOFN will be provided to various types of service providers such as telecommunicationsservice providers, ISPs, cable television operators and content providers to launch various services inrural areas such as e-health, e-education and e-governance, etc.

Instructions for New Mobile Subscribers

The DoT issued detailed instructions on August 9, 2012 regulating activation and disconnection ofnew mobile connections to improve customer verification compliance. A customer acquisition form(“CAF”) along with documentary proof of identity and address is required to be provided at the timeof activation of a new mobile connection. Certain procedures required to be followed includetele-verification post acquisition of SIM card by the telecommunications service provider and filingof a first information report (“FIR”) by the distributor/franchisee of SIM cards against the subscriberin case the latter submits false documentation. In case the franchisee/distributor fails to lodge an FIRagainst the subscriber, the telecommunications service provider must lodge an FIR against thesubscriber and franchisee/distributor.

Guidelines for Obtaining Licence for Providing Direct-to-Home Broadcasting Service in India

The Ministry of Information and Broadcasting issued guidelines for obtaining a licence to provideDTH services in January 2001. The guidelines prescribe certain eligibility criteria and procedures forobtaining DTH licences in India. The guidelines restrict broadcasting and cable network companiesfrom collectively owning more than 20% of a DTH licensee’s total paid-up equity share capital. Theguidelines also restrict the licensee from holding more than 20% in any other broadcasting and/orcable network company. Licensee’s must obtain SACFA clearance and clearance for usage of satellitesfrom the Department of Space and also a clearance from the Ministry of Home Affairs. The DTHlicence is valid for a period of 10 years. There are no restrictions as to the total number of DTH

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licensees. The Ministry reserves the right to prohibit the transmission or reception of programmes inthe interest of national security, in the event of emergency/war or a similar type of situation. Licenseesmust cease transmission of television channels or any content as directed by the Ministry or any otherdesignated lawful authority.

On July 23, 2014, TRAI released recommendations for a new DTH licensing regime, which include(i) extension of licence period of DTH operators to 20 years, (ii) reduction in existing licence fee from10% of gross revenue to 8% of AGR; and (iii) one time entry fee of `100 million.

Telecommunication (Broadcasting and Cable Services) Interconnection Regulation, 2004

The Telecommunication (Broadcasting and Cable Services) Interconnection Regulation, 2004 governarrangements among broadcasting and cable service providers for interconnection and revenue share.Under these regulations, broadcasters of television channels are not permitted to enter intoarrangements with any distributor of television channels that prevent any other distributor fromobtaining such television channels for distribution. Broadcasters are required to provide on requestsignals of its television channels on non-discriminatory terms to all distributors of television channels(including cable operators, DTH operators, multi-system operators, head ends in the sky operators) ona non-discriminatory basis. Moreover, no broadcaster, multi system operator is permitted to disconnectthe television channel signals to a distributor of television channels unless prior notice is servedthrough newspapers. Information must also be given to consumers to enable them to protect theirinterests.

Foreign Exchange Laws

ECB Guidelines

The current laws relating to ECBs are embodied in the ECB Guidelines. ECB can be accessed undertwo routes: (i) the automatic route, and (ii) the approval route. The automatic route does not requirea borrower to obtain any RBI approvals whereas the approval route refers to circumstances where priorRBI approval is mandatory, before raising an ECB.

Automatic Route

Under the automatic route, recognised borrowers permitted to raise ECBs include, inter alia,companies in industrial sectors, infrastructure sectors and specified service sectors (i.e. hotel, hospitaland software sectors) and includes companies engaged in the manufacture or production of steel. Theautomatic route places several restrictions including those on the eligibility of borrower, lender, all-incost and end use that are described further below.

The foreign lenders eligible to provide ECBs include, inter alia: (i) international banks, (ii)international capital markets, (iii) multilateral financial institutions or regional financial institutionsand Government-owned development financial institutions, (iv) export credit agencies, (v) suppliersof equipment, (vi) foreign collaborators; and (vii) foreign equity holders, other than erstwhile overseascorporate bodies (subject to compliance with threshold requirements).

ECB proceeds can be utilised for, inter alia: (i) investment (such as the import of capital goods, newprojects, modernisation or expansion of existing production units) in the real sector (i.e. the industrialsector including small and medium enterprises, infrastructure sector and specified service sectors); (ii)overseas direct investment in joint ventures or wholly owned subsidiaries (subject to applicableguidelines); (iii) acquisition of shares in the Government’s disinvestment programme of public sectorunits; (iv) lending to self-help groups or for micro-credit or bona fide microfinance activity; (iv)payment of interest during construction by companies engaged in infrastructure sector, (v) refinancingof bridge finance used for import of capital goods by infrastructure companies; (vi) import of services,technical knowhow and payment of licence fee subject to certain restrictions; (vii) payment ofspectrum allocation fee; and (viii) refinancing of ECBS subject to certain conditions.

ECB proceeds cannot be used for: (i) on-lending or investment in capital markets or for acquisitionof a company in India by a corporate; (ii) investment in real estate; (iii) general corporate purpose(including working capital); and (iv) acquisition of land.

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The ECB Guidelines do not permit the repayment of existing Rupee loans from ECB proceeds raisedunder the automatic route except for the purpose of refinancing the Rupee loans availed from domesticlenders to make upfront payment for 2G spectrum allocation, provided that the ECB is raised within18 months from the date of sanction of the Rupee loans.

Any ECB raised by an Indian company under the ECB Guidelines has to comply with the minimumaverage maturity prescribed. In terms of the ECB Guidelines, an ECB above US$750 million or itsequivalent must have a minimum average maturity of five years.

The maximum amount of ECB which can be raised by a corporate (other than those in the servicesectors) is US$ 750 million in a financial year. The all-in cost (which includes rate of interest, otherfees and expenses in foreign currency but does not include commitment fees, pre-payment fees,payments for withholding tax in Rupees or fees payable in Rupees) ceilings for ECBs are as follows:

Average Maturity Period All-in Cost over 6 Month LIBOR*

ECB of 3 years up to 5 years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350 basis points

ECB of more than 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 basis points

* For respective currency of borrowing or applicable benchmarks. In case of fixed rate loans, the swap cost plus the margin

should be equivalent to floating rate plus the applicable margin.

Approval Route

All ECBs falling outside the purview of the automatic route are considered by RBI under the approvalroute. In terms of the ECB Guidelines, no company can utilize the proceeds of an ECB for therepayment of its existing rupee loans without the approval of the RBI.

Filing and regulatory requirements in relation to issuance of Notes

Our Company, as an ECB borrower, is required to obtain a loan registration number (“LRN”) from theRBI before an issuance of Notes can be effected. For allotment of the LRN, ECB borrowers arerequired to submit Form 83 certified by a company secretary or chartered accountant to the AD Bankof the ECB borrower. The AD Bank is then required to forward the Form 83 to the RBI. Each ECBborrower, including our Company, is required to submit an ECB-2 Return on a monthly basis via itsAD Bank to the RBI.

Procedure in relation to any change to the Terms and Conditions of the Notes

As at the date of this Offering Circular, the ECB Guidelines prescribe that any changes in the termsand conditions of the Notes after obtaining the LRN will require the prior approval of the RBI or theAD Bank, as the case may be.

Our Company will be required to obtain prior approval from the AD Bank, in accordance with the ECBGuidelines, if there is a change in the repayment schedule of the Notes whether associated with changein the average maturity period or not and/or with changes in the all-in-cost of the ECB. Consequently,the prior approval of the AD Bank will be required for an early redemption of the Notes upon: (i) theoccurrence of a Change of Control triggering event, (ii) an Event of Default or (iii) early redemptionof the Notes due to taxation reasons. See “Terms and Conditions of the Notes — Redemption andPurchase — Redemption for Change of Control Triggering Event”, “Terms and Conditions of the Notes— Events of Default” and “Terms and Conditions of the Notes — Redemption and Purchase —Redemption for taxation reasons”.

Our Company will also be required to obtain prior approval of the AD Bank for certain changes in theterms and conditions of Notes under the ECB Guidelines, including: (i) a modification in the currencyof the borrowing, (ii) a change in the designated AD Bank, (iii) a change in the name of the borrower,(iv) a cancellation of the LRN; (v) a reduction in amount of ECB (irrespective of number ofoccassions) along with any changes in draw-down and repayment schedules, average maturity periodand all-in-cost; and (vi) a change in the all-in cost of the ECB.

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Corporate Laws

Our Company is incorporated and registered under the Companies Act, 1956 and is governed by itsprovisions and the rules made thereunder. In 2013, the Indian Parliament enacted the Companies Act2013, which was notified in part in the official gazette on August 30, 2013. The Ministry of CorporateAffairs has to date notified (i) 98 sections of the Companies Act 2013 which were made effective fromSeptember 12, 2013; (ii) Section 35 and Schedule VII of the Companies Act 2013 in relation tocorporate social responsibility on February 27, 2014 made effective from April 1, 2014; and (iii) 183sections and Schedule I to XI which were notified on March 26, 2014 and made effective from April1, 2014. The substantial operative part of the legislation is in the rules, and the rules forimplementation of majority of the chapters of Companies Act 2013 have also been notified and weremade effective from April 1, 2014.

The Companies Act 2013 has introduced various sections which significantly and substantiallymodify, repeal and replace the entire framework of law governing Indian companies including ourCompany. For transition purposes, the Companies Act 2013 encapsulates grandfathering provisionswhereby acts done, resolutions passed, documents entered, registers maintained under the CompaniesAct, 1956 (unless contrary to the Companies Act 2013) will continue to be valid under the CompaniesAct 2013.

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OUR BUSINESS

Overview





Our Global Operations comprise the provision of voice, data and Internet network and services, andthe lease of submarine cable infrastructure and metropolitan city networks. We have approximately650 enterprise customers throughout developed markets such as the United States, the UnitedKingdom, the Netherlands and Singapore. We own and operate a widespread submarine fibre opticcable network spanning 68,698 RKm and connecting North America, Europe, the Middle East and Asiathrough 46 landing points in 27 countries. The total installed capacity of our five subsea cable systemsis over 21 Tbps. We also have owned and leased metropolitan networks in 27 cities across 13countries. We are one of the leading managed Ethernet service providers in the United States and havean established position in the global enterprise data market.

We are a part of the Reliance Group, one of India’s largest business groups by market capitalisation(`621.6 billion as at December 31, 2014) with business interests in, among others, thetelecommunications, power, infrastructure, financial services and entertainment industries. TheReliance Group had approximately 95,000 employees as at December 31, 2014, and its four listedcompanies in India had over 7.68 million shareholders, as at March 13, 2015. The Reliance Group isled by Mr. Anil D. Ambani, one of India’s prominent business leaders.

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From an operational perspective, our business is organised into two strategic segments: the IndiaOperations and the Global Operations. We conduct a substantial portion of our business through ourSubsidiaries, particularly, GCX, RTL, RCIL, Reliance Infratel and Reliance Big TV.

For the financial years 2014 and 2013, our total revenue was `223.21 billion and `217.78 billion,respectively, while profit after tax was `10.47 billion and `6.72 billion, respectively.

For the financial years 2014 and 2013, our India Operations and Global Operations generated totalrevenues of `185.69 billion and `177.84 billion and `46.21 billion and `49.28 billion, respectively.

Our Competitive Strengths

Presence in an Industry with Growth Potential

We believe we can capitalise on the growth potential presented by the telecommunications industry asa result of our established presence and our comprehensive range of products and services in India andglobally.

The Indian telecommunications industry has attractive growth prospects that are mainly a result offactors such as: (i) relatively low rural penetration; (ii) rapid growth in data consumption from a lowdata consumption levels; and (iii) reduced competitive intensity resulting in improved pricing powerfor existing operators. According to “The Indian Telecom Services Performance Indicator ReportJuly-September 2014” published by TRAI, 382.5 million wireless subscribers were rural subscribers,out of 930.2 million total wireless subscribers, as at September 30, 2014. According to TRAI, thenumber of rural wireless subscribers has increased by 47.6 million between September 30, 2012 and2014. While the increase in rural subscribers has increased the rural teledensity gradually from 39.5per 100 population as at September 30, 2012 to 44.3 per 100 population as at September 30, 2014, itis still very low compared to the urban teledensity, which stood at 142.4 per 100 population as atSeptember 30, 2014.

There has also been a decrease in competitive intensity as measured by the number of wirelessoperators presenting an opportunity for existing players. According to TRAI data, the number ofwireless operators (measured by whether a licensee reported subscribers in a particular circle as atmonth end) increased from 135 in December 2008 to 249 in December 2011. However, it has fallento 171 as at September 30, 2014. The monthly ARPU for GSM subscribers increased from `95 to `116between the quarter ending September 30, 2012 and the quarter ending September 30, 2014. ForCDMA subscribers, monthly ARPU increased from `78 to `110 over the same period. We believe thesefactors will allow us to leverage our existing presence to grow our revenue and improve ourprofitability.

Data consumption is also growing rapidly. Total Internet subscribers increased by 20.9% from 210.4million as at September 30, 2013 to 254.4 million as at September 30, 2014, according to “The IndianTelecom Services Performance Indicator Report July-September 2014” published by TRAI. Dataconsumption in India is largely a wireless phenomenon, as 92.6% of total Internet subscribers werewireless Internet subscribers. However, the wireless Internet subscriber base represents only 25.3% oftotal wireless subscribers. According to the Nokia Networks MBiT Report, 2014, India 2G and 3G datapayload grew by 87% from January to December 2013, of which 3G data payload grew by 146%.

Further, we believe that the global data communications industry has attractive growth prospectsdriven by various factors, which include: (i) rapid increase of Internet users, particularly in emergingmarkets; (ii) consumer demand for faster broadband speeds; (iii) the increase in the number ofconnected devices, such as smartphones, tablets and other Internet of Everything gadgets; (iv) growthin demand of data-intensive applications, such as social networking, video, online gaming, file sharingand remote file storage; and (v) the development and widespread implementation of cloud computingtechnologies that require high bandwidth and low latency global networks.

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Large Customer Base with Leadership in Data Subscribers

We have a large customer base in India. According to the monthly subscriber data of TRAI forDecember 2014, we reported 107.5 million total subscribers, of whom 106.3 million were wirelesssubscribers. We are the fourth largest wireless operator in India, as measured by the number ofwireless subscribers, with a market share of 11.3% and 12.4% on a VLR basis. The third largestoperator had a wireless subscriber market share of 15.9% and the fifth largest operator had a wirelesssubscriber market share of 8.6%. We have generated more than 100 billion MoU per quarter for thelast 12 quarters. We also have a strong market position in data subscribers, including 3G subscribers.As at December 31, 2014, we had a wireless subscriber base of 106.3 million wireless subscribers(including 31.4 million data subscribers, of which 16.7 million were 3G subscribers). Our reportedvoice and data traffic were 103.4 billion minutes and 76.4 billion MB, respectively, for the threemonths ended December 31, 2014. The India enterprise customer base includes over 39,000 Indian andmultinational corporations including SMEs and over 900 prominent enterprises in India to whom weoffer a wide range of products and services spanning voice, data, collaboration, data centre servicesand managed services. We believe that our large customer base provides us with significant operatingleverage and gives us the opportunity to benefit significantly from the reduction in competitiveintensity for voice and the growth in data traffic.

Our global data business has a diverse customer base, including major telecommunications carriers,multinational enterprises and new media companies. Furthermore, long-term contracts with many ofthese customers provide us with high revenue visibility.

Annuity-like Recurring Revenue Streams

We believe our revenues have higher stability and predictability, due to annuity-like recurring revenuestreams across our various businesses. In the wireless business, we have acquired long-term customersthrough bundled sales and post-paid services, which lead to lower churn rates and longer customer lifecycles. We experience low churn rates for our enterprise clientele of multinational corporations andSMEs, ensuring annuity-like recurring revenue. In our carrier business, we have recurring revenuesfrom various customers, including other carriers. Our Global Operations revenues mostly are throughlong-term carrier and IRU contracts and are recurring in nature. In our tower infrastructure business,we have long-term contracts with other service providers and also have further capacity to enhancetenancies.

Comprehensive Domestic and International Network

We have a nationwide, convergent digital network capable of providing a comprehensive suite ofproducts and services to our customer base. As at December 31, 2014, our wireless network included86,792 owned and leased sites which provide coverage to over 21,000 cities and over 400,000 villagesacross all 22 Circles. Our nationwide OFC network has a length of over 190,000 RKm. We have aterrestrial network in 44 cities and towns in India with approximately more than one million buildingsconnected directly to our broadband network, which services approximately 1.2 million access lines.We have ten data centres in four cities with a total capacity of approximately 1.1 million square feet(including one data centre under construction). Our DTH services are available in 8,350 cities andtowns. Our global network is distinguished by its geographical coverage and ability to provide subseaand terrestrial connectivity to major telecommunications hubs. These include hubs in the developedmarkets in the U.S. and Europe and key emerging markets in the Middle East and Asia. Our convergednetwork provides us with great flexibility in:

• potentially bundling voice, data and video services to retail customers;

• providing seamless, fully redundant, domestic and international connectivity to corporatecustomers at demanding service levels;

• upgrading networks, including introducing new technologies in a short time frame and in ahighly localised manner; and

• financially efficient implementation of expansion and upgrades in coverage, capacity andtechnology.

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Ample, Long Validity Period Wireless Spectrum

We are the only telecommunications operator in India with allocation of CDMA spectrum (800 MHz)and GSM spectrum (900 MHz and/or 1800 MHz) in all 22 telecommunications Circles. In addition,we have won 3G spectrum (2100 MHz) in 13 Circles in the 2010 auction. Most of our spectrums havelong validity periods — our CDMA spectrum is valid until 2021 or later in 19 Circles, our GSMspectrum is valid until 2021 or later in 14 Circles, and our 3G spectrum is valid until 2030 in all 13Circles. We believe that our diversity of spectrum provides us with significant advantages. Inparticular, our CDMA spectrum allows us to provide high-quality data services through dongles andsmartphones in a capital-efficient manner, since the lower frequency requires fewer sites for similarcoverage, and CDMA technology allows for more efficient compression and transmission of data.Further, the long validity period of our spectrum allows us to conserve cash flows relative to manyof our competitors who face expiration of validity periods for considerable spectrum holding over thenext two financial years.

Extensive Distribution and Service Network

We maintain an extensive distribution and service network covering all 22 telecommunications Circlesin India. We have recently adopted an initiative to launch full-service franchise owned and operatedretail outlets offering a full suite of services, including innovative self-care options, to our customers.As at December 31, 2014, we had 855 franchised Reliance Mobile exclusive stores spread across 134cities and towns, offering customer activation and after-sales services. We also intend to increase theseretail outlets to other cities. Our third-party retailer presence includes more than 680,000 outlets.Reliance Digital TV is available at more than 35,850 outlets across 8,350 cities and towns in thecountry. As at December 31, 2014, our Global Cloud Xchange operations had 156 sales and supportstaff across 28 locations and 681 engineering and operational service staff across 18 countries. InGlobal Operations, we offer virtual international calling services to 230 international destinations toover 2.6 million retail customers in the 14 countries where we operate. We believe our distributionnetworks allow us to:

• Obtain local intelligence on the popularity of our products and services which helps us toimprove targeting and customer segmentation;

• Quickly rollout and test new products and services; and

• Provide personalised sales and customer service to improve customer loyalty.

Recognised Brands

We are a part of the Reliance Group, one of India’s leading business houses. We believe the RelianceGroup has a strong and recognised brand in India which enables us to enjoy its brand recall amongconsumers in India. We believe our own brands are also recognised as leading national brands fortelecommunications services. Our brands, which include Reliance Mobile for the mobile portfolio ofservices, Reliance Hello for the fixed wireless portfolio of services, Reliance Pro and Reliance Pro3for CDMA wireless data services, and Reliance 3G for 3G Services, assist in promoting us as anintegrated telecommunications service provider country-wide. Our recognised brands assist us inattracting subscribers, particularly in an industry affected by exits and consolidation. The Reliancebrand was named among the top 20 brands in India by Interbrand in its “Best Indian Brands 2014”report.

We have won numerous awards and accolades on industry transformation, innovation, operationalexcellence and leadership, as well as for the best practices followed by us, including in the fields ofinformation technology, network security and customer experience. These include:

• Economic Times Human Resources Excellence Award, 2014, for human resource practices,including in the areas of learning and development, talent management and talent acquisitions;

• Nasscom DSCI Excellence Award, for security in the telecommunications sector for innovativeIT security and privacy efforts which focuses on robust risk management and compliance;

• Aegis Graham Bell Award for Best Broadband Network Provider;

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• “Economic Times Telecom Award 2012” in the ‘Quality and Service’ category;

• IT EDGE Award, for our innovative and agile IT processes setup using TM forum standards;

• Amdocs Innovation Award, for customer experience, enhanced customer loyalty and reducedcustomer churn, and increased productivity by decreasing the average handling time;

• ‘Top 100 CISO’ Award, for security in the telecommunications sector in the automation of useraccess management, an innovative IT security and data protection solution focusing on riskmanagement and compliance; and

• Managed Video Conferencing Service Provider of the Year, at the 2014 Frost & Sullivan IndiaICT Awards, in recognition of expertise and experience in conceptualising and delivering videoconferencing services to the Indian corporate sector.

Experienced Management Team

Our management team includes Mr. Vinod Sawhny, President and Chief Executive Officer, Mr.Gurdeep Singh, President and Chief Executive Officer (Consumer Business), Mr. Punit Garg,President, Corporate Strategy and Regulatory Affairs), Mr. William Barney, Chief Executive Officer(Global Cloud Xchange, India Enterprise and Carrier Business), and Mr. Deepak Khanna, JointPresident and Chief Executive Officer (India Enterprise). They have in-depth industry knowledge andextensive managerial experience in telecommunications, DTH and related businesses. We believe ourmanagement team is well-equipped to respond to and leverage the advancements and other changes inthe telecommunications industry in general and to execute our strategy.

Strong Shareholder

We are promoted by Mr. Anil Dhirubhai Ambani, one of India’s leading entrepreneurs. The RelianceGroup is one of India’s largest business houses by market capitalisation (`621.6 billion as at December31, 2014), with business interests in, among others, telecommunications, power, infrastructure,financial services and entertainment industries. We believe being part of one of India’s largestbusiness groups enhances our credibility and growth prospects.

The Reliance Group underlined its strategic focus on our Company with the subscription of warrantsaggregating to `13 billion by the Promoters by way of preferential allotment, which concludedsimultaneously with a qualified institutional placement of equity.

Our Strategy

Spectrum-based “Go To Market” strategy

We intend to continue to focus on offering 2G services in all 22 Circles covered by our network, and3G services in the 13 Circles in which we have been allocated 3G spectrum and the five Circles wherewe recently launched 3G services through ICR arrangements. We believe our integrated businessmodel brings about significant group synergies and economies of scale of operations, advantages thatwe will continue to utilise. We have adopted a “Circle as a Country” growth strategy, whereby weintend to customise our expansion and market intervention strategies according to peculiarcharacteristics of each Circle, and various micro-markets and subscriber classes within each Circle.We have identified Circles where we intend to participate in the natural industry-level market growthbeing witnessed in such Circles, Circles where we will take a differentially aggressive position onvarious customer propositions and Circles where we will have a well-calibrated management betweenfocus on existing subscriber base and new acquisitions. For example, we have adopted specificstrategies for the metropolitan Circles of Delhi, Mumbai and Kolkata, and our other 3G and non-3GCircles, to gain market share through focused handheld device, dongle, voice and data offerings.

We also intend to selectively leverage existing infrastructure and our internal resources, to increaseour market share in an effective manner in each category of Circle. We have specialised marketingteams for our GSM and CDMA-based services, which we believe will allow us to offer customers more

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specific and customised service and leverage revenues from each technology platform’s offeringseffectively. We will continue to seek partnerships with leading telecommunications handsetmanufacturers, to bundle our offerings with handsets to attract new subscribers in the micro-marketswe focus on.

Focus on Data-based Services

We aim to continue to increase our data subscriber base, including mobile and wireline subscribers,and revenues by focusing on improving our data service offerings, such as introducing more affordableprice plans that provide customers 3G data access speeds at 2G rates. There are five components ofour GSM data strategy: (1) focus on affordability by pricing our anchor 3G data plan at the same priceas the 2G data plan of other service providers; (2) aggressive 2G positioning to popularize Internetfurther; (3) free social networking with data plans to drive preference among young subscribers; (4)bundling contextual content for driving Internet adoption; and (5) key device partnerships.

Further, we believe that CDMA technology is well suited for high speed data-based services. Weintend to focus on increasing our market share in the large screen (computers) connectivity marketthrough our CDMA offerings and the small screen device market through 3G services in the 18 Circleswhere we provide such services. We have formulated separate CDMA data strategies for metropolitanCircles, category A towns and smaller towns which are emerging data markets. Our bundled-salesbusiness strategy is aimed at:

• offering large and faster data network and providing coverage at attractive pricing;

• bundling products through combining value service plans;

• strategic segmenting through customized upgrade plans and specific SME/enterprise offering;and

• offering a multi-mode device ecosystem, including through smart devices and universal modeInternet devices.

We also intend to continue to partner with leading smartphone brands and enter into devicecollaborations such as our “Zero Plan”, which combines the offering of a handset with voice and dataservice plans. We aim to increase data revenue through attracting a greater share of smartphone andtablet users by focusing on driving adoption of data-based services among these devices. This, webelieve, will also drive upgrades to smartphones, increase data usage by our existing customers andattract data customers.

With respect to our Global enterprise data business, we intend to focus on increasing our market sharein the finance, legal and healthcare sectors in the United States and grow the revenues from ourexisting multinational customers. We have rebranded Reliance Globalcom as Global Cloud Xchangewith the objective of focusing on developing the network infrastructure, data centre and managedservices spaces and delivering an integrated cloud ecosystem. We intend to integrate our keyinternational assets with a focus on Internet protocol and cloud services.

Continue to Focus on Offering New Products and Services

We aim to expand our revenue streams through the expansion of our portfolio of service offerings andlaunching specific sales and marketing initiatives aimed at increasing our customer base. Such effortsinclude (i) offering a wider range of wireless and wireline services, such as video on demand, onlinegaming and video chat and conferencing; (ii) further expanding our distribution network of retailstores and developing them into one-stop shops for retail customers; and (iii) providing wirelessbroadband data services through both our CDMA and 3G mobile networks. In addition, we intend tofocus on cross-selling and bundling of products and services, including bundling of free socialnetworking applications with data packages, through our various partnerships with devicemanufacturers and application developers. This enables us to introduce more attractive categories oftariffs and product combinations that can cater to different markets, demographics and customerneeds, and in turn, benefit our customers from the greater value presented by our product offerings.We recently have launched a series of GSM initiatives aimed at providing value to customers,including ‘TalkLoan’, a facility where customers with low balances can take talktime loans (alsoavailable on CDMA), the ‘MyStore’ upsell portal, where customers can buy six different single-day

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validity products for `9 or get mobile-number specific offers and ‘One India, One Rate Plan’, a freenational roaming plan for our post-paid and pre-paid GSM subscribers. Under this offer, the local,STD and roaming charges are the same and we charge our customers their home plan tariffs, whileallowing roaming anywhere in India.

Focus on Reduction of Operating Costs

In line with our growth, we will also focus on cost management and margin expansion through variousmeasures to reduce our operating costs and achieve cost optimisation. We have entered into long-termoutsourcing agreements with end-to-end network managed service providers aimed at reducing ourcosts, benefitting from economies of scale and delivering superior customer experience. We believethat our agreements with such service providers will enable us to improve network performance andincrease customer satisfaction. Our other cost reduction measures include cutting down on consumablecosts, shifting to a customer-facing organisation structure with reduced manpower to create a leanerorganisation, outsourcing call centre operations to third-party business process outsourcing companiesfor optimal efficiency and focusing on decreasing the channel commission for distribution of ourprepaid subscription packs. In addition, we have entered into ICR arrangements with othertelecommunications operators to share telecommunications infrastructure in select areas, which offerour existing customers wider coverage and facilitate the expansion of our network with minimumcapital investments. We believe such arrangements will allow us to lower our capital expenditures andoperational costs as we are not required to invest in establishing and maintaining networkinfrastructure, which would typically be required as part of geographic expansion efforts. Further, toimprove our operating margins, we are focusing on initiatives such as:

• optimising network costs through outsourcing of network management services, processre-engineering in outsourcing, optimising fuel consumption and restructuring of annualmaintenance contracts with our vendors;

• reduction of gross subscriber acquisition costs through cross-selling of high-value products, suchas data and 3G packs, and additional steps aimed at optimization of channel commissions andindirect costs; and

• decreasing manpower costs through outsourcing of BPO operations and additional steps aimedat restructuring customer facing functions.

Manage our Assets Effectively

We aim to achieve better and more profitable management of our portfolio of assets, including thepassive infrastructure that we build and use and also make available on a shared basis to other wirelessand communications service providers. Our aim is to pursue expansion at a reduced cost to achieveincreased shareholder returns, improved cash flows, higher operational efficiency and increasednetwork coverage with better quality. In this regard, we have entered into various long-termagreements for sharing telecommunications towers and inter-city and intra-city OFC networks, whichalso give us the right to use such infrastructure developed by our counterparty. We intend to explorefurther opportunities for such infrastructure sharing arrangements and grow the revenue stream fromthis business segment. We are also exploring divestment of our non-core assets to reduce our debtlevels and increase profitability, thereby achieving greater returns and value for our shareholders. Wealso intend to continue to focus on reducing our leverage. We are looking at various options tomonetise our various non-core assets to deleverage our balance sheet. These non-core assets includeour subsidiary GCX, our DTH business and various real estate properties in India.

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Our Business Segments

With effect from July 1, 2013, our business is organised into two customer-facing geographicalbusiness segments, India operations and Global Operations. Set out below is a summary descriptionof these business segments:

a. Our India operations segment comprises the following businesses: (i) wirelesstelecommunications services to retail customers through CDMA and GSM technology-basednetworks across India, including 3G services in 18 Circles, which also include the metropolitanCircles of Delhi, Mumbai and Kolkata. We provide a diverse array of mobile and fixed wirelessvoice, data, and value-added services in our wireless telecommunications business; (ii) voice,long-distance services and broadband access to enterprise customers; (iii) managed Internet datacentre services; and (iv) DTH business.

b. Our Global Operations segment comprises the following businesses: (i) carrier bandwidth anddata services, where we offer our global submarine cable network infrastructure on an IRU andleased circuit basis, Internet bandwidth and IPLC to carriers, ISPs, content providers andenterprises; (ii) consumer voice, where we offer virtual international calling services to retailcustomers for calls to 230 international destinations, including India under the brand “RelianceGlobal Call”; and (iii) carrier voice, where we offer ILD carriage and termination, on aninter-segment basis, to our other business units and other operators.

The following table sets forth the contribution of our India and Global Operations segments to ourrevenues for each of the financial years 2012, 2013 and 2014:

Segment

Financial Year

2012 2013 2014

(` in billion) % of Total (` in billion) % of Total (` in billion) % of Total

India Operations . . . . . . . . . 173.87 85.3 177.84 81.7 185.69 83.2

Global Operations . . . . . . . . 42.07 20.6 49.28 22.6 46.21 20.7

Unallocable . . . . . . . . . . . . — — 5.50 2.5 4.41 2.0

Total . . . . . . . . . . . . . . . . . . 215.94 232.62 236.31

Elimination . . . . . . . . . . . . . (12.12) (5.9) (14.84) (6.8) (13.10) (5.9)

Total Income . . . . . . . . . . . . 203.82 217.78 223.21

India Operations

Wireless Telecommunications Business

We provide a range of services through CDMA- and GSM-based wireless networks. Our servicesinclude mobile and fixed wireless voice, data and value-added services. Our customers in this segmentinclude retail customers, small, medium and large enterprises, small office and home office customersin India.

Products and Services

Our wireless telecommunications products and services include:

• 3G mobile telecommunications services in 18 Circles and 2G mobile services in all 22 Circlesfor retail and enterprise customers, including local and long-distance voice, messaging, wirelessInternet access, wireless multimedia and value-added services. Our services are offered throughpre-paid and post-paid subscriptions. Our 3G mobile telecommunications services offer a varietyof data applications such as live mobile TV, video-on-demand, video-calling, video and musicstreaming and video-conferencing. We also have partnerships with video and music contentproviders, social networking and messaging platforms;

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• fixed wireless and terminal services primarily for residential and SME customers, including localand long-distance voice, messaging, wireless Internet access, wireless multimedia andvalue-added services. These services are offered through pre-paid and post-paid subscriptions;

• public calling offices for local and long-distance voice using fixed wireless phones andterminals. We provide these services to independent retail operators through pre-paidsubscriptions;

• NLD carriage services for voice, data, and Internet; and

• NLD bandwidth and infrastructure services for other telecommunications service providers.

In order to increase our subscriber base in India, we pursue a marketing strategy that is based onmaking wireless services affordable, including lowering the entry cost of acquiring a mobile phone.We offer handsets bundled with a variety of service offerings such as talk time, incoming validity,long-distance calling and data plans. We have entered into arrangements with various handsetmanufacturers to offer select models of certain handsets to our subscribers for a fixed monthlypayment for specified periods. The monthly payment includes the handset cost, unlimited local andSTD calls, SMS, national roaming and 3G data services. We also offer data cards and USB modemsfor laptops and personal computers to our subscribers.

We provide nationwide and global roaming services under agreements with several internationalCDMA and GSM operators and offer NLD carriage and termination to other carriers as well as, on aninter-segment basis, to our other business units.

The following table sets forth certain operational metrics for our service offerings:

Metric Unit

As at and for the quarter ended

March 31,

2014

June 30,

2014

September 30,

2014

December 31,

2014

Total Telecom Customers . . . Millions 112.1 110.1 111.3 107.5

VLR Customers . . . . . . . . . . % 99.4 98.6 97.5 97.6

Wireless Net Adds . . . . . . . . Millions (6.4) (2.0) 1.2 (3.8)

Pre-paid % of total wirelesscustomers . . . . . . . . . . . . . % 95.3 95.1 96.3 96.3

ARPU(1) . . . . . . . . . . . . . . . . `/Sub 128 136 137 142

Revenue per minute(RPM)(1) . . . . . . . . . . . . . . `/Min 0.43 0.44 0.44 0.45

Wireless Churn . . . . . . . . . . . % 5.5 3.6 4.3 4.9

3G customers(2) . . . . . . . . . . Millions 12.0 13.0 15.1 16.7

Non-voice as % of telecomrevenue . . . . . . . . . . . . . . . % 23.5 24.1 24.3 24.8

Voice

Total minutes of use(MoU)(1) . . . . . . . . . . . . . . Billion Minutes 102.3 103.1 102.1 103.4

MoU per customer permonth(1) . . . . . . . . . . . . . . Min/Sub 296 311 307 315

Data

Total data customers(3) . . . . . Millions 26.7 28.6 29.7 31.4

Total data traffic . . . . . . . . . . Million MBs 50,251 55,276 65,778 76,434

Data usage per customer . . . . MBs 648 666 752 834

Total ILD minutes . . . . . . . . Million Mins 4,995 4,701 4,809 5,079

Total NLD minutes . . . . . . . . Million Mins 14,886 14,626 14,635 14,685

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(1) Also includes approximately 1.2 million wireline customers.

(2) We define 3G customers as any subscribers having made at least one revenue generating call or with data usage of more

than one Mb in one month.

(3) We define total data subscribers as any subscribers with data usage of more than one Mb in one month.

Our Circles and Subscriber Base

We provide CDMA and GSM technology-based wireless services in all 22 Circles in India. Welaunched our GSM technology-based wireless network in December 2008. In addition, we launched 3Gwireless services in 13 Circles in 2011, namely Delhi, Mumbai, Kolkata, Punjab, Rajasthan, MadhyaPradesh, West Bengal, Himachal Pradesh, Bihar, the North East, Jammu & Kashmir, Orissa and Assam.We recently launched 3G services in Karnataka, Andhra Pradesh, Tamil Nadu, Kerala and UttarPradesh (East) through ICR arrangements.

We were the fourth largest telecommunications service provider as at December 31, 2014, in terms oftotal wireless subscribers. The following table sets out select Circle-wise information of our wirelesssubscribers and our market share based on total number of wireless subscribers, as at December 31,2014 (all information provided in the table below is taken from information disclosed by TRAI):

Circle Total Market Share VLR

(in million) % %

Andhra Pradesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 7.1 98.0

Assam(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 13.7 92.6

Bihar(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 13.4 98.9

Delhi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 18.1 98.5

Gujarat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 7.7 99.1

Haryana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 9.2 97.1

Himachal Pradesh(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 20.0 95.5

Jammu & Kashmir . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7 8.4 60.4

Karnataka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 9.2 99.2

Kerala . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8 5.6 95.0

Kolkata(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 16.1 99.1

Madhya Pradesh(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 20.7 95.7

Maharashtra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 6.6 99.2

Mumbai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 19.1 99.1

North East(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8 8.2 86.6

Odisha(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9 14.4 99.1

Punjab . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 10.0 96.6

Rajasthan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 11.7 98.4

Tamil Nadu (including Chennai) . . . . . . . . . . . . . . . . . . . . . 6.1 7.6 94.9

Uttar Pradesh (East) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9 9.9 99.1

Uttar Pradesh (West) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 10.2 99.1

West Bengal(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7 14.8 99.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.3 11.3 97.6

(1) Services offered by our subsidiary, RTL, in these Circles.

(2) Services offered by our Company and RTL.

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Tariffs

The telecommunications industry in India is highly competitive and tariffs are determined bycompetitive forces. The TRAI currently has a tariff forbearance policy, except for (i) national roamingservices, (ii) leased circuits and (iii) use of USSD for USSD-based mobile banking services, where aceiling is provided by them. Moreover, termination charges for services including voice and SMS arefixed and reviewed by TRAI periodically. Subject to these regulatory requirements, we have flexibilityin setting our tariff plans and they differ across Circles. We structure our tariffs so that subscriberscan choose their preferred package based on their requirements. We regularly revise our tariff plansto take advantage of new opportunities and our competitors’ existing tariffs and product offerings. Webelieve that our tariff plans are simple and transparent. Our aim is to ensure that we acquire and retainsubscribers, achieve superior realisations and optimise our network utilisation.

Enterprise Business

We launched our enterprise broadband service in May 2005 under the brand name “RelianceBroadband”. In 2012, we rebranded this business and now offer enterprise solutions in India under thebrand name “Reliance Business Services”. Our enterprise clientele includes over 39,000 Indian andmultinational corporations including SMEs and over 900 prominent enterprises in India. We have aterrestrial network in 44 cities and towns in India with approximately more than one million buildingsconnected directly to our broadband network, which services approximately 1.2 million access lines,as at December 31, 2014.

Products and Services

We offer a wide range of products and services spanning voice, data, collaboration, data centreservices and managed services.

Some of our key offerings include:

• voice products such as E1 DID, Centrex, One Office Duo (which offers close user group benefitsacross all wireline and wireless voice products), toll free services and intelligent telephonyservices;

• data products such as MPLS-VPN, leased lines, IPLCs, Ethernet, Connect Prime, remote-accessVPN services and broadband Internet. Our MPLS product, ‘Connect Prime’, has won aninternational innovation award, the 2013 Leading Lights Award for the most innovativeEnterprise service; and

• collaboration services such as video conferencing, audio conferencing and web conferencing. Inthe 2014 Frost & Sullivan India ICT Awards, we were declared the winner in the ‘Managed VideoConferencing Provider of the Year’ category.

Internet Data Centres

We are one of the leading IDC service providers in India with ten data centres in Navi Mumbai,Bengaluru, Chennai and Hyderabad. Our IDCs have a total capacity of 1.1 million square feet(including IDC V, a new data centre in Navi Mumbai which is currently under construction). We offera wide range of services through our data centres including co-location, managed hosting, ITinfrastructure, managed security, system integration, storage and back-up solutions. We haveintroduced a pay-per-use model for co-location services. We also offer cloud-based services such asstorage for archival purposes and data protection and business application services such as CRM, ERPand HRMS to customers on a pay-per-use model.

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Licences and Spectrums

We hold UASL in all 22 Circles along with an NLD licence and ILD licence. Our NLD and ILDlicences are due for renewal in 2022. The details of the spectrum held and the validity of the UASLsand spectrums held by us are as set out below:

S. No. CIRCLE

CDMASpectrumAllocated

(800 MHz)

CDMASpectrumValid Till

GSMSpectrumAllocated

(900 MHz)

GSMSpectrumAllocated

(1800 MHz)

GSMSpectrumValid Till

3GSpectrumAllocated

(2100 MHz)3G Spectrum

Valid Till

1. Andhra Pradesh 5 July 19, 2021 — 4.4 July 19, 2021 — —

2. Assam(1) 2.5 December 11,2015

6.2 — December 11,2015

5 August 31,2030

3. Bihar(2) 5 July 19, 2021 6.2 — December 11,2015

5 August 31,2030

4. Delhi 5 July 19, 2021 — 4.4 July 19, 2021 5 August 31,2030

5. Gujarat 3.75 September 29,2017

— 4.4 September 29,2017

— —

6. Haryana 3.75 July 19, 2021 — 4.4 July 19, 2021 — —

7. Himachal Pradesh(2) 2.5 July 19, 2021 6.2 — December 11,2015

5 August 31,2030

8. Jammu & Kashmir 2.5 September 5,2024

— 4.4 September 5,2024

5 August 31,2030

9. Karnataka 5 July 19, 2021 — 4.4 July 19, 2021 — —

10. Kerala 5 July 19, 2021 — 4.4 July 19, 2021 — —

11. Kolkata(2) 5 July 19, 2021 — 6.2 September 26,2021

5 August 31,2030

12. Madhya Pradesh(2) 5 July 19, 2021 6.2 — December 11,2015

5 August 31,2030

13. Maharashtra 5 July 19, 2021 — 4.4 July 19, 2021 — —

14. Mumbai 5 July 19, 2021 — 5(3) July 19, 2021 5 August 31,2030

15. North East(1) 2.5 December 11,2015

4.4 1.8 December 11,2015

5 August 31,2030

16. Odisha(2) 3.75 July 19, 2021 6.2 — December 11,2015

5 August 31,2030

17. Punjab 3.75 July 19, 2021 — 4.4 July 19, 2021 5 August 31,2030

18. Rajasthan 3.75 July 19, 2021 — 4.4 July 19, 2021 5 August 31,2030

19. Tamil Nadu(including Chennai)

5 September 25,2021

— 4.4 September 25,2021

— —

20. Uttar Pradesh (East) 5 July 19, 2021 — 4.4 July 19, 2021 — —

21. Uttar Pradesh(West)

5 July 19, 2021 — 4.4 July 19, 2021 — —

22. West Bengal(2) 3.75 July 19, 2021 4.4 1.8 December 11,2015

5 August 31,2030

TOTAL 92.5 39.8 72 65

(1) Held by RTL

(2) GSM Spectrum held by RTL

(3) This includes the 0.6 MHz spectrum in the 1800 MHz band, which we acquired in the recent auction in February 2014,

and is valid till 2034. This spectrum is yet to be allocated to us.

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In the 800 MHz band, we hold contiguous blocks of 5 MHz in 12 Circles (three metropolitan Circles,four A Circles, four B Circles and one C Circle). Technologically, 5 MHz contiguous spectrumprovides capabilities to offer 4G/LTE services to consumers, subsequent to liberalisation of thespectrum and after payment of market-related prices for the remaining maturity period.

Our subsidiary, Reliance Infratel was registered as an infrastructure provider (Category-1) on January12, 2007. Further, Reliance Big TV has entered into a licence agreement dated May 24, 2007 with theMinistry of Information and Broadcasting to establish, maintain and operate the DTH platform, whichis valid for a period of 10 years. For further details on the terms of such licences and registrations,see “Overview of the Regulatory Regime in India”.

In the recently concluded spectrum auctions in March 2015, we were successful bidders for spectrumfor a period of 20 years (up to 2035) in the following Circles:

Circles 800 MHz 900 MHz 1800 MHz

Assam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 — —

Gujarat. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 — —

Haryana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25 — 0.6

Himachal Pradesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 5 —

Jammu & Kashmir . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 — —

Karnataka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0.6

Kolkata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25

Madhya Pradesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 5 —

North East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 — 5

Odisha . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25 — 5

Punjab . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 — 0.6

Uttar Pradesh (West) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25 — —

West Bengal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25 — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.25 10 11.8

In the seven circles operated by RTL, where spectrum is coming up for renewal, we were successfulbidders for spectrum in four Circles — 5 MHz each in 900 MHz in two circles and 5 MHz each in1,800 MHz in two circles. RTL holds 3G spectrum in all these seven Circles. We have existing ICRarrangements to ensure uninterrupted service to our customers across all these Circles. We also intendto continue to focus on transition of 2G customers in the remaining three Circles to 3G services.

After this round of spectrum auctions, we believe that our spectrum portfolio is equipped to serviceour business strategy. We were the successful bidder for the 800/850 LTE band spectrum in 11 circles,which is recognized as one of the most powerful spectrum bands in the sub-1 GHz spectrum category.We have invested approximately 50% of total cost for acquiring spectrum in this band. We now hold5MHz or more in this spectrum band in 21 Circles (an increase from 12 Circles earlier), the onlyIndian telecommunication service provider to do so. We believe this gives us the unique capability tolaunch LTE services in an efficient manner, which we plan to launch in the medium term. In theimmediate term, we intend to utilise this spectrum capability to broaden our RevB offerings. RevBoffering provides a better indoor experience to consumers due to better in-wall propagation qualities.

The total cost for the acquisition of spectrum in this round of auctions will be `42,905 million, withan upfront payment of `11,041 million. The balance payment is required to be made on a deferredbasis over 10 annual instalments after a moratorium of two years.

This allocation of spectrum is provisional and is subject to the approval of the Government of Indiaand the final result of a proceeding pending before the Supreme Court of India. See “Risk Factors —Our telecommunications licences, permits and spectrum allocations are subject to ongoing review andextensions and varying interpretations, each of which may result in modification, early termination,expiry on completion of the term or additional payments”.

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Telecommunications Infrastructure

Our telecommunications network consists of:

• mobile switch centres for switching calls and interconnecting with the public switched telephonenetworks and other mobile and fixed-line networks;

• receiving stations and other equipment used to communicate through radio channels withsubscribers’ mobile devices within the range of a cell site;

• station controllers, which connect to and control a number of receiving stations deployed withina certain area;

• packet core elements to handle the data traffic;

• intelligent network for offering pre-paid services; and

• transmission links, consisting of microwave and optic fibre media, to link various elements ofthe network.

We build, own and operate telecommunications towers and other related assets at designated cell-sites(together, “passive infrastructure”), and use such passive infrastructure for our networks as well asmake available such passive infrastructure on a shared basis to wireless and other telecommunicationsservice providers under long-term contracts. This business is carried out by Reliance Infratel, asubsidiary of our Company. As at December 31, 2014, our wireless towers portfolio comprised 43,379towers, which are spread across all 22 Circles in the country. Many of our towers in the urban areasare connected to our OFC network. Our portfolio of towers is suitable for use by CDMA, GSM 900MHz, GSM 1800 MHz, 3G and BWA networks. We provide passive infrastructure services to variouswireless telecommunications operators. The average age of telecommunications towers owned by usis seven years. Certain operational metrics of our passive infrastructure portfolio as at December 31,2014 are set out below:

Roof-Top Towers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,907

Ground-based Towers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,472

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,379

Current Tenancy Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.49x

Total Tenancy on Towers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,081

- External Tenants on Towers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,379

Total Cell Sites on Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,792

3G Cell Sites on Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,659

In June 2013, our Company and Reliance Infratel entered into an agreement with Reliance JioInfocomm Limited (“Jio”) for sharing of our passive tower infrastructure and services. The agreementis valid until August 16, 2030. Jio has agreed to pay the specified monthly infrastructure and servicecharges for the use of our telecommunications towers. In addition, Jio has also agreed to makeavailable a passive tower infrastructure developed by Jio at locations as mutually agreed between theparties to Reliance Infratel on identical terms and conditions as contained in the passive towerinfrastructure and services agreement.

Our OFC network, also owned and operated by Reliance Infratel, consists of a series of ducts and darkfibre throughout India, which is used for bandwidth to provide voice and data services. Our networkencompassed over 190,000 RKm of OFC in India. Our network covers over 21,000 cities and townsand over 400,000 villages. Our network connects approximately 270 media coverage nodes, which aretraffic aggregation points and more than one million buildings, as at December 31, 2014.

Our Company and Reliance Infratel also entered into definitive agreements with Infotel TelecomLimited, a subsidiary of Jio, and Jio in April 2013 and 2014, respectively for sharing of our inter-city

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optic fibre and intra-city fibre networks, respectively on an IRU basis. Under these agreements, wehave granted an IRU over a portion of our respective OFC network and co-location of associatedproperties for a term of 20 years and five years, respectively. Under the inter-city fibre agreement withInfotel Telecom Limited, we have granted an IRU over an approximate length of 90,000 (four pairs)and 30,000 (two pairs) RKm and co-location of associated properties. Infotel Telecom Limited and Jiohave agreed to pay monthly fee and co-location of support infrastructure fees in accordance with theterms of these agreements. Under the intra-city fibre network agreement, the parties have agreed thatif, after mutual discussions between the parties, Jio offers any of its intra-city fibre network to us foruse for our telecommunications services, it will also offer such intra-city fibre network on the sameterms and conditions as contained in the intra-city fibre network agreement. Under the inter-city fibrenetwork agreement, if Infotel Telecom Limited proposes to set up an OFC network, it is required toinform Reliance Infratel of the routes on which such fibre infrastructure is proposed to be set up andReliance Infratel may confirm the number of pairs of fibre (not exceeding four) that it proposes to takeon an IRU basis and such fibre network shall be provided to Reliance Infratel on the same terms andconditions as contained in the inter-city fibre network agreement.

The following map sets out our long-distance OFC network in India, as at December 31, 2014:

Kozhikode

Mangalore

Coimbatore

Pune

Nashik

Surat

Baroda Indore

Vizag

Rourkela

Jamshedpur

Allahabad

Kanpur

Ludhiana

Jodhpur

Shimla

Chandigarh Dehradun

New Delhi

Jaipur

Lucknow

BhopalGandhinagar

Ranchi

Bhubaneshwar

Hyderabad

Panaji

Bengaluru

Chennai

Puducherry

Thiruvananthapuram

Raipur

Mumbai

Patna

Jammu

Kolkata

We have also expanded our network coverage through strategic 2G GSM ICR agreements with existingoperators in India, offering our subscribers wider coverage and uninterrupted service. Under thesearrangements, for a usage-based fee, an ICR partner permits roaming for subscribers from otherservice providers in the same Circle. We believe these arrangements help us to expand our GSMnetwork footprint at reduced costs, improve both outdoor and in-building coverage and allow oursubscribers a seamless roaming experience on partner networks. Using the ICR model also allows usto lower our capital expenditures and operational costs as we are not required to invest in establishingand maintaining network infrastructure. We have ICR arrangements with three telecommunicationscompanies in India.

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All the key components of our telecommunications networks have been supplied by leadingtelecommunications equipment manufacturers. We have entered into contracts with these vendors forthe supply of equipment and for maintenance support of our core and radio access networks. Thesecontracts generally have a term ranging from three to ten years and purchases under such contracts aremade pursuant to individual purchase orders governing price and quantity of equipment purchased.Our information technology systems play an important role in enhancing customer experience,improving operational efficiency and ensuring compliance in a stringent regulatory environment.

We have outsourced most of our network and infrastructure management, including operations andmaintenance to third-party vendors for the various regions of India for a term of five years, beginningJanuary 25, 2013. As at the date of this Offering Circular, the scope of these outsourcing arrangementshave expanded to a pan-India level. These outsourcing arrangements cover functions such as networkmanagement and maintenance services, field operations, service delivery and compliance withbenchmark key performance indicators and service level assurances. These agreements willautomatically renew each year for a maximum period of three years, unless terminated earlier forcause or extended under the terms of the agreement.

DTH Business

We launched our satellite TV services in the DTH format in 2008 and operate under the RelianceDigital TV brand across India. We distribute multiple television channels and allied video and audioservices to subscribers as part of our DTH services. We bring to our subscribers digital qualitytelevision viewing and, as at December 31, 2014, carried 255 national and international channels andservices, in HD like quality and four exclusive movie channels and four interactive services. As atDecember 31, 2014, we had approximately 4.9 million subscribers.

Our distribution of multiple television channels and services is enabled through equipment installedat the end-consumers’ premises, which allows subscribers to directly receive programming from ourleased satellite through a mini-dish which is then decoded by a digital receiver called a set-top box.We offer a full combination of standard definition, high definition and high definition-DVR set-topboxes. The technology we use allows us to offer all our channels in HD-like quality. We use MPEG-4technology, which permits high compression for video.

Reliance Digital TV is available at more than 35,850 outlets across 8,350 cities and towns in thecountry. We leverage the retail and distribution reach, as well as our infrastructure established for ourtelecommunications business to expand our DTH presence. We also offer a ‘consumer loyaltyprogramme’ to our DTH customers. For every Rupee spent on a Reliance Digital TV subscription, theconsumer earns reward points, which can be redeemed against various Reliance Digital TV services.

We offer several subscription packages to our customers, as well as the option of choosing add-onsand à la carte channels and receiving certain discounts through long-term recharge offers. From timeto time, we launch various subscription packages to cater to the varied needs of customers. We do notown any satellites and have entered into a lease agreement for transponder capacity valid until 2017with the Department of Space, Government of India for the leasing of transponder capacity on theMEASAT 3 satellite. We currently lease nine transponders of 36 MHz each on this satellite.

Content procurement by DTH operators in India, including us, generally takes place through channeldistributors or owners. Under Indian interconnection regulations, all broadcasters and distributors arerequired to offer their content to all platforms and operators. We enter into content agreements withchannel distributors and owners to licence channels for viewing by our subscribers and we pay themcontent and programming cost as stipulated under the agreements.

Sales, Marketing and Distribution

We believe we enjoy strong recognition among consumers in India as a leading national brand fortelecommunications services. Our brands include Reliance Mobile for the mobile portfolio of services,Reliance Hello for the fixed wireless portfolio of services, Reliance Pro and Reliance Pro3 for CDMAwireless data services and Reliance 3G for 3G Services. We are an integrated telecommunicationsservice provider. Our marketing strategy is customised to meet the needs of individual customers anddifferent customer segments. We offer bundled plans and selective promotional campaigns based onusage patterns of specific customer groups. We have developed robust customer segmentation

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structures based on advanced analytics, for both voice and data, that is used for cross-sell and up-sell.Customers are given offers dynamically suited to their past behaviour and structured to maximisebusiness value. These efforts are enhanced through geographic segmentation, through whichcustomers may be provided with offers targeted to the particular demographics of a geographic area.We also offer flexible international and national telephone service plans that distinguish between peakand off-peak call periods. To promote our data and voice services, we target high-usage customers,such as financial institutions, large domestic and multinational corporations and government entitiesas well as the fast-growing sector of Internet service providers, Internet content providers and licensedoperators in India.

We believe that data-based services will be the core growth area for the Indian telecommunicationssector in the near future. Our branding and marketing objective is to continue to transform ourselvesfrom a telecommunications network provider offering data plans to a software experience managerthat focuses on content and consumer experiences through telecommunications services. We targetyounger customers and young professionals who are considered key consumers for such services. Ourkey marketing strategies include:

• based on network utilisation, consumer usage pattern and existing customer ARPU, focus onattracting subscribers from various ARPU bands through our GSM prepaid packages;

• use handset bundled plans offering device and usage plans to subscribers on our nationwidenetwork to attract first time workers, housewives and the self-employed subscribers;

• customise our solutions on devices and platforms to appeal to corporate businesses and SMEs;

• offer dongles and data cards through our CDMA-based services for large screen (computer)Internet access and provide a combination option of phone and dongle connection in a singlebilling account to subscribers;

• attract executives and local businesses through smart solutions based on markets and usage planswith fixed monthly rentals through our CDMA network;

• leverage mobile number portability and offer deals bundled with the latest smartphones frompremium range devices to attract the business of high affluent users;

• use a customer lifecycle management approach for our GSM-based services, centred on customerbehaviour analysed through customer analytics softwares. Our offers are based on customerprofiles and how they have previously used our products; and

• having a two tier distribution model of hub and spoke for rural markets, and focusing onmeasurement of quality output at retail.

Our extensive distribution and service networks consist of approximately 855 franchised RelianceMobile exclusive stores. We also have customer service centres with multi-lingual capabilities andover 680,000 retail outlets selling Reliance Mobile connections or recharges of prepaid mobile andfixed wireless connections.

Our pre-paid starter packs and vouchers are sold to distributors upfront, who in turn supply them toretail outlets. The Indian retail sector is not organised on a national scale and comprises a very largenumber of small retail shops throughout the country. Our pre-paid distribution network compriseswide categories of retail outlets, ranging from neighbourhood department stores and pharmacies toexclusive telecommunications outlets and branded stores. We offer incentives to distributors andretailers who are successful in meeting specified targets. We believe this promotes distributor andretailer loyalty and, as a result, continuity and availability of our products to our subscribers. Ourpost-paid services are marketed by our marketing team, dealers and direct sales agents. Our enterprisebusiness unit provides products and services as a complete package to meet the telecommunicationsneeds of the businesses, including after-sales services and support with respect to billing queries andcomplaints.

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We seek to develop strong customer relationships for sustained business performance. We identify thevalue segments among our customer base and develop customised service solutions for them. Ourcustomers in the corporate segment are serviced through a dedicated team of key account managersand relationship managers. For high-value retail customers, a dedicated team extends expressresolution including priority access. In addition, we have also created a customer delight programmegiving customers additional privileges brought together by tie-ups with leading brands.

We also use digital technology to provide our customers with their service and product requirementsusing our digital self-care applications.

Customer Service and Billing

We believe that the quality of our customer service is critical to attracting and retaining customers.We focus on the following key processes for effective delivery of our services:

• the initial and continued provision of services;

• receiving and resolving customer queries; and

• efficient billing and collection.

Our BPO is supported by various outsourced partners and has approximately 6,200 seats, which inaddition to handling our customers’ servicing requirements also provides support totelecommunications, entertainment, BFSI and utility companies of the Reliance Group. The BPOprovides both voice (Inbound, Outbound and Self-Service) and non-voice (Back Office, E-mail andWeb-Chat) support in 12 regional languages and four foreign languages. Our call centres and ourReliance Mobile outlets are also equipped with online customer relationship management systems. Toprovide prompt and cost-effective customer care, we have also established an automatic customer careservice, available by telephone or via the Internet, through which the customers may activate newsubscriptions, order new value-added services and check account balances. Online customer serviceis also available for customers to modify their service class or change or migrate their service plans.

Typically, we require individual post-paid subscribers to settle their accounts on a monthly basis.Subscribers pay in the following ways: (i) in person at franchise owned and operated outlets; (ii) inperson or by direct debit at banks or post offices designated by us; (iii) online payment through ourwebsite; or (iv) in person at offices of our sales agents. We charge a late payment fee on subscriberaccounts that are not paid by the monthly due date.

Global Operations

Bandwidth and Data Business

We own and operate a widespread submarine cable system which is used by our customers to move,store and deliver data and Internet traffic between locations. We also offer a portfolio of enterprisevoice, data, video, Internet and IT infrastructure services.

Our primary bandwidth and data services include the following:

Capacity Services. Our capacity services entail the lease of capacity on our network to customersunder long-term contracts ranging from 10 to 15 years, as well as associated operations andmaintenance services. We provide point-to-point, full or half-channel circuit connectivity to landingstations and PoPs throughout Asia, Europe, the Middle East and North America for all types oftelecommunications traffic and requirements, including voice, data, video and Internet traffic. Weprovide services across various capacity levels on several routes. Our various capacity products andservices include the following:

• Rights of Use. ROUs are sold to our customers as point-to-point connections with a fixed amountof bandwidth between any two landing stations or PoPs on our global network. Theseconnections are provided for an extended period of time, ranging from 10 to 15 years, and atvarying capacities. Customers pay a one-time fee to purchase the ROU and an annual operationsand maintenance fee, which typically ranges from 3.0% to 4.0% of the purchase fee.

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• Operations and Maintenance Services. O&M services are provided to customers that havepurchased ROUs from us. Customers are invoiced for these services based on the capacityactivated for use and a fixed percentage of the ROU sales price, subject to a minimum O&Mcharge. Our O&M services revenue depends on the volume and pricing of ROU contracts signedin a given period.

• Restoration Services. We provide restoration services to other telecommunications carriers tore-establish communications circuits between two end-users when the carrier’s primary route orcapacity has failed. Customers are required to pay a fee to enter into a restoration capacity leaseagreement and are then charged for the days that they utilise the service.

• Lease Capacity Services. We provide lease capacity services to customers that require significantamounts of bandwidth and seek to exercise more direct control over their network and, in thecase of customers who avail leased capacity, develop their own network management framework.We have developed our own IP infrastructure to enable the provision of IP network services andvalue-added services to our customers. Customers can lease capacity for shorter periods of time,typically up to one year, on our global network. Customers that lease capacity pay in a single,monthly or quarterly instalment and do not pay maintenance fees. Our lease capacity productsand services also include managed bandwidth services which entail protected and unprotectedpoint-to-point transmission circuits between any two of our PoPs and IPLCs, which arepoint-to-point connections of dedicated bandwidth that run between two customer specificlocations rather than between two points on our global network for the conveyance of voice, dataand/or information services.

Global Ethernet. Our global Ethernet service enables customers to extend their local area networks,wide area networks or Internet backbone to major global business centres. Our global Ethernetnetwork employs a virtual private local area network service over a multi-protocol label switchingplatform (“MPLS”). These services extend the benefits of Ethernet technology to wide area network(“WAN”) technology and eliminate the need for separate inflexible networks. Our service also offersa variety of physical interfaces, port speeds, bandwidth options, point-to-point and multi-pointvariants, performance reporting and SLAs based on customer requirements. We typically offer ourglobal Ethernet service in annual contracts with an upfront fee and monthly payments. Our globalEthernet business is primarily concentrated across four industry segments — financial, legal,Government and healthcare — which currently account for a substantial portion of the global Ethernetmarket.

IP Transit. Our IP transit service enables customers to access the Internet depending on customerrequirements from any city in our global network. This service is facilitated by sharing arrangementsthat we have developed with major local content providers, carriers and Internet service providers atmajor Internet traffic exchanges. We typically enter into 12 month contracts where we buy capacityin bulk. Our service contracts entail an upfront fee and monthly payments thereafter.

IP VPN. Our IP VPN services provide international multi-service IP WAN connectivity to customersites in an ‘any-to-any’ configuration. These services permit businesses to replace multiple networkswith a single solution that simplifies the converged transmission of voice, video and data. We contractwith local carriers that provide regional termination and market the service to prospective customers.We typically enter into 12 month contracts where we buy capacity in bulk. We typically offer annualIP VPN services contracts providing for an up-front fee and monthly payments.

VAS — Enterprises. Our VAS for enterprises, which we also refer to as managed services, entailscustomised solutions for specific requirements of customers across various areas, including:

• Security. We provide security solutions such as intrusions prevention, policy design and e-mailsecurity.

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• Project Management. We monitor the overall implementation of access as well other customerpremises equipment, including ordering, coordination and installation. We operate as a virtualnetwork operator and offer managed services by leasing circuits from telecommunicationsservice providers within that country. Our virtual network currently extends to over 27,000 sitesacross 153 countries. We typically enter into three- to five-year contracts which involve anupfront payment and monthly charges. We also provide high margin hosting and othervalue-added services that complement our offering of traditional capacity and network services,including the following:

o Edge Hosting. Edge hosting services entail co-location, managed storage and back-upservices, performance reporting, security solutions, such as spam blockers and anti-virusprotection and other services. Edge hosting services are provided at our PoPs close to theend-user.

o Co-location. We offer data centre space for an agreed fee where customers can install andoperate their own servers, content storage devices and communications network equipmentin a safe and secure technical operating environment. At such co-location sites, customersenjoy high-speed, reliable connectivity to our global network and other networks.Customers can also purchase reliable AC or DC power, access to Public SwitchedTelephone Network lines, GPS and clock synchronisation services, emergency back-upgenerator power, equipment cooling and fire protection. These sites are monitored andmaintained 24 hours a day and incorporate advanced security access.

Consumer Voice Business

Through Reliance Global Call, which is a web-based international calling card service, we offerinternational calling at affordable rates with the convenience of online service and billing facilities.This service has a customised platform for enterprise customers through which global enterprises canview their usage, credit control and billing. The various features offered under this product includePIN-less dialling, four-digit PIN dialling, two-digit dialling, express dialling, smart calling,simultaneous calling, fax and electronic receipt facilities.

As at December 31, 2014, we have more than 550 enterprise customers of Reliance Global Call across11 countries including the United States, United Kingdom, Canada, Australia, New Zealand,Singapore, Spain, Belgium, France, the Netherlands and India. We also offer SIP Trunk calling alongwith Blackberry and Windows App.

As at December 31, 2014, we offer virtual international calling services to retail customers for callsto 230 international destinations. Our retail services are available to customers in the following 14countries: Australia, Austria, Belgium, Canada, France, Hong Kong, India, Ireland, the Netherlands,New Zealand, Singapore, Spain, the United Kingdom and the United States. We have over 2.6 millioncustomers for our Reliance Global Call service.

Network Infrastructure

Our global network infrastructure comprises the following:

(a) Five wholly-owned subsea cable systems with a total installed capacity of over 21 Tbps. Thesesubsea cable systems operate on six of the eight major global data traffic routes, namely theTrans-Atlantic route, the Intra-Asia route, the Middle East-West route, the Middle East-Eastroute, the India-West route and the India-East route. As at December 31, 2014, these subsea cablesystems had a total length of 68,698 RKm and 46 landing points in 27 countries. Our subsea cablesystems are built on a non-linear basis, which allows us to service local as well as express routes.We provide connectivity over long distances with express routes ensuring low latency and localroutes providing access to intermediate markets. We provide single end-to-end solutions

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and a single point of contact for connectivity across various regions. The remaining useful lifeof our subsea cable system extends up to 2031. The table below sets forth certain details aboutour five operational fibre-optic cable networks, as at December 31, 2014:

Commissioning Date RKm

Countries

Connected

Landing

Points Key Countries

Flag Europe Asia . . . . November 1997 28,012 14 16 UK, Spain, Italy,Egypt, Jordan,Saudi Arabia, UAE,India, China, Japan,Malaysia, Thailand,Korea

Flag Atlantic-1 . . . . . . June 2001 14,491 3 4 USA, UK

Flag North Asia Loop July 2002 9,504 4 4 Hong Kong, Korea,Japan, Taiwan

FALCON . . . . . . . . . . September 2006 12,357 14 19 Egypt, Yemen,UAE, Saudi Arabia,Qatar, Bahrain,Iran, Oman,Maldives and SriLanka

HAWK(1) . . . . . . . . . . March 2011 4,334 3 3 France, Egypt,Cyprus

Total . . . . . . . . . . . . . 68,698 27(1) 46(1)

(1) Total represents unique landing points or countries, to avoid double counting across all fibre-optic networks.

We also purchase long-term capacity on third-party subsea cable systems to provide resiliencyand complete sections of some routes which we do not service. We plan to invest in two subseanew cable systems: (1) a new Trans-Pacific subsea cable system between Japan and the westcoast of the United States, referred to as the Pacific Cloud Xchange cable and (2) a new subseacable system between India and Singapore, referred to as the India Cloud Xchange cable.

(b) Owned and leased metropolitan networks in 27 cities across 13 countries covering majorbusiness centres including New York, London, Paris, Frankfurt, Hong Kong and Tokyo. Thesemetropolitan networks carry data and Internet traffic over land and provide terrestrialconnectivity from subsea cable landing stations to various customer locations including datacentres, major inter-connection points for peering of data traffic and other landing stations on ournetwork;

(c) Nine locations with over 85,000 square feet of space for data centres and telecommunicationsfacilities in the United States, United Kingdom, France, Hong Kong and Taiwan, where some ofour customers co-locate their telecommunications and data storage equipment; and

(d) Owned a scalable global IP and multi-protocol label switching network which provided over 27diverse owned and leased international subsea and terrestrial cable routes with 836 directinter-connections to 342 third-party networks.

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The following map sets out our global network infrastructure:

PLANNED CABLECABLE & TERRESTRIAL COVERAGE

GCX cloud nodesGlobal POPS PLANNED POP

Marketing, Sales and Distribution

For our Global Operations, our sales and marketing strategy is focused on promoting our brand andmaintaining and enhancing customer loyalty. We have separate marketing and sales teams forwholesale data, enterprise data and our voice business. However, certain functions are shared toenhance efficiency. We also maintain regional in-country sales teams. We have 28 regional salesoffices worldwide as at December 31, 2014.

Competition

The telecommunications industry is extremely competitive. Our future success depends on our abilityto compete with other telecommunications services providers. We compete on the basis of price,network performance, network reliability and service quality. We have competitors in the varioussegments in which we operate.

Competition in the Indian telecommunications industry increased primarily as a result of deregulationwhich led to the privatisation of the industry and permitted foreign direct investment. However, theSupreme Court of India, by its order dated February 2, 2012, cancelled 122 telecommunicationslicences, as a result of which a number of mobile telecommunications services providers ceasedoperations and the competitive scenario in India eased. Nevertheless, six to ten mobile operators stilloperate in most Circles. We face significant competition from a number of companies, including fromthose with pan-India footprints such as Bharti Airtel Limited, Vodafone India Limited, Idea and TataDoCoMo Limited. For our DTH business, we compete directly with other pay TV DTH operators, aswell as indirectly with cable operators, IPTV operators and free-to-air television.

For our Global Operations, we face competition from existing, newly developed and planned cablesystems along certain of our existing and planned network routes and from satellite companies.

Intellectual Property

We rely on a combination of patent, copyright, trademark, confidentiality procedures and contractualprovisions to protect our intellectual property rights.

In May 2006, our Company entered into a brand licensing agreement with Anil Dhirubhai AmbaniVentures Private Limited which allows our Company to use the “Reliance” trademarks, names andlogos for its services and products on a non-exclusive and royalty-free basis for a period of 10 years,including the right to sub-licence such trademark to our Subsidiaries. Our Company has agreed toincur expenditure up to `800.00 million for the development and presentation of the “Reliance” brandand the time and amount of such expenditure (subject to such limit) were determined by AnilDhirubhai Ambani Ventures Private Limited.

Awards and Recognitions

Over the years, we have won numerous industry awards and accolades:

Financial Year 2012:

• our Human Resources Policies, Processes and Practices have been recognised as ‘Best Practices’

• we were ranked sixth among the ‘Best Companies to Work For’ and first in the Telecom andAllied Services sector in a survey conducted by Business Today

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• the Golden Peacock National Training Award;

• the Aegis Graham Bell Award for Best Broadband Network Provider; and

• our National Learning Centre won Excellence in Training at the World HRD Congress, IPE-HRLeadership Awards.


• the Prestigious TM Forum’s Excellence Award 2012 for commitment to industry transformation,innovation, operational excellence and leadership;

• the “Top Green IT Enterprise Award 2012” presented by IDG Media in the Large Enterprisecategory;

• the CIO Masters Award 2013 presented by Network 18 for our IT security initiative Deploymentof Data Leakage Prevention Solution in our Company; and

• the ‘Economic Times Telecom Award 2012’ for ‘Quality of Service Category’ received byReliance BPO in May 2012.


• the Nasscom DSCI Excellence Award, for security in telecommunications sector for innovativeIT security and privacy efforts which focuses on robust risk management and compliance;

• the IT EDGE Award, for our innovative and agile IT processes setup using TM forum standards;

• the “Transformers Award 2012” presented by EMC for our Big Data initiative and the change webrought in Indian enterprises though the smart and judicious use of our IT;

• the Amdocs Innovation Award, for customer experience, enhanced customer loyalty and reducedcustomer churn, increased productivity by decreasing the average handling time;

• the ‘Top 100 CISO’ Award, for security in telecommunications sector for automation of useraccess management, an innovative IT security and data protection solution focusing on riskmanagement and compliance; and

• Managed Video Conferencing Service Provider of the Year, at the 2014 Frost & Sullivan IndiaICT Awards in recognition of expertise and experience in conceptualising and delivering videoconferencing services to the Indian corporate sector.


• Managed Video Conferencing Service Provider of the Year, at the 2014 Frost & Sullivan IndiaICT Awards, in recognition of expertise and experience in conceptualising and delivering videoconferencing services to the Indian corporate sector;

• IT Edge Award 2014 by UBM, a leading media and events company, for business technologyinnovation;

• Woman Leader in IT to our IT-CIO by Interop, a leading independent technology conferenceforum, for our business strategic focus in technology;

• CIO 100 by IDG Media for our information security project concerning deployment ofanti-DDOS (Distributed Denial of Service); and

• Economic Times Human Resources Excellence Award, 2014, for human resource practices,including in the areas of learning and development, talent management and talent acquisitions.

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Human Resources

As at December 31, 2014 we had 9,135 employees across all business areas. We have outsourced ournetwork management functions and call centre operations. To motivate our employees, we offervarious monthly and quarterly incentive schemes. We also have a performance linked incentive policywhich encourages our employees to achieve their targets. We endeavour to make our policies,processes and procedures more transparent and employee friendly, in line with the best industrypractices.

Properties

Our Company’s registered and corporate office is located at H Block, 1st Floor, Dhirubhai AmbaniKnowledge City, Navi Mumbai, which is owned by Reliance Infocomm Infrastructure Limited, one ofour Subsidiaries and leased by our Company until March 31, 2017.

Most of our telecommunications towers and cell-sites are located on leased properties. These leaseagreements are generally for a period of 10 to 15 years and grant Reliance Infratel the right to use theleased premises for the purpose of carrying on our telecommunications business. We also own or leaseland and buildings for our administrative and customer service centres and technical facilities.

For our Global Operations, our offices, which are generally leased, are located in 18 countries, withfloor space aggregating more than 200,000 square feet. Our other principal properties consist of ninehosting centres, aggregating more than 85,000 square feet leased for a period ranging from five to 10years and are located in five countries.

Insurance

We currently maintain a comprehensive Cellular Network All Risk Insurance Policy for coveringinland transits, operational risks, business interruption, erection and installation and third-partyliability in India. We also have marine cargo policy (both inland and import) to cover transit risks. Wealso maintain a directors and officers liability policy.

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DESCRIPTION OF MATERIAL INDEBTEDNESS

To finance our capital expenditure, our Company and its Subsidiaries have entered into loanagreements with various lenders in India and other foreign countries. As at December 31, 2014, ourtotal consolidated outstanding borrowings amounted to `390.46 billion. The exchange rate consideredfor converting the US$-denominated loans into INR is 1 US$ = `63.035, as provided by FEDAI, asat December 31, 2014. Set out below is a summary of the material terms and conditions of these loanagreements.

INDEBTEDNESS OF OUR COMPANY

1. Foreign Currency Loans

a) China Development Bank Facility I

On June 4, 2008, we entered into a facility agreement with China Development Bank for availing aterm loan of US$750 million (“China Development Bank Facility I”). As at December 31, 2014,US$518 million of the principal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the China Development Bank Facility I is the aggregate ofthe applicable LIBOR and a margin of 1.8%.

Financial Covenants

Under the terms of the China Development Bank Facility I, we agreed to the following financialcovenants to be tested on the financial results of our Company on a consolidated basis:

• net worth of our Company shall not be less than `180 billion;

• the ratio of net debt to EBITDA will not be greater than 4:1;

• the ratio of EBITDA to interest expenses will not be less than 4:1;

• the ratio of adjusted EBITDA to debt service will not be less than 1.5:1; and

• the Asset Cover Ratio will not be less than 1.25:1.

For the purpose of this section, “Asset Cover Ratio” means ratio of the net book value of the assetsof our Company, RTL, RCIL and Reliance Infratel which have been hypothecated in favour of therelevant lender to secured long-term indebetedness (debt for which repayment is not due within 12months from creation of such indebtedness) of our Company, RTL, RCIL and Reliance Infratel.

Other Covenants

Under the terms of the China Development Bank Facility I:

• our Company, RTL, RCIL and Reliance Infratel cannot create or permit to subsist any securityover any of our present and future assets and property, other than permitted security.

Security

The China Development Bank Facility I is secured by:

• first pari passu charge over the present and future moveable plant and machinery and capitalwork in progress of, and all rights, title, interest, benefits, claims and demands under and inrespect of all insurance contracts entered into in relation to these assets by our Company, RCIL,Reliance Infratel and RTL;

• assignment of 20 unified access service licences, a national long-distance licence and aninternational long-distance licence of our Company; and

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• pledge of:

(i) 66,980,095 equity shares of RTL held by our Company;

(ii) 18,019,900 equity shares of RTL held by RIIL; and

(iii) 9,379,999,994 equity shares of RCIL held by our Company.

Events of Default

• The China Development Bank Facility I contains customary events of default, includingnon-payment of principal or interest, cross-default, insolvency and breach of the terms of theChina Development Bank Facility I.

• Termination, suspension or cancellation of any material licences or concessions available to ourCompany in relation to wireless telephony services is also an event of default under the ChinaDevelopment Bank Facility I.

• If (i) any person other than the Reliance ADA Group (being Mr. Anil Dhirubhai Ambani, hisfamily and family trust and companies in which Mr. Anil Dhirubhai Ambani has at least 26%stake and companies which are directly or indirectly controlled by Mr. Anil Dhirubhai Ambani)acquires control or acquires more than 50% of the issued share capital of our Company, RTL,RCIL or Reliance Infratel; or (ii) the Reliance ADA Group ceases to have management controlor own at least 26% of the issued share capital of our Company, RTL, RCIL or Reliance Infratel,it will be an event of default under the China Development Bank Facility I.

b) China Development Bank Facility II

On March 9, 2011, we entered into a facility agreement with China Development Bank for availinga term loan of US$ 300 million (“China Development Bank Facility II”). As at December 31, 2014,US$29 million of the principal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the China Development Bank Facility II is the aggregateof the applicable LIBOR and a margin of 2.20%.

Financial Covenants

Under the terms of the China Development Bank Facility II, we agreed to the following financialcovenants to be tested on the financial results of our Company on a consolidated basis:






Other Covenants

Under the terms of the China Development Bank Facility II:

• our Company, RTL, RCIL and Reliance Infratel cannot create or permit to subsist any securityover any of our present and future assets and property, other than permitted security interest.

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Security

The China Development Bank Facility II is secured by:

• first pari passu charge over the present and future moveable plant and machinery and capitalwork in progress of, and all rights, title, interest, benefits, claims and demands under and inrespect of all insurance contracts entered into in relation to these assets by, our Company, RCIL,Reliance Infratel and RTL;


• pledge of:




Events of Default

• The China Development Bank Facility II contains customary events of default, includingnon-payment of principal or interest, cross-default, insolvency and breaches of the terms of theChina Development Bank Facility II.

• Termination, suspension or cancellation of any material licences or concessions available to ourCompany in relation to wireless telephony services is also an event of default under the ChinaDevelopment Bank Facility II.

• If (i) any person other than the Reliance ADA Group (being Mr. Anil Dhirubhai Ambani, hisfamily and family trust and companies in which Mr. Anil Dhirubhai Ambani has at least 26%stake and companies which are directly or indirectly controlled by Mr. Anil Dhirubhai Ambani)acquires control or acquires more than 50% of the issued share capital of our Company, RTL,RCIL or Reliance Infratel; or (ii) the Reliance ADA Group ceases to have management controlor own at least 26% of the issued share capital of our Company, RTL, RCIL or Reliance Infratel,it will be an event of default under the China Development Bank Facility II.

c) China Development Bank Facility III

On March 9, 2011, we entered into a facility agreement with China Development Bank for availinga term loan of US$ 1,330 million (“China Development Bank Facility III”). As at December 31,2014, US$1,237 million of the principal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the China Development Bank Facility III is the aggregateof the applicable LIBOR and a margin of 3.25%.

Financial Covenants

Under the terms of the China Development Bank Facility III, we agreed to the following financialcovenants to be tested on the financial results of our Company on a consolidated basis:






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Other Covenants

Under the terms of the agreement executed for the China Development Bank Facility III:


Security

The China Development Bank Facility III is secured by:



• pledge of:




Events of Default

• The China Development Bank Facility III contains customary events of default, includingnon-payment of principal or interest, cross-default, insolvency and breaches of the terms of theChina Development Bank Facility III.

• Termination, suspension or cancellation of any material licences or concessions available to ourCompany in relation to wireless telephony services is also an event of default under the ChinaDevelopment Bank Facility III.

• If (i) any person other than the Reliance ADA Group (being Mr. Anil Dhirubhai Ambani, hisfamily and family trust and companies in which Mr. Anil Dhirubhai Ambani has at least 26%stake and companies which are directly or indirectly controlled by Mr. Anil Dhirubhai Ambani)acquires control or acquires more than 50% of the issued share capital of our Company, RTL,RCIL or Reliance Infratel; or (ii) the Reliance ADA Group ceases to have management controlor own at least 26% of the issued share capital of our Company, RTL, RCIL or Reliance Infratel,it will be an event of default under the China Development Bank Facility III.

d) Export Development Canada Facility I

On April 19, 2008, we entered into a facility agreement with Export Development Canada for availinga term loan of US$ 250 million (“Export Development Canada Facility I”). As at December 31,2014, US$69 million of the principal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the Export Development Canada Facility I is the aggregateof the applicable LIBOR and a margin of 3.00%.

Financial Covenants

Under the terms of the Export Development Canada Facility I, we agreed to the following financialcovenants to be tested on the financial results of our Company on a consolidated basis:


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• the ratio of adjusted EBITDA to debt service will not be less than 1:1; and


Other Covenants

Under the terms of the Export Development Canada Facility I:

• our Company, RTL, RCIL and Reliance Infratel cannot create or permit to subsist any securityover any of our present and future assets and property without the prior written consent of thelender, other than permitted security interest; and

• we cannot incur any long-term debt (debt for which repayment is not due within 12 months fromcreation of such indebtedness) or any obligation which is, in the opinion of the lender, on termsand conditions more favourable than the terms and conditions of Export Development CanadaFacility I, without the prior written consent of the lender, unless benefit of such favourable termsis also extended to the lenders under the facility.

Security

The Export Development Canada Facility I is secured by:



• pledge of:




Events of Default

• The Export Development Canada Facility I contains customary events of default, includingnon-payment of principal or interest, cross-default, insolvency and breaches of the terms of theExport Development Canada Facility I.

• Termination or expiry of any material licences available to our Company is also an event ofdefault under the Export Development Canada Facility I.

• If any person or group of persons acting in concert other than the Reliance ADA Group (beingMr. Anil Dhirubhai Ambani, his family and family trust and companies in which Mr. AnilDhirubhai Ambani has at least 26% stake and companies which are directly or indirectlycontrolled by Mr. Anil Dhirubhai Ambani) acquires control or acquires more than 50% of theissued share capital of our Company, RTL, RCIL or Reliance Infratel, it will be an event ofdefault under the Export Development Canada Facility I.

e) Export Development Canada Facility II

On November 24, 2008, we entered into a facility agreement with Export Development Canada foravailing a term loan of US$ 150 million (“Export Development Canada Facility II”). The aggregateprincipal amount of the term loan was subsequently reduced to US$ 20 million. As at December 31,2014, US$9 million of the principal amount was outstanding under this facility.

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Interest

The applicable interest rate per annum for the Export Development Canada Facility II is the aggregateof the applicable LIBOR and a margin of 1.75%.

Financial Covenants

Under the terms of the Export Development Canada Facility II, we agreed to the following financialcovenants to be tested on the financial results of our Company on a consolidated basis:






Other Covenants

Under the terms of the Export Development Canada Facility II:


• we cannot incur any long-term debt (debt for which repayment is not due within 12 months fromcreation of such indebtedness) or any obligation which is, in the opinion of the lender, on termsand conditions more favourable than the terms and conditions of Export Development CanadaFacility II, without the prior written consent of the lender, unless benefit of such favourableterms is also extended to the lenders under the facility.

Security

The Export Development Canada Facility II is secured by:



• pledge of:




Events of Default

• The Export Development Canada Facility II contains customary events of default, includingnon-payment of principal or interest, cross-default, insolvency and breaches of the terms of theExport Development Canada Facility II.

• Termination or expiry of any material licences available to our Company is also an event ofdefault under the Export Development Canada Facility II.

• If any person or group of persons acting in concert other than the Reliance ADA Group (beingMr. Anil Dhirubhai Ambani, his family and family trust and companies in which Mr. Anil

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Dhirubhai Ambani has at least 26% stake and companies which are directly or indirectlycontrolled by Mr. Anil Dhirubhai Ambani) acquires control or acquires more than 50% of theissued share capital of our Company, RTL, RCIL or Reliance Infratel, it will be an event ofdefault under the Export Development Canada Facility II.

f) Export Development Canada Facility III

On April 19, 2008, we entered into a facility agreement with Export Development Canada for availinga line of credit of US$ 150 million (“Export Development Canada Facility III”). In June 2014, theloan was transferred by Export Development Canada to Deutsche Bank AG, London Branch. As atDecember 31, 2014, US$36 million of the principal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the Export Development Canada Facility III is the aggregateof the applicable LIBOR and a margin of 3.00%.

Financial Covenants

Under the terms of the Export Development Canada Facility III, we agreed to the following financialcovenants to be tested on the financial results of our Company on a consolidated basis:






Other Covenants

Under the terms of the Export Development Canada Facility III:


• we cannot incur any long-term debt (debt for which repayment is not due within 12 months fromcreation of such indebtedness) or any obligation which is, in the opinion of the lender, on termsand conditions more favourable than the terms and conditions of Export Development CanadaFacility III, without the prior written consent of the lender, unless benefit of such favourableterms is also extended to the lenders under the facility.

Security

The Export Development Canada Facility III is secured by:



• pledge of:




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Events of Default

• The Export Development Canada Facility III contains customary events of default, includingnon-payment of principal or interest, cross-default, insolvency and breaches of the terms of theExport Development Canada Facility III.

• Termination or expiry of any material licences available to our Company is also an event ofdefault under the Export Development Canada Facility III.

• If any person or group of persons acting in concert other than the Reliance ADA Group (beingMr. Anil Dhirubhai Ambani, his family and family trust and companies in which Mr. AnilDhirubhai Ambani has at least 26% stake and companies which are directly or indirectlycontrolled by Mr. Anil Dhirubhai Ambani) acquires control or acquires more than 50% of theissued share capital of our Company, RTL, RCIL or Reliance Infratel, it will be an event ofdefault under the Export Development Canada Facility III.

g) BNP Paribas Facility

On January 11, 2011, we entered into a facility agreement with Australian and New Zealand BankingGroup Limited, BNP Paribas, Crédit Agricole Corporate and Investment Bank, DBS Bank Ltd. andIntesa Sanpaolo S.P.A for availing a term loan of US$255 million (“BNP Paribas Facility”). As atDecember 31, 2014, US$255 million of the principal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the BNP Paribas Facility is the aggregate of the applicableLIBOR and a margin of 3.85%.

Financial Covenants

Under the terms of the BNP Paribas Facility, we agreed to the following financial covenants to betested on the financial results of our Company on a consolidated basis:






Other Covenants

Under the terms of the BNP Paribas Facility:

• we cannot create or permit to subsist any security over any of our present and future assets andproperty in favour of a lender providing long-term debt (debt for which repayment is not duewithin 12 months from creation of such indebtedness) without the prior written consent of themajority banks, other than permitted security interest unless agreements are executed givingbenefit of the security interest to the finance parties; and

• we cannot incur any long-term debt (debt for which repayment is not due within 12 months fromcreation of such indebtedness) or any obligation which is, in the opinion of the lender, on termsand conditions more favourable than the terms and conditions of the BNP Paribas Facility,without the prior written consent of the lenders, unless benefit of such favourable terms is alsoextended to the lenders under the BNP Paribas Facility.

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Security

The BNP Paribas Facility is secured by:



• pledge of:




Events of Default

• The BNP Paribas Facility contains customary events of default, including non-payment ofprincipal or interest, cross-default, insolvency and breaches of the terms of the BNP ParibasFacility.

• Termination or expiry of any material licences available to our Company is also an event ofdefault under the BNP Paribas Facility.

• If any person or group of persons acting in concert other than the Reliance ADA Group (beingMr. Anil Dhirubhai Ambani, his family and family trust and companies in which Mr. AnilDhirubhai Ambani has at least 26% stake and companies which are directly or indirectlycontrolled by Mr. Anil Dhirubhai Ambani) acquires control or acquires more than 50% of theissued share capital of our Company, it will be an event of default under the BNP ParibasFacility.

h) ICBC Facility I

On February 22, 2012, we entered into a facility agreement with China Development BankCorporation, Export-Import Bank of China and Industrial and Commercial Bank of China Limited foravailing a term loan of US$ 925.2 million (“ICBC Facility I”). As at December 31, 2014, US$796million of the principal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the ICBC Facility I is the aggregate of the applicableLIBOR and a margin of 4.75%.

Financial Covenants

Under the terms of the ICBC Facility I, we agreed to the following financial covenants to be testedon the financial results of our Company on a consolidated basis:





• the asset cover ratio (being the ratio of the net book value of the assets of our Company, RTL,RCIL and Reliance Infratel, which have been hypothecated in favour of the lenders and, in case

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of the Company, the telecommunications licences, which are subject to the tripartite agreements,to secured long-term indebetedness (debt for which repayment is not due within 12 months fromcreation of such indebtedness) of our Company, RTL, RCIL and Reliance Infratel) will not beless than 1.6:1.

Other Covenants

Under the terms of the ICBC Facility I:

• our Company, RTL, RCIL and Reliance Infratel cannot create or permit to subsist any securityover any of our present and future assets and property, other than permitted security interest; and

• we cannot incur any long-term debt (debt for which repayment is not due within 12 months fromcreation of such indebtedness) or any obligation which is, in the opinion of the lender, on termsand conditions more favourable than the terms and conditions of ICBC Facility I, without theprior written consent of the lender, unless benefit of such favourable terms is also extended tothe lenders under the facility.

Security

The ICBC Facility I is secured by:



• pledge of:




Events of Default

• The ICBC Facility I contains customary events of default, including non-payment of principal orinterest, cross-default, insolvency and breaches of the terms of the ICBC Facility I.

• Termination, suspension or cancellation of any material licences or concessions available to ourCompany in relation to wireless telephony services is also an event of default under the ICBCFacility I.

• If (i) any person other than the Reliance ADA Group (being Mr. Anil Dhirubhai Ambani, hisfamily and family trust and companies in which Mr. Anil Dhirubhai Ambani has at least 26%stake and companies which are directly or indirectly controlled by Mr. Anil Dhirubhai Ambani)acquires control or acquires more than 50% of the issued share capital of our Company, RTL,RCIL or Reliance Infratel; or (ii) the Reliance ADA Group ceases to have management controlor own at least 26% of the issued share capital of our Company, RTL, RCIL or Reliance Infratel,it will be an event of default under the ICBC Facility I.

i) Deutsche Bank Facility

On March 13, 2015, we entered into a facility agreement with Deutsche Bank AG, Singapore Branchas the lender and Deutsche Bank AG, Hong Kong Branch as the facility agent for availing a term loanof US$ 75 million (“Deutsche Bank Facility”).

Interest

The applicable interest rate per annum for the Deutsche Bank Facility is the aggregate of theapplicable LIBOR and a margin of 4.25%.

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Financial Covenants

Under the terms of the Deutsche Bank Facility, we agreed to the following financial covenants to betested on the financial results of our Company on a consolidated basis:

• net worth of our Company shall not be less than Rs. 180 billion;





Other Covenants

Under the terms of the Deutsche Bank Facility:


• we cannot incur any long-term debt (debt for which repayment is not due within 12 months fromcreation of such indebtedness) or any obligation which is, in the opinion of the lender, on termsand conditions more favourable than the terms and conditions of Deutsche Bank Facility, withoutthe prior written consent of the lender, unless benefit of such favourable terms is also extendedto the lenders under the facility.

Security

The Deutsche Bank Facility is secured by:



• pledge of:



(iii) 9,379,999,994 equity shares of RCIL shares held by our Company.

Events of Default

• The Deutsche Bank Facility contains customary events of default, including non-payment ofprincipal or interest, cross-default, insolvency and breaches of the terms of the Deutsche BankFacility.

• Termination, suspension or cancellation of any material licences or concessions available to ourCompany in relation to wireless telephony services is also an event of default under the DeutscheBank Facility.

• If (i) any person other than the Reliance ADA Group (being Mr. Anil Dhirubhai Ambani, hisfamily and family trust and companies in which Mr. Anil Dhirubhai Ambani has at least 26%stake and companies which are directly or indirectly controlled by Mr. Anil Dhirubhai Ambani)

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acquires control or acquires more than 50% of the issued share capital of our Company, RTL,RCIL or Reliance Infratel; or (ii) the Reliance ADA Group ceases to have management controlor own at least 26% of the issued share capital of our Company, RTL, RCIL or Reliance Infratel,it will be an event of default under the Deutsche Bank Facility.

2. Syndicated Rupee Facility

On February 20, 2015, we entered into a common loan facility agreement for term loan facilitiesaggregating to `67,500 million with State Bank of India acting as the lead bank (“Syndicated RupeeFacility”) (the “Facility Agreement”).

Details of the loan amounts sanctioned by banks forming a part of the consortium (“ConsortiumLenders”), along with the applicable interest rates, are as follows:

Sr. No. Name of the Bank Borrower Company

Total Amount Sanctioned

(`in million)

1. Bank of India . . . . . . . . . . . . . . . . . . . . . . . . Company 7,000

2. Bank of India . . . . . . . . . . . . . . . . . . . . . . . . RTL 500

3. State Bank of India . . . . . . . . . . . . . . . . . . . Company 15,000

4. State Bank of India . . . . . . . . . . . . . . . . . . . RTL 1,250

5. Canara Bank . . . . . . . . . . . . . . . . . . . . . . . . . Company 7,400

6. Canara Bank . . . . . . . . . . . . . . . . . . . . . . . . . RTL 600

7. Central Bank . . . . . . . . . . . . . . . . . . . . . . . . Company 2,800

8. Central Bank . . . . . . . . . . . . . . . . . . . . . . . . RTL 200

9. Corporation Bank . . . . . . . . . . . . . . . . . . . . . Company 2,350

10. Corporation Bank . . . . . . . . . . . . . . . . . . . . . RTL 150

11. IDBI Bank Ltd . . . . . . . . . . . . . . . . . . . . . . . Company 7,500

12. IDBI Bank Ltd . . . . . . . . . . . . . . . . . . . . . . . RTL 3,000

13. Indian Overseas Bank . . . . . . . . . . . . . . . . . . Company 1,300

14. Indian Overseas Bank . . . . . . . . . . . . . . . . . . RTL 200

15. Oriental Bank of Commerce . . . . . . . . . . . . . Company 2,050

16. Oriental Bank of Commerce . . . . . . . . . . . . . RTL 200

17. Syndicate Bank. . . . . . . . . . . . . . . . . . . . . . . Company 4,600

18. Syndicate Bank. . . . . . . . . . . . . . . . . . . . . . . RTL 400

19. UCO Bank . . . . . . . . . . . . . . . . . . . . . . . . . . Company 7,400

20. UCO Bank . . . . . . . . . . . . . . . . . . . . . . . . . . RTL 600

21. Union Bank . . . . . . . . . . . . . . . . . . . . . . . . . Company 2,750

22. Union Bank . . . . . . . . . . . . . . . . . . . . . . . . . RTL 250

The interest rate for each term loan shall be the base rate of the SBI plus a margin of 2.50%.

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Interim disbursements

Our Company and RTL had executed individual agreements with each Consortium Lender to availinterim loans (“Interim Loans”). Details of the loan amounts sanctioned by each Consortium Lenderare as follows:

Sr. No. Name of the Bank

Amount Sanctioned

(`in million)

Amount Outstanding as at

December 31, 2014

(` in million)

Company RTL Total Company RTL Total

1. State Bank of India . . . . . . . . . 15,000 1,250 16,250 15,000 1,250 16,250

2. Bank of India. . . . . . . . . . . . . . 7,000 500 7,500 3,500 — 3,500

3. UCO Bank . . . . . . . . . . . . . . . 7,400 600 8,000 7,400 — 7,400

4. IDBI Bank . . . . . . . . . . . . . . . 7,500 3,000 10,500 7,500 3,000 10,500

5. Oriental Bank of Commerce . . . 2,050 200 2,250 2,050 200 2,250

6. Central Bank of India . . . . . . . 2,800 200 3,000 2,800 — 2,800

7. Syndicate Bank . . . . . . . . . . . . 4,600 400 5,000 4,600 400 5,000

8. Indian Overseas Bank . . . . . . . 1,300 200 1,500 1,300 200 1,500

9. Corporation Bank . . . . . . . . . . . 2,350 150 2,500 2,350 — 2,350

10. Canara Bank . . . . . . . . . . . . . . 7,400 600 8,000 7,400 600 8,000

Total . . . . . . . . . . . . . . . . . . . . 57,400 7,150 64,500 53,900 5,650 59,550

Post execution of the Facility Agreement on February 20, 2015, these interim disbursements have beenconverted into long-term loans by the respective Consortium Lenders and will form a part of thefunding limits disbursed by the respective Consortium Lender under the Facility Agreement.

Financial Covenants

Under the terms of the Facility Agreement, we agreed to the following financial covenants:

• ratio of net debt to EBITDA of each of our Company and RTL shall not be more than 5.00 timesas at March 31, 2015 and 4.00 thereafter;

• ratio of EBITDA to interest expense of each of our Company and RTL shall not be less than 3.00times as at March 31, 2015 and 4.00 as at March 31, 2016 and any time thereafter;

• ratio of adjusted EBITDA to debt service of our Company shall not be less than 1.00 times;

• net worth of our Company shall not fall below `250,000 million at any time; and

• asset loan ratio shall not fall below 1.10 times.

Other Covenants

Under the terms of the Facility Agreement and agreements executed for the Interim Loans:

• our Company, RTL, RCIL, Reliance Infratel and Reliance Globalcom B.V. cannot undertake anyfurther borrowings whether secured or unsecured beyond the approved limit;

• no contractual obligations of long-term nature can be executed which affect our Company, RCIL,Reliance Globalcom B.V., RTL or Reliance Infratel to a significant extent; and

• no further security interest can be created on the assets securing the Syndicated Term Loan otherthan as approved by the relevant Consortium Lender. The Facility Agreement permits thecreation of pari passu security interest for any indebtedness availed by the Company and RTLfor refinancing the existing debt.

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Security

The Interim Loans were secured by:

• first ranking pari passu charge over the present and future moveable plant and machinery andcapital work in progress of and all rights, title, interest, benefits, claims and demands under andin respect of all insurance contracts entered in relation to these assets of our Company, RCIL,Reliance Infratel and RTL.

Some of the Interim Loans given by State Bank of India aggregating `13,250 million were also securedby a second ranking pari passu charge over present and future movable plant and machinery andcapital work in progress of our Company, RCIL, Reliance Infratel and RTL.

After the execution of the Facility Agreement, the Interim Loans will become a part of the limitssanctioned by the Facility Agreement and will be secured in accordance with the terms thereunder. TheFacility Agreement provides for the creation of security interest in the following two stages:

• Stage one:

� Creation of first pari passu charge over the present and future moveable plant andmachinery, including tower assets and optic fibre cables, if any, and capital work inprogress of, and all rights, title, interest, benefits, claims and demands under and in respectof all insurance contracts entered into in relation to these assets by, our Company, RCIL,Reliance Infratel and RTL. This security interest has been created in favour of theConsortium Lenders by the Deed of Hypothecation dated February 20, 2015.

• Stage two:

� assignment of all telecom licenses of our Company and RTL;

� first ranking pari passu pledge over:

(i) 100 percent equity shares of RTL held by our Company;

(ii) 100 percent equity shares of RTL held by RIIL;

(iii) 100 percent equity shares of RCIL held by our Company; and

(iv) 100 percent equity shares of Reliance Infratel held by RCIL;

� creation of first ranking pari passu charge on all present and future movable fixed assetsof our Company, RCIL, Reliance Infratel, RTL and Reliance Globalcom B.V., but notlimited to movable plant and machinery and capital work in progress;

� creation of first pari passu charge on present and future cash flows, receivables, othercurrent assets, revenues, intangibles of our Company, RCIL, Reliance Infratel, RTL andReliance Globalcom B.V.;

� creation of first pari-passu charge on all present and future immoveable assets of ourCompany, RCIL, Reliance Infratel, RTL and Reliance Globalcom B.V.;

� assignment of rights, titles, interests, benefits, claims and demands in material projectcontracts including insurance proceeds of our Company, RCIL, Reliance Infratel, RTL andReliance Globalcom B.V.;

� execution of joint and several guarantees from our Company, RCIL, Reliance Infratel andRTL to secure the obligations of our Company, RTL and Reliance Globalcom B.V.; and

in addition to the above:

� subject to regulatory approvals, mortgage of all spectrum belonging to our Company andRTL in favour of the Consortium Lenders.

The security interest described in stage two has not yet been created in favour of the ConsortiumLenders and will be created after the receipt of relevant regulatory approvals, approvals from existinglenders and execution of joint document with all the Consortium Lenders.

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Events of Default

The facility documents contain customary events of default, including non-payment of principal orinterest, cross-default, insolvency and breaches of the terms of the facilities.

3. Other Rupee Term Loans

a) IDBI Bank Facility I

On March 29, 2011, we entered into a facility agreement with IDBI Bank Limited for availing a termloan of `100 million (“IDBI Bank Facility I”). As at December 31, 2014, `100 million of theprincipal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the IDBI Bank Facility I is the aggregate of the base rateof IDBI Bank Ltd. and 250 basis points.

Financial Covenants

Under the terms of the IDBI Bank Facility I, we agreed to the following financial covenants:

• the ratio of net debt to EBITDA will not be greater than 5.5:1;




Other Covenants

Under the terms of the IDBI Bank Facility I:

• we cannot create or permit to subsist any security over any of our present and future assets andproperty, other than permitted security, without the prior written consent of the lender;

• we cannot enter into any borrowing arrangements either secured or unsecured, with any otherbank, financial institution, company or otherwise, without informing the lender in writing withinseven days of date of borrowing;

• we cannot enter into any contractual obligations of a long-term nature or affecting our Companyfinancially to a significant extent other than in the normal course of business of the Company,without informing the lender in writing within seven days of date of borrowing; and

• we cannot effect or agree to effect any charge, mortgage, sale, lease, transfer or otherwisedispose of any of our Company’s movable or immovable assets other than those in the ordinarycourse of business, without informing the lender in writing within seven days of date ofborrowing.

Security

The IDBI Bank Facility I is secured by:



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• pledge of:




Events of Default

• The IDBI Bank Facility I contains customary events of default, including non-payment ofprincipal or interest, cross-default, insolvency and breaches of the terms of the IDBI BankFacility I.

• If (i) any person or group of persons acting in concert, other than the Reliance ADA Group (beingMr. Anil Dhirubhai Ambani, his family and family trust and companies in which Mr. AnilDhirubhai Ambani, his family or family trust has at least 26% stake and companies which aredirectly or indirectly controlled by Mr. Anil Dhirubhai Ambani, his family or family trust)acquires control or acquires more than 50% of the issued share capital of our Company; or (ii)the Reliance ADA Group ceases to have management control or own at least 26% of the issuedshare capital of our Company, it will be an event of default under the IDBI Bank Facility I.

b) IFCI Facility

On November 22, 2013, we entered into a corporate loan agreement with IFCI Limited for availinga corporate loan of `3,000 million (“IFCI Facility”). As at December 31, 2014, `3,000 million of theprincipal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the IFCI Facility is 14.70%.

Covenants

Under the terms of the IFCI Facility:

• we cannot sell or dispose of the assets charged or to be charged or create any mortgage, lien orcharge by way of hypothecation or otherwise except in the ordinary course of business or as maybe permitted by the lender, without the prior written approval of the lender.

Security

The IFCI Facility is secured by:

• first pari passu charge over the present and future moveable plant and machinery and capitalwork in progress of, and all rights, title, interest, benefits, claims and demands under and inrespect of all insurance contracts entered into in relation to these assets by, our Company, RCIL,Reliance Infratel and RTL; and

• assignment of 20 unified access service licences, a national long-distance licence and aninternational long-distance licence of our Company.

Events of Default

The IFCI Facility contains customary events of default, including non-payment of principal orinterest, cross-default, insolvency and breaches of the terms of the IFCI Facility.

c) Bank of Baroda Facility

On May 18, 2013, we entered into a term loan agreement with Bank of Baroda for availing a term loanof `2,500 million (“Bank of Baroda Facility”). As at December 31, 2014, `2,500 million of theprincipal amount was outstanding under this facility.

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Interest

The applicable interest rate per annum for the Bank of Baroda Facility is the aggregate of the base rateof the Bank of Baroda and 2%.

Covenants

Pursuant to the agreement for the Bank of Baroda Facility:

• we cannot create or permit to subsist any security interest over any of our present and futureassets and property, without the prior written consent of the lender.

Security

The Bank of Baroda Facility is secured by:

• first pari passu charge over the present and future moveable plant and machinery and capitalwork in progress of, and all rights, title, interest, benefits, claims and demands under and inrespect of all insurance contracts entered into in relation to these assets by, our Company, RCIL,Reliance Infratel and RTL.

Events of Default

• The Bank of Baroda contains customary events of default, including non-payment of principalor interest, cross-default, insolvency and breaches of the terms of the Bank of Baroda Facility.

• If (i) any person or group of persons acting in concert, other than the Reliance ADA Group (beingMr. Anil Dhirubhai Ambani, his family and family trust and companies in which Mr. AnilDhirubhai Ambani, his family or family trust has at least 26% stake and companies which aredirectly or indirectly controlled by Mr. Anil Dhirubhai Ambani, his family or family trust)acquires control or acquires more than 50% of the issued share capital of our Company; or (ii)the Reliance ADA Group ceases to have management control or own at least 26% of the issuedshare capital of our Company, it will be an event of default under the Bank of Baroda Facility.

d) UBI Facility

On June 28, 2013, we entered into a term loan agreement with United Bank of India for availing a termloan of `2,500 million (“UBI Facility”). As at December 31, 2014, `2,500 million of the principalamount was outstanding under this facility.

Interest

The applicable interest rate per annum for the UBI Facility is the aggregate of the Base Rate and 2%.

Covenants

Pursuant to the agreement for the UBI Facility:

• we cannot create or permit to subsist any security interest over any of our present and futureassets and property, without the prior written consent of the lender.

Security

The UBI Facility is secured by:


Events of Default

• The UBI Facility contains customary events of default, including non-payment of principal orinterest, cross-default, insolvency and breaches of the terms of the UBI Facility.

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• If (i) any person or group of persons acting in concert, other than the Reliance ADA Group (beingMr. Anil Dhirubhai Ambani, his family and family trust and companies in which Mr. AnilDhirubhai Ambani, his family or family trust has at least 26% stake and companies which aredirectly or indirectly controlled by Mr. Anil Dhirubhai Ambani, his family or family trust)acquires control or acquires more than 50% of the issued share capital of our Company; or (ii)the Reliance ADA Group ceases to have management control or own at least 26% of the issuedshare capital of our Company, it will be an event of default under the UBI Facility.

e) Yes Bank Facility I

On July 4, 2013, we entered into a facility agreement with Yes Bank for availing a term loan of `2,500million (“Yes Bank Facility I”). As at December 31, 2014, `1,380 million of the principal amount wasoutstanding under this facility.

Interest

The applicable interest rate per annum for the Yes Bank Facility I is 11.75%.

Covenants

Pursuant to the agreement for the Yes Bank Facility I:

• we are required to inform the lender within seven days of incurring further indebtedness of along-term nature whether for borrowed money or otherwise.

Events of Default

• The Yes Bank Facility I contains customary events of default, including non-payment ofprincipal or interest, cross-default, insolvency and breaches of the terms of the Yes Bank FacilityI.

• The sanction letter executed for the Yes Bank Facility I states that failure of the ADA Group tohold at least 26% of the paid-up share capital of our Company and to retain management controlin our Company would be an event of default.

• The facility agreement executed for the Yes Bank Facility I states that any substantial change inthe constitution or management of our Company without previous consent of the lender or if themanagement ceases to enjoy the confidence of the lender, it would be an event of default.

f) Yes Bank Facility II

On November 19, 2014, we entered into a term loan agreement with Yes Bank for availing a term loanof `5,000 million (“Yes Bank Facility II”). As of December 31, 2014 `5,000 million of the principalamount was outstanding under this facility.

Interest

The applicable interest rate per annum for the Yes Bank Facility II is 11.25% and it is linked to thebase rate of Yes Bank on a floating basis.

Covenants

Pursuant to the agreement for the Yes Bank Facility II:


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Security

The Yes Bank Facility II will be secured by second pari passu charge over the movable plant andmachinery and capital work in progress of our Company, Reliance Infratel, RTL and RCIL.

Events of Default

• The Yes Bank Facility II contains customary events of default, including non-payment ofprincipal or interest, cross default, insolvency and breaches of the terms of the Yes Bank FacilityII.

• If, the Reliance ADA Group ceases to have management control or own at least 26% of the issuedshare capital of our Company, it will be an event of default under the Yes Bank Facility II.

g) Yes Bank Facility III

On January 15, 2015, we entered into a facility agreement with Yes Bank for availing a term loan of`3,000 million (“Yes Bank Facility III”).

Interest

The applicable interest rate per annum for the Yes Bank Facility III is 12.50%.

Covenants

Pursuant to the agreement for the Yes Bank Facility III:


Security

The Yes Bank Facility III will be secured by second pari passu charge over the movable plant andmachinery and capital work in progress of our Company, Reliance Infratel, RTL and RCIL.

Events of Default

• The Yes Bank Facility III contains customary events of default, including non-payment ofprincipal or interest, cross-default, insolvency and breaches of the terms of the Yes Bank FacilityIII.

• The facility agreement executed for the Yes Bank Facility III states that any substantial changein the constitution or management of our Company without previous consent of the lender or ifthe management ceases to enjoy the confidence of the lender, it would be an event of default.

h) SCB Facility I

On December 4, 2014 and March 27, 2015, we have availed credit facilities from Standard CharteredBank aggregating to US$ 108.3 million and `3,100.1 million, respectively (together, “SCB FacilityI”). As of December 31, 2014 `3,500 million of the principal amount was outstanding under thisfacility.

Interest

The SCB Facility I provides for various sub limits for short term loan facility, overdraft facility,import letter of credit and import invoice financing. The rate of interest payable on most of these sublimits is base rate plus margin.

Events of Default

• The SCB Facility I contains customary events of default, including non-payment of principal orinterest, cross default, insolvency and breaches of the terms of the SCB Facility I.

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4. Non Convertible Debentures

a) LIC Debentures I

We have issued 3,000 secured, redeemable non convertible debentures of face value of `10 millioneach aggregating to `30,000 million, on a private placement basis (“LIC Debentures I”) pursuant toterms and conditions contained in the information memorandum dated February 21, 2009. The LICDebentures I are listed on the BSE Limited and National Stock Exchange of India Limited and willbe due for redemption in March 2019. Axis Trustee Services Limited has been appointed as thedebenture trustee. As at December 31, 2014 100% of these debentures are held by Life InsuranceCorporation of India and Life Insurance Corporation of India P&GS Fund.

Interest

The applicable interest rate per annum for the LIC Debentures I is 11.20%.

Covenants

Pursuant to the agreement for the LIC Debentures I:

• our Company, RTL, RCIL and Reliance Infratel cannot sell or dispose of the hypothecatedproperty or create any mortgage, lien, or charge by way of hypothecation, pledge or otherwise,without the prior approval of the debenture trustee.

Security

The LIC Debentures I is secured by:


Events of Default

The terms and conditions of LIC Debentures I provide for customary events of default, includingnon-payment of principal or interest, cross-default, insolvency and breaches of the terms of the LICDebentures I.

b) Yes Bank Debentures

We have issued 5,000 secured, redeemable non convertible debentures (series 2) of face value of `1million each aggregating to `5,000 million, on a private placement basis (“Yes Bank Debentures”)pursuant to terms and conditions contained in the information memorandum dated February 2, 2012.The Yes Bank Debentures are listed on the BSE Limited and National Stock Exchange of India Limitedand will be due for redemption in February 2017. Axis Trustee Services Limited has been appointedas the debenture trustee. As at December 31, 2014 100% of these debentures are held by Yes Bank Ltd.

Interest

The applicable interest rate per annum for the Yes Bank Debentures is 11.60%.

Covenants

Under the terms and conditions of the Yes Bank Debentures:


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Security

The Yes Bank Debentures are secured by:



• pledge of:




Events of Default

The terms and conditions of the Yes Bank Debentures provide for customary events of default,including non-payment of principal or interest, cross-default, insolvency and breaches of the terms ofthe Yes Bank Debenture.

c) LIC Debentures II

We have issued 1,500 secured, redeemable non convertible debentures (series 1) of face value of `10million each aggregating to `15,000 million, on a private placement basis (“LIC Debentures II”) onthe terms and conditions contained in the information memorandum dated January 30, 2012. The LICDebentures II are listed on the BSE Limited and National Stock Exchange of India Limited and theirfinal maturity date in February 2019. Axis Trustee Services Limited has been appointed as thedebenture trustee. As at December 31, 2014 100% of these debentures are held by Life InsuranceCorporation of India.

Interest

The applicable interest rate per annum for the LIC Debentures II is 11.25%.

Covenants

Pursuant to the agreement for the LIC Debentures II:


Security

The LIC Debentures II is secured by:


• assignment of 20 unified access service licences, a national long-distance licence and aninternational long-distance licence of our Company.

Events of Default

The terms and conditions of LIC Debentures II provide for customary events of default, includingnon-payment of principal or interest, cross-default, insolvency and breaches of the terms of the LICDebentures II.

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INDEBTEDNESS OF RELIANCE TELECOM

a) China Development Bank Facility IV

On March 9, 2011, RTL entered into a facility agreement with China Development Bank for availinga term loan of US$ 300 million (“China Development Bank Facility IV”). Our Company hasguaranteed this facility. As at December 31, 2014, US$214 million of the principal amount wasoutstanding under this facility.

Interest

The applicable interest rate per annum for the China Development Bank Facility IV is the aggregateof the applicable LIBOR and a margin of 2.2%.

Financial Covenants

Under the terms of the China Development Bank Facility IV, we agreed to the following financialcovenants to be tested based on the financial results of our Company on a consolidated basis:

• net worth of the Company shall not be less than `180 billion;

• the ratio of net debt to EBITDA of our Company will not be greater than 4:1;

• the ratio of EBITDA to interest expenses of our Company will not be less than 4:1;

• the ratio of adjusted EBITDA to debt service of our Company will not be less than 1.5:1; and


Other Covenants

Under the terms of the China Development Bank Facility IV:


Security

The China Development Bank Facility IV is secured by:


• assignment of eight unified access service licences of RTL;

• pledge of:



(iii) 9,379,999,994 equity shares of RCIL held by our Company; and

• corporate guarantee of our Company.

Events of Default

• The China Development Bank Facility IV contains customary events of default, includingnon-payment of principal or interest, cross-default, insolvency and breaches of the terms of theChina Development Bank Facility IV.

• Termination, suspension or cancellation of any material licences or concessions available to RTLin relation to wireless telephony services is also an event of default under the ChinaDevelopment Bank Facility IV.

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• If (i) any person other than the Reliance ADA Group (being Mr. Anil Dhirubhai Ambani, hisfamily and family trust and companies in which Mr. Anil Dhirubhai Ambani has at least 26%stake and companies which are directly or indirectly controlled by Mr. Anil Dhirubhai Ambani)acquires control or acquires more than 50% of the issued share capital of our Company, RelianceTelecom, RCIL or Reliance Infratel; or (ii) the Reliance ADA Group ceases to have managementcontrol or own at least 26% of the issued share capital of our Company, RTL, RCIL or RelianceInfratel, it will be an event of default under the China Development Bank Facility IV.

b) HSBC France Facility

On April 23, 2008, RTL entered into a COFACE supported buyer credit facility agreement with HSBCFrance for availing a credit facility of US$ 150 million (“HSBC France Facility”). As at December31, 2014, US$62 million of the principal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the HSBC France Facility is the sum of the applicableLIBOR and a margin of 1.4%.

Financial Covenants

Under the terms of the agreement executed for the HSBC France Facility, RTL agreed to the followingfinancial covenants, to be tested on the basis of consolidated financial statements of our Company:

• net worth shall not be less than `180 billion;





Other Covenants

Under the terms of the HSBC France Facility:


• our Company and RTL cannot incur any long-term debt (debt for which repayment is not duewithin 12 months from creation of such indebtedness) or any obligation which is, in the opinionof the lender, on terms and conditions more favourable than the terms and conditions of HSBCFrance Facility, without the prior written consent of the lender, unless benefit of such favourableterms is also extended to lenders under the facility.

Security

The HSBC France Facility is secured by:



• pledge of:




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Events of Default

• The HSBC France Facility contains customary events of default, including non-payment ofprincipal or interest, cross-default, insolvency and breaches of the terms of the HSBC FranceFacility.

• Termination or expiry of any material licences available to our Company and RTL is also anevent of default under the HSBC France Facility.

• If (i) any person or group of persons acting in concert other than the Reliance ADA Group (beingMr. Anil Dhirubhai Ambani, his family and family trust and companies in which Mr. AnilDhirubhai Ambani, his family or family trust has at least 26% stake and companies which aredirectly or indirectly controlled by Mr. Anil Dhirubhai Ambani, his family or family trust)acquires control or acquires more than 50% of the issued share capital of our Company or anyother security provider; (ii) any person or group of persons acting in concert other than ourCompany and a member of the Reliance ADA Group acquires control or acquires more than 50%of the issued share capital of RTL or any other security provider; or (iii) the Reliance ADA Groupceases to have management control or own at least 26% of the issued share capital of ourCompany, RTL, RCIL or Reliance Infratel, it will be an event of default under the HSBC FranceFacility.

c) IDBI Bank Facility II

In March 29, 2011, RTL entered into a facility agreement with IDBI Bank Limited for availing a termloan of `100 million (“IDBI Bank Facility II”). As at December 31, 2014, `100 million of theprincipal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the IDBI Bank Facility II is the aggregate of the base rateof IDBI Bank Ltd. and 250 basis points.

Financial Covenants

Under the terms of the IDBI Bank Facility II, RTL agreed to the following financial covenants:

• the net worth of RTL shall not be less than `180 billion;





Other Covenants

Under the terms of the agreement executed for the IDBI Facility II:

• RTL cannot create or permit to subsist any security over any of its present and future assets andproperty without the prior written consent of the lender, other than permitted security interest.

Security

The IDBI Bank Facility II is secured by:



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• pledge of:





Events of Default

• The IDBI Facility II contains customary events of default, including non-payment of principalor interest, cross-default, insolvency and breaches of the terms of the IDBI Bank Facility II.

• If (i) any person or group of persons acting in concert other than the Reliance ADA Group (beingMr. Anil Dhirubhai Ambani, his family and family trust and companies in which Mr. AnilDhirubhai Ambani, his family or family trust has at least 26% stake and companies which aredirectly or indirectly controlled by Mr. Anil Dhirubhai Ambani, his family or family trust)acquires control or acquires more than 50% of the issued share capital of RTL; or (ii) theReliance ADA Group ceases to have management control or own at least 26% of the issued sharecapital of RTL, it will be an event of default under the IDBI Facility II.

INDEBTEDNESS OF RELIANCE INFRATEL

a) HSBC Facility

On March 19, 2010, Reliance Infratel entered into a facility agreement with the Hong Kong andShanghai Banking Corporation Limited for availing a term loan of US$ 250 million (“HSBCFacility”). As at December 31, 2014, US$250 million of the principal amount was outstanding underthis facility.

Interest

The applicable interest rate per annum for the HSBC Facility is the sum of the applicable LIBOR anda margin of 3.85%.

Financial Covenants

Under the terms of the agreement executed for the HSBC Facility, Reliance Infratel agreed to thefollowing financial covenants:

• net worth of Reliance Infratel shall not be less than `40 billion;




• the Asset Cover Ratio will not be less than 1:1.

Other Covenants

Under the terms of the agreement executed for the HSBC Facility:

• our Company, RTL, RCIL and Reliance Infratel cannot create or permit to subsist any securityover any of our present and future assets and property without the prior written consent of themajority banks, other than permitted security interest; and

• Reliance Infratel cannot incur any long-term debt (debt for which repayment is not due within12 months from creation of such indebtedness) or any obligation which is, in the opinion of thelender, on terms and conditions more favourable than the terms and conditions of HSBC Facility,without the prior written consent of the lenders, unless benefit of such favourable terms is alsoextended to lenders under the facility.

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Security

The HSBC Facility is secured by:



Events of Default

• The HSBC Facility contains customary events of default, including non-payment of principal orinterest, cross-default, insolvency and breaches of the terms of the HSBC Facility.

• Cessation of any telecommunications licence available to our Company is also an event ofdefault under the HSBC Facility.

• If (i) any person or group of persons acting in concert other than the Reliance ADA Group (beingMr. Anil Dhirubhai Ambani, his family and family trust and companies in which Mr. AnilDhirubhai Ambani, his family or family trust has at least 26% stake and companies which aredirectly or indirectly controlled by Mr. Anil Dhirubhai Ambani, his family or family trust)acquires control or acquires more than 50% of the issued share capital of our Company, RTL,RCIL or Reliance Infratel; or (ii) the Reliance ADA Group ceases to have management controlor own at least 51% of the issued share capital of our Company, RTL, RCIL or Reliance Infratel,it will be an event of default under the HSBC Facility.

b) HSBC (Mauritius) Facility

On March 25, 2010, Reliance Infratel entered into a facility agreement with the HSBC Bank(Mauritius) Limited for availing a term loan of US$ 50 million (“HSBC (Mauritius) Facility”). Asat December 31, 2014, US$50 million of the principal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the HSBC (Mauritius) Facility is the aggregate of theapplicable LIBOR and a margin of 3.85%.

Financial Covenants

Under the terms of the HSBC (Mauritius) Facility, Reliance Infratel agreed to the following financialcovenants:





• the Asset Cover Ratio will not be less than 1:1.

Other Covenants

Under the terms of the HSBC (Mauritius) Facility:


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• Reliance Infratel cannot incur any long-term debt (debt for which repayment is not due within12 months from creation of such indebtedness) or any obligation which is, in the opinion of thelender, on terms and conditions more favourable than the terms and conditions of the HSBC(Mauritius) Facility, without the prior written consent of the lenders, unless benefit of suchfavourable terms is also extended to lenders under the facility.

Security

The HSBC (Mauritius) Facility is secured by:



Events of Default

The HSBC (Mauritius) Facility contains customary events of default, including non-payment ofprincipal or interest, cross-default, insolvency and breaches of the terms of the HSBC (Mauritius)Facility.

c) DBS Facility

On February 12, 2010, Reliance Infratel entered into a facility agreement with DBS Bank Ltd. foravailing a term loan of US$ 50 million (“DBS Facility”). As at December 31, 2014, US$ 50 millionof the principal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the DBS Facility is the sum of the applicable LIBOR anda margin of 3.85%.

Financial Covenants

Under the terms of the DBS Facility, Reliance Infratel agreed to the following financial covenants:






Other Covenants

Under the terms of the DBS Facility:


• Reliance Infratel cannot incur any long-term debt (debt for which repayment is not due within12 months from creation of such indebtedness) or any obligation which is, in the opinion of thelender, on terms and conditions more favourable than the terms and conditions of the DBSFacility, without the prior written consent of the lenders, unless benefit of such favourable termsis also extended to lenders under the facility.

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Security

The DBS Facility is secured by:



Events of Default

• The DBS Facility contains customary events of default, including non-payment of principal orinterest, cross-default, insolvency and breaches of the terms of the DBS Facility.

• If (i) any person or group of persons acting in concert other than the Reliance ADA Group (beingMr. Anil Dhirubhai Ambani, his family and family trust and companies in which Mr. AnilDhirubhai Ambani, his family or family trust has at least 26% stake and companies which aredirectly or indirectly controlled by Mr. Anil Dhirubhai Ambani, his family or family trust)acquires control or acquires more than 50% of the issued share capital of our Company, RTL,RCIL or Reliance Infratel; or (ii) the Reliance ADA Group ceases to have management controlor own at least 51% of the issued share capital of our Company, RTL, RCIL or Reliance Infratel,it will be an event of default under the DBS Facility.

d) HDFC Facility

On May 19, 2014, Reliance Infratel was sanctioned a short term loan of aggregating to `2,500 millionby HDFC Bank (“HDFC Facility”). As at December 31, 2014, `1,220 million of the principal amountwas outstanding under this facility.

Interest

The applicable interest rate per annum for the HDFC Facility is 12%.

INDEBTEDNESS OF OTHER SUBSIDIARIES

a) ICBC Facility II

On July 21, 2014, Reliance Tech Services Limited entered into a loan agreement with Industrial andCommercial Bank of China Limited for availing a working capital loan of `1.2 billion (“ICBCFacility II”). Our Company has guaranteed this facility.

Interest

The applicable interest rate per annum for the ICBC Facility II is the aggregate of the applicable baserate and a margin of 1.25%.

Covenants

Under the terms of the ICBC Facility II:

• Reliance Tech Services Limited cannot enter into any borrowing arrangement, either secured orunsecured, with any bank, financial institution, company or otherwise, without informing thelender; and

• Reliance Tech Services Limited cannot create security over its assets in favour of a third partywhich will affect its ability to fulfil its obligations under the ICBC Facility II, without the priorwritten consent of the lender.

Security

The ICBC Facility II has been guaranteed by our Company.

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Events of Default

The ICBC Facility II contains customary events of default, including non-payment of principal orinterest, cross-default, insolvency and breaches of the terms of the ICBC Facility II.

b) SCB Facility II

On June 22, 2010, Reliance Globalcom B.V. entered into a facility agreement with Standard CharteredBank for availing a term loan of US$500 million which was increased to US$700 million through anAmendment and Restatement Agreement dated May 8, 2012 (“SCB Facility II”). As at December 31,2014, US$150 million of the principal amount was outstanding under this facility.

Interest

The applicable interest rate per annum for the SCB Facility II is the aggregate of the applicable LIBORand a margin of 3.90%.

Financial Covenants

Under the terms of the agreement executed for the SCB Facility II, Reliance Globalcom B.V. agreedto the following financial covenant:

• the ratio of net debt to EBITDA will not be greater than 3.5:1.

Other Covenants

Pursuant to the agreement for the SCB Facility II:

• Reliance Globalcom B.V. or any of its subsidiaries cannot create or permit to subsist any securityover any of its assets.

Security

The SCB Facility II is secured by:

• corporate guarantee by RCIL for US$560 million;

• assignment of equity share subscription agreement of US$560 million; and

• a pledge of:

(i) 235,322,790 ordinary shares of Global Cloud Xchange Limited held by Reliance GlobalcomB.V.;

(ii) 235,322,790 ordinary shares of GCX Limited held by Global Cloud Xchange Limited;

(iii) 100 common shares of Reliance Infocom Inc. held by Reliance Globalcom B.V.; and

(iv) 100 shares of Reliance Communications Inc. held by Reliance Infocomm Inc.

Events of Default

The SCB Facility II contains customary events of default, including non-payment of principal orinterest, cross-default, insolvency and breaches of the terms of the SCB Facility. Termination or expiryof any material licences available to our Company is also an event of default under the SCB FacilityII.

c) GCX Bonds

GCX Limited has issued senior secured notes aggregating to US$ 350 million (“GCX Bonds”)pursuant to terms and conditions contained in the offering circular dated July 24, 2014. The GCXBonds are listed on the Singapore Stock Exchange and will mature on August 1, 2019. The GCX Bondsare guaranteed by certain subsidiaries of GCX Limited.

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Interest

The applicable interest rate per annum for the GCX Bonds is 7%.

Covenants

Under the terms of the GCX Bonds, GCX Limited has agreed to the following ratio debt incurrencecovenant:

• the Leverage Ratio at the time of incurring any indebtedness would not be greater than 3.75 to1.00 (subject to a range of customary baskets and carve-outs).

In addition, under the terms of the GCX Bonds:

• GCX Limited and some of its subsidiaries are restricted from incurring any indebtedness, exceptas permitted under the terms of the GCX Bonds.

• The GCX Bonds also contain other customary incurrence based covenants governing matterssuch as asset sales, transactions with shareholders and affiliates and mergers, consolidations andsale of all assets.

Security

The GCX Bonds are secured by:

• a pledge by GCX Limited and subsidiary guarantors (as identified in the offering circular) ofshares held by them in other subsidiary guarantors; and

• a security interest over the present and future assets of GCX Limited and some of its subsidiaries(as identified in the offering circular)

Events of Default

The GCX Bonds contain customary events of default, including non-payment of principal or interest,cross-default, insolvency and breaches of the terms of the GCX Bonds.

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DESCRIPTION OF COLLATERAL

Collateral

The obligations of the Issuer with respect to the Notes and the performance of all other obligationsof the Issuer under the Trust Deed and the Notes will be secured by the Collateral, which will beshared on a pari passu basis with the holders of certain other indebtedness existing on the closing dateand certain other indebtedness that may be incurred in the future, and will consist of the following:

1. First pari passu charge on the whole of the movable plant and machinery, including (withoutlimitations) tower assets and optic fibre cables, if any (whether attached or otherwise), capitalwork- in- progress (pertaining to movable fixed assets) both present and future including all therights, title, interest, benefits, claims and demands in respect of all insurance contracts relatingthereto of the Issuer and its subsidiary companies namely, RTL, Reliance Infratel, and RCIL (the“Hypothecated Property”).

2. Assignment of 20 unified access service licences, one national long-distance licence and oneinternational long-distance licence of the Issuer (the “Licences”). The details of the licences heldby the Company which will be assigned in favour of the Lenders’ Agent for the benefit of theTrustee is set out below:

UNIFIED ACCESS SERVICES LICENCES

Sr. No. Service Area (Circle) UASL Agreement No.Effective Date

of Licence Validity Period

1 Andhra Pradesh . . . . 10-02/2004-BS-II/RIL/AP 20/07/2001 19/07/2021 (20 Years)

2 Bihar . . . . . . . . . . 10-04/2004-BS-II/RIL/Bihar 20/07/2001 19/07/2021 (20 Years)

3 Delhi . . . . . . . . . . 10-21/2004-BS-II/RIL/Delhi 20/07/2001 19/07/2021 (20 Years)

4 Gujarat . . . . . . . . . 10-05/2004-BS-II/RIL/GUJARAT 30/09/1997 29/09/2017 (20 Years)

5 Haryana . . . . . . . . . 10-06/2004-BS-II/RIL/HARYANA 20/07/2001 19/07/2021 (20 Years)

6 Himachal Pradesh . . . 10-07/2004-BS-II/RIL/HP 20/07/2001 19/07/2021 (20 Years)

7 Jammu &Kashmir . . . 20-208/2004-RELIANCE/BS-III 06/09/2004 05/09/2024 (20 Years)

8 Karnataka . . . . . . . . 10-09/2004-BS-II/RIL/KARNATAKA 20/07/2001 19/07/2021 (20 Years)

9 Kerala . . . . . . . . . . 10-10/2004-BS-II/RIL/KERALA 20/07/2001 19/07/2021 (20 Years)

10 Kolkatta. . . . . . . . . 10-22/2004-BS-II/RIL/KOLKATA 20/07/2001 19/07/2021 (20 Years)

11 Maharashtra . . . . . . 10-12/2004-BS-II/RIL/MAHARASHTRA 20/07/2001 19/07/2021 (20 Years)

12 Madhya Pradesh . . . . 10-11/2004-BS-II/RIL/MADHYAPRADESH

20/07/2001 19/07/2021 (20 Years)

13 Mumbai . . . . . . . . . 10-23/2004-BS-II/RIL/Mumbai 20/07/2001 19/07/2021 (20 Years)

14 Orissa . . . . . . . . . . 10-14/2004-BS-II/RIL/Orissa 20/07/2001 19/07/2021 (20 Years)

15 Punjab. . . . . . . . . . 10-15/2004-BS-II/RIL/Punjab 20/07/2001 19/07/2021 (20 Years)

16 Rajasthan . . . . . . . . 10-16/2004-BS-II/RIL/Rajasthan 20/07/2001 19/07/2021 (20 Years)

17 Tamil Nadu(Including Chennai). .

10-17/2004-BS-II/RIL/Tamil Nadu 26/09/2001 25/09/2021 (20 Years)

18 Uttar Pradesh (East) . 10-19/2004-BS-II/RIL/UP(E) 20/07/2001 19/07/2021 (20 Years)

19 Uttar Pradesh (West) . 10-18/2004-BS-II/RIL/UP(W) 20/07/2001 19/07/2021 (20 Years)

20 West Bengal . . . . . . 10-01/2004-BS-II/RIL/WEST BENGAL 20/07/2001 19/07/2021 (20 Years)

NATIONAL LONG-DISTANCE LICENCE

Sr. No. Service Area (Circle) NLD Agreement No.Effective Date


1 . . . . . All India 10-21/2001-BS-I (2) 28/01/2002 27/01/2022 (20 Years)

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INTERNATIONAL LONG-DISTANCE LICENCE

Sr. No. Service Area (Circle) ILD Agreement No.Effective Date


1 . . . . . All India 10-10/2002-BS-I(ILD-01) 25/02/2002 24/02/2022 (20 Years)

3. Pledge over all the equity shares held by the Issuer in RCIL and all the equity shares held by theIssuer and RIIL in RTL (the “Pledged Securities”).

Collateral Creation Timelines

To the extent that any of the collateral documents required in connection with the creation, perfectionand registration of the first priority security interests in the Hypothecated Property and the PledgedSecurities have not been executed and delivered on or prior to the Issue Date, or the Issuer has notprocured the registration of such security interests on or prior to the Issue Date (in each case, to theextent required by the Trust Deed and the collateral documents), the Issuer will be required to ensurethat all such actions are completed as soon as reasonably practicable, and in no event later than 60days following the Issue Date. To the extent that any of the collateral documents required inconnection with the creation, perfection and registration of the first priority security interests in theLicences have not been executed and delivered on or prior to the Issue Date, or the Issuer has notprocured the registration of such security interests on or prior to the Issue Date (in each case, to theextent required by the Trust Deed and the collateral documents), the Issuer will be required on a bestefforts basis to ensure that all such actions are completed as soon as practicable and to ensure that therequisite application(s) are made for all regulatory approvals necessary to create such securityinterests in the Licences within 180 days of the Issue Date (to the extent required by the Trust Deedand the collateral documents) and, without prejudice to the foregoing, will be obligated to ensure thatall such actions are completed no later than 60 days following the receipt of all regulatory approvalsnecessary to create such security interests in the Licences (to the extent required by the Trust Deedand the collateral documents). There can be no assurance, however, that the Issuer will create, perfectand register the security interests in the Collateral within these time periods, or at all. See “RiskFactors — Risks Relating to the Notes — The failure of the Issuer to properly create, perfect andregister the security interests in the Collateral securing the Notes could result in an event of defaultunder the Notes, and could impair the ability of the holders of the Notes to seek repayment”.

Process of Creation of Security Interest over the Collateral

Hypothecated Property

The Trustee will accede to a master security trustee agreement executed between our Company, RTL,Reliance Infratel, RCIL, certain existing lenders and the Collateral Agent, dated March 4, 2011 (the“Hypothecation STA”), by way of a lender deed of accession in the form and manner set out inSchedule II thereto.

Our Company will also execute a deed of hypothecation in favour of the Collateral Agent for creationof first ranking pari passu security over the Hypothecated Property for the benefit of the Trustee (astrustee for the holders of the Notes) (the “Deed of Hypothecation”).

Pursuant to the execution of the Deed of Hypothecation and accession by the Trustee to theHypothecation STA, security interest over the Hypothecated Property will be created in favour of theCollateral Agent for the benefit of the Trustee (as trustee for the holders of the Notes) on a pari passubasis with a number of other existing lenders of our Company.

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Licences

The assignment of the Licences will entail the following steps:

• The Trustee (as trustee for the holders of the Notes) will accede to the lenders’ agent agreementexecuted between our Company, certain existing lenders of our Company and the Lenders’ Agent,dated April 27, 2011, (the “Lenders’ Agent Agreement”) by way of a deed of accession(“Deed”) in the form and manner set out in Schedule 3 of the Lenders’ Agent Agreement. Underthe Deed, the Trustee (as acceding lender) will agree to be bound by the terms of the Lenders’Agent Agreement, and shall be entitled to all benefits available to the existing lenders, in termsof the Lenders’ Agent Agreement.

• The Trustee will issue an authority letter in favour of the Lenders’ Agent authorizing it to executea tripartite agreement to be entered into among our Company, the Lenders’ Agent and the DoT.

• Our Company will apply to the DoT for approval for assignment of Licences in favour of theLenders’ Agent for the benefit of the Trustee (as trustee for the holders of the Notes).

• After receipt of the approval from the DoT, our Company, the Lenders’ Agent and the DoT willenter into tripartite agreements in the prescribed formats reflecting the creation of security on thelicences in favour of the Lenders’ Agent for the benefit of the Trustee (as trustee for the holdersof the Notes) on a pari passu basis with a number of other existing lenders of our Company.

• The Lenders’ Agent will issue a confirmation to the Trustee stating the tripartite agreements forcreation of security over the Licences have been executed.

Pledged Securities

The Trustee (as trustee for the holders of the Notes) will accede to a share pledge master securitytrustee agreement between our Company, certain existing lenders of our Company and the CollateralAgent dated February 21, 2013 (the “Pledge STA”) by way of a lender deed of accession in the formand manner set out in Schedule II thereto.

Our Company and RIIL will execute a share pledge agreement with the Collateral Agent for creationof a pledge over the Pledged Securities in favour of the Collateral Agent (“Pledge Agreement”).

Pursuant to the execution of the Pledge Agreement and accession by the Trustee to the Pledge STA,the Collateral Agent will hold the security interest over the Pledged Securities for the benefit of theTrustee (as trustee for the holders of the Notes) on a pari passu basis with a number of other existinglenders of our Company.

Enforcement of Collateral

The following paragraphs set out a broad summary of the process of enforcement of the Collateral asenvisaged in the various security documents.

Hypothecated Property

The Hypothecation STA provides for the following mechanism for enforcement of the security interestcreated over the Hypothecated Property.

• The Trustee (upon being instructed by the holders of the Notes to enforce Security) will berequired to send a written notice to the Collateral Agent (the “Enforcement Action Notice”). TheCollateral Agent will forward this notice to all the security providers under the HypothecationSTA and the other lenders who are a party to or have acceded to the Hypothecation STA.

• A standstill period will apply for a period of 21 days from the Enforcement Action Notice duringwhich time the Collateral Agent will not take any enforcement action unless otherwise instructedby lenders holding at least 66 2/3% of the total amount outstanding under the facilities or debtsecured by the Hypothecated Property (the “Majority Secured Lenders”).

• If the Majority Secured Lenders do not reach any consensus on the enforcement action to betaken by the end of a period of 21 days from the date of Enforcement Action Notice, then the

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Collateral Agent will commence enforcement action upon receipt of confirmation from lendersholding at least 45% of the total amount outstanding under the facilities or debt secured by theHypothecated Property, provided such confirmation is received within 35 days from the date ofthe Enforcement Action Notice.

• If lenders holding at least 45% of the total amount outstanding under the facilities or debtsecured by the Hypothecated Property do not reach an agreement within the period of 35 daysas set out above, the Collateral Agent will commence enforcement action upon receipt ofconfirmation from lenders holding at least 30% of the total amount outstanding under thefacilities or debt secured by the Hypothecated Property, provided such confirmation is receivedwithin 60 days from the date of the Enforcement Action Notice.

• If lenders holding at least 30% of the total amount outstanding under the facilities or debtsecured by the Hypothecated Property do not reach an agreement within the period of 60 daysas set out above, the Collateral Agent shall, after a period of 60 days from the date of theEnforcement Action Notice, commence enforcement action as instructed in terms of theEnforcement Action Notice delivered by the Trustee (as trustee for the holders of the Notes).

Any proceeds received by the Collateral Agent upon enforcement shall first be utilised for paymentof enforcement and other related costs. The balance proceeds shall be utilised to pay in full theoutstanding dues of the lenders under the facilities (including the Notes) secured by the HypothecatedProperty simultaneously to each such lender (including the Trustee (as trustee for the holders of theNotes)). However, if the amounts available for distribution are insufficient to pay in full theoutstanding dues of such lenders, the Collateral Agent will distribute amounts on a pro rata and equalfirst ranking and pari passu basis to each such lender (including the Trustee (as trustee for the holdersof the Notes)).

Licences

The terms of the tripartite agreements which have previously been executed by our Company, theLenders’ Agent and the DoT for assignment of Licences provide for the following process forassignment of Licences in case of default by our Company:

• The Trustee (upon being instructed by the holders of the Notes to enforce Security) will berequired to send a written notice to the Lenders’ Agent in relation to the Company’s default andinstruct the Lenders’ Agent to proceed with enforcement of rights under the tripartite agreement.

• The Lenders’ Agent will be required to notify the Company and the DoT of occurrence of a‘material default’ and provide the Company a period of 30 days from the date of such notice forcuring such default. The existing tripartite agreements define ‘material default’ as continuousdefault by the Company for a minimum period of one month in payment of any two quarterlyinstalments or one half yearly instalment either of principal or interest or both under thefinancing documents which in the considered opinion of the Lenders’ Agent is likely to affectadversely and substantially the ability of the Company to work or operate the unified accessservice telephone service in the relevant circle (“Material Default”). Non payment of licence feeor other dues payable by the Company to the DoT is also included within the meaning of ‘default’under the existing tripartite agreements.

• There is an inconsistency between the events of default under the Notes and the MaterialDefaults.

• On expiry of 30 days from the date of the notice, if the Company has not cured the default, allthe lenders who are party to or have acceded to the Lenders’ Agent Agreement (including theTrustee (as trustee for the holders of the Notes)) can jointly select an Indian company for thepurpose of assignment or transfer of the Licences (the “Selectee”). The Selectee is required tobe selected either by private negotiations or public auctions or by tender process. The Selecteeshould meet the eligibility criteria specified under the tripartite agreement.

• The Lenders’ Agent will be required to notify the DoT of the accrual of right of the lenders toseek transfer or assignment of the Licences.

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• If the DoT has any objection to the transfer of Licences to the Selectee, it may give a reasonedorder for its refusal within 90 days of the date of receipt of proposal from the Lenders’ Agentor the last date of receipt of any clarification from the Lenders’ Agent, whichever is later. If theDoT does not raise any objection within this period, the Selectee shall be deemed to have beenaccepted. If the DoT refuses to accept the Selectee, the Lenders’ Agent may propose anothername and the same procedure will be repeated.

• Thereafter, the DoT shall transfer the Licences within 15 days of the acceptance of the Selectee.

• If the DoT decides to transfer the Licences to any person other than the Selectee it shall includea condition as agreed to by the lenders (including the Trustee (as trustee for the holders of theNotes)) for payment or takeover of the money owed to the lenders by such assignee.

• If the Selectee or any new assignee is not found then the licence agreement executed with theCompany shall stand terminated and the assets and the infrastructure of the Company shall bedisposed of by the DoT. The proceeds will be first utilised by DoT for recovery of any dues andthe balance amounts shall be utilised to repay the dues to the lenders (including the Trustee (astrustee for the holders of the Notes)).

Under the terms of the Lenders’ Agent Agreement, on the occurrence of a Material Default under theNotes, the Trustee (as trustee for the holders of the Notes) will be required to send a notice to theLenders’ Agent, which the Lenders’ Agent will then forward to the other lenders. If a default hasoccurred on account of non-payment of dues by the Company to the DoT, the Lenders’ Agent, onreceipt of the notice from the DoT, is required to forward the notice to all the lenders (including theTrustee (as trustee for the holders of the Notes)) who are a party to the Lenders’ Agent Agreement.Thereafter, the lenders and the Lenders’ Agent will discuss the course of action to be taken under thetripartite agreements, and the Lenders’ Agent will convey such decision to the DoT only after theLenders’ Agent has received written consents from all the lenders.

The amounts received by the Lenders’ Agent from the DoT pursuant to an enforcement action underthe tripartite agreement will be distributed by the Lenders’ Agent to the lenders (including the Trustee(as trustee for the holders of the Notes)) in the proportion to the amounts owed to the lenders underthe facilities secured by the assignment of Licences.

Pledged Securities

The Pledge STA provides for the following mechanism for enforcement of pledge:

• The Trustee (upon being instructed by the holders of the Notes to enforce Security) will berequired to send a written notice to the Collateral Agent (the “Pledge Enforcement ActionNotice”). The Collateral Agent will forward this notice to the pledgors and other lenders who area party to or have acceded to the Pledge STA.

• A standstill period will apply for a period of 21 days from the Pledge Enforcement Action Noticeduring which time the Collateral Agent will not take any enforcement action unless otherwiseinstructed by lenders holding at least 66 2/3% of the total amount outstanding under the facilitiesor debt secured by the Pledged Securities (the “Pledge Majority Secured Lenders”).

• If the Pledge Majority Secured Lenders do not reach an agreement on enforcement action to betaken by the end of a period of 21 days from the date of the Pledge Enforcement Action Notice,then the Collateral Agent will commence enforcement action upon receipt of confirmation fromlenders holding at least 45% of the total amount outstanding under the facilities or debt securedby the Pledged Securities, provided such confirmation is received within 35 days from the dateof the Pledge Enforcement Action Notice.

• If the lenders holding at least 45% of the total amount outstanding under the facilities or debtsecured by the Pledged Securities do not reach an agreement within the period of 35 days as setout above, the Collateral Agent will commence enforcement action upon receipt of confirmationfrom lenders holding at least 30% of the total amount outstanding under the facilities and debtsecured by the Pledged Securities, provided such confirmation is received within 60 days fromthe date of the Pledge Enforcement Action Notice.

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• If lenders holding at least 30% of the total amount outstanding under the facilities or debtsecured by the Pledged Securities do not reach an agreement within the period of 60 days as setout above, the Collateral Agent shall, after a period of 60 days from the date of the PledgeEnforcement Action Notice, commence enforcement action as instructed in terms of theEnforcement Action Notice delivered by the Trustee (as trustee for the holders of the Notes).

Any proceeds received by the Collateral Agent upon enforcement shall first be utilised for paymentof enforcement and other related costs. The balance proceeds shall be utilised to pay in full theoutstanding dues of the lenders under the facilities (including the Notes) secured by the PledgedSecurities and such amounts shall be paid simultaneously to each such lender (including the Trustee(as trustee for the holders of the Notes)). However, if the amounts available for distribution areinsufficient to pay in full the outstanding dues of such lenders, the Collateral Agent will distributeamounts on a pro rata and equal first ranking and pari passu basis to each such lender (including theTrustee (as trustee for the holders of the Notes)).

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BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Board of Directors

The general supervision, direction and management of our operations and business are vested in theBoard, which exercises its powers subject to the Memorandum and Articles and the requirements ofIndian law. The Articles set out that the number of Directors shall not be less than three and not morethan such number as may be stipulated by the Companies Act.

Currently, our Company has six Directors. The composition of the Board is governed by the provisionsof the Companies Act and the Listing Agreement. The Articles require that Mr. Anil D. Ambani be thenon-retiring Chairman as long as he is willing to be a Director and the Chairman. The Chairman shallpreside over all meetings of the Board and the general meetings of the Shareholders and will have acasting vote in the event of a tie. Of the six Directors, four are independent Directors, Mr. Anil D.Ambani is a Promoter, non-executive, non-independent Director and Ms. Manjari Kacker is anon-executive, non-independent Director.

The following table sets forth details regarding the Board as at the date of this Offering Circular:

Name Age Position

Director

Identification

Number Address Director Since

Mr. AnilDhirubhaiAmbani

55 Promoter,Chairman andNon-ExecutiveandNon-IndependentDirector

00004878 39, ‘Sea Wind’, CuffeParade, Colaba,Mumbai - 400 005

February 7,2006

Prof. J.Ramachandran

57 IndependentDirector

00004593 417, Faculty Quarters,Indian Institute ofManagement,Bannerghatta,Bengaluru - 560076

February 7,2006

Mr. DeepakShourie


00101610 A - 31, West End,New Delhi - 110 021

April 30,2006

Mr. A. K. Purwar 68 IndependentDirector

00026383 Ashok Towers, Flat No.2303, C Block, 63/7-4,Dr. S. S. Rao Road,Parel, Mumbai - 400 012

July 17,2007

Mr. R. N.Bhardwaj


01571764 402, Moksh Apartments,Upper Govind Nagar,Malad (East),Mumbai - 400 097

August 29,2013

Ms. ManjariKacker

62 Non-Executive,andNon-IndependentDirector

06945359 B-702 Beau MondeApartment, Appa SahebMarathe Marg,Prabhadevi,Mumbai - 400025

September 16,2014

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The Directors may be appointed by the Board or by a general meeting of the Shareholders. The Boardmay appoint any person as an additional Director, but such a Director must retire at the next AGM oron the last date when the AGM should have been held, whichever is earlier, unless re-elected by theShareholders after complying with the provisions of the Companies Act. A person who fails to getappointed as a Director in a general meeting cannot be appointed as an additional Director. A casualvacancy caused in the Board due to the death or resignation of a Director can be filled by the Board,but such a person can remain in office only for the unexpired term of the person in whose place hewas appointed and on the expiry of the term he will retire unless re-elected by the Shareholders. TheBoard may appoint an alternate Director in accordance with the provisions of the Companies Act toact for a Director during his absence from India, which period of absence shall not be less than threemonths (subject to such person being acceptable to the Chairman).

Two-thirds of the total numbers of Directors (other than Independent Directors) are subject toretirement by rotation, and of such Directors, one-third, or if their number is not three or multiplesof three, then the number nearest to one-third, must retire every year. The Directors to retire are thosewho have been the longest in office. A retiring Director is eligible for re-appointment. The Directorsare not required to hold any qualification Equity Shares. Our Company must have at least one Directorwho has stayed in India for at least 182 days in the previous calendar year (i.e. is an Indian resident).Our Company is required to have at least one-half of its Directors as independent Directors.

The quorum for meetings of the Board is one-third of the total number of Directors (any fractioncontained in that one-third being rounded off as one) or two Directors, whichever is higher. Theparticipation of the Directors by video conferencing or by other visual means will be counted towardsthe quorum. However, where the number of interested Directors is equal to or exceeds two-thirds oftotal strength, the remaining number of Directors (i.e. Directors who are not interested) present at themeeting, being not less than two shall be the quorum during such time. In case there is no quorum fora Board meeting, the remaining Directors may act only for the purpose of increasing the number ofDirectors to meet the quorum requirements or to summon a general meeting.

Brief Biographies of the Directors:

Mr. Anil Dhirubhai Ambani — Chairman, Non-Executive and Non-Independent Director

Mr. Anil D. Ambani, aged 55 years, is the chairman of our Company, Reliance Capital Limited,Reliance Infrastructure Limited and Reliance Power Limited. He is also on the board of directors ofReliance Infratel Limited and Reliance Anil Dhirubhai Ambani Group Limited. He is the president ofthe Dhirubhai Ambani Institute of Information and Communication Technology, Gandhinagar, Gujarat.He is a member of the Stakeholders Relationship Committee, the Nomination and RemunerationCommittee, the Employee Stock Option Scheme Compensation Committee (“ESOS CompensationCommittee”) and the Corporate Social Responsibility (“CSR”) Committee of our Company.

With a master’s degree from the Wharton School of the University of Pennsylvania, Mr. Ambani iscredited with having spearheaded the Reliance Group’s first forays into the overseas capital marketswith international public offerings of global depository receipts, convertibles and bonds.

Mr. Ambani has been associated with a number of prestigious academic institutions in India andabroad. He is currently a member of:

• Wharton Board of Overseers, The Wharton School, U.S.A.

• Executive Board, Indian School of Business (ISB), Hyderabad.

The Prime Minister of India nominated Mr. Ambani as the Co-Chair from the Indian side of theIndia-China CEO Forum in 2011.

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Prof. J. Ramachandran — Independent Director

Prof. J. Ramachandran, Director, aged 57 years, is a Professor of Corporate Strategy and Policy at theIndian Institute of Management, Bengaluru. He is a Chartered Accountant and Cost Accountant andis a fellow of the Indian Institute of Management, Ahmedabad. He is also a director of RelianceInfratel Limited, Sasken Communication Technologies Limited, Redington (India) Limited and AllCargo Logistics Limited.

Prof. Ramachandran is a member of the Stakeholders Relationship Committee, the Nomination andRemuneration Committee, the Risk Management Committee and the ESOS Compensation Committeeand chairman of the Audit Committee and the CSR Committee of our Company. He is a member ofthe Audit Committee of Redington (India) Limited and CSR and Audit Committees of Reliance InfratelLimited. He is chairman of the Share Transfer & Investors Grievance Committee and theCompensation Committee of Sasken Communication Technology Limited and also the InvestorGrievance Committee of Redington (India) Limited.

Mr. Deepak Shourie — Independent Director

Mr. Deepak Shourie, Director, aged 65 years, holds a bachelor’s degree in economics and has morethan 39 years’ experience in general management with an emphasis on media, consumer goods andcorporate affairs. He was the executive vice president and managing director of DiscoveryCommunications of India and director in South Asia for BBC Worldwide Media Private Limited(formerly, BBCW Channels Private Limited).

Mr. Shourie is a member of the Audit Committee, the Nomination and Remuneration Committee, theRisk Management Committee, the Stakeholders Relationship Committee and the CSR Committee andthe chairman of the ESOS Compensation Committee of our Company.

Mr. A. K. Purwar — Independent Director

Mr. A. K. Purwar, Director, aged 68 years, was the former chairman of the State Bank of India (“SBI”)and also the former Managing Director of the State Bank of Patiala. He holds a master’s degree incommerce and a diploma in business administration. He is also a director of Vardhman TextilesLimited, Jindal Steel and Power Limited, Jindal Power Limited, Apollo Tyres Limited, IIFL HoldingsLimited, ONGC Tripura Power Company Limited, IL&FS Renewable Energy Limited and AlkemLaboratories Ltd.

Mr. Purwar has served on the board of governors of the Indian Institute of Management, Lucknow,XLRI, Jamshedpur and as a member of the advisory board for the Institute of Indian EconomicStudies, Waseda University, Tokyo, Japan. He is the chairman of the Stakeholders RelationshipCommittee and member of the Audit Committee, the Nomination and Remuneration Committee, theCSR Committee, the Risk Management Committee and the ESOS Compensation Committee of ourCompany. He is also a member of the Audit and Nomination and Remuneration Committees of JindalSteel and Power Limited and Jindal Power Limited and a member of the Compensation/RemunerationCommittee of IIFL Holdings Limited. He is chairman of the Investment Committees of Jindal Steeland Power Limited and Jindal Power Limited, the Remuneration Committee of IL&FS RenewableEnergy Limited and the Audit Committee of ONGC Tripura Power Company Limited.

Mr. R. N. Bhardwaj — Independent Director

Mr. R. N. Bhardwaj, Director, aged 69 years, is a non-executive and independent Director of ourCompany. He holds a master’s degree in economics from the Delhi School of Economics and a diplomain industrial relations and personnel management from the Punjabi University, Patiala. He has over 38years of experience in various sectors such as economics, finance, investment and portfoliomanagement. He was the managing director and chairman of Life Insurance Corporation of India. Mr.R. N. Bhardwaj has also served as a member of the Securities Appellate Tribunal.

166

Mr. Bhardwaj is also a director in Reliance Infratel Limited, Jaiprakash Associates Limited, JaiprakashPower Ventures Limited, Microsec Financial Services Limited, Dhunseri Petrochem Limited,Milestone Capital Advisors Limited, Amtek Auto Limited, Rupa & Company Limited and SBI LifeInsurance Company Limited. Mr. Bhardwaj is a member of the Audit Committee, the StakeholdersRelationship Committee, the CSR Committee, the Risk Management Committee and the ESOSCompensation Committee and the chairman of the Nomination and Remuneration Committee of ourCompany. He is chairman of the Audit Committee of Jaiprakash Associates Limited. He is a memberof the Audit Committee of Microsec Financial Services Limited, Reliance Infratel Limited, JaiprakashPower Ventures Limited, Milestone Capital Advisors Limited, SBI Life Insurance Company Limitedand Rupa & Company Limited. He is also a member of the Nomination and Remuneration and CSRCommittees of Reliance Infratel Limited. He is chairman of the Shareholders & Investors GrievanceCommittee of Microsec Financial Services Limited. He is also a member of the Policy HoldersProtection and Risk Management Committees and chairman of the Investment Committee of SBI LifeInsurance Company Limited. He is also member of the Transfer, Allotment and ManagementCommittee of Milestone Capital Advisors Ltd.

Ms. Manjari Kacker — Director

Ms. Manjari Kacker, aged 62 years, holds a master’s degree in chemistry and a diploma in businessadministration. She has more than 38 years of experience in taxation, finance, administration andvigilance. She was in the Indian Revenue Service batch of 1974. She held various assignments duringher tenure in the tax department and was also a member of the Central Board of Direct Taxes. She hasalso served as the Functional Director (Vigilance and Security) in Air India and has also representedIndia in international conferences. Presently, she is a director of the Life Insurance Corporation ofIndia, Indiabulls Housing Finance Limited, Shubhalakshmi Polyesters Limited and Hindustan Gumand Chemicals Limited. She is a member of the Audit Committee, Stakeholders RelationshipCommittee, Nomination and Remuneration Committee, ESOS Compensation Committee, CorporateSocial Responsibility Committee and Risk Management Committee of our Company.

Compensation of Directors

The Nomination and Remuneration Committee determines and recommends to the Board thecompensation of the Directors.

The table below sets forth the details of the remuneration (including sitting fees, salaries andperquisites) paid to the Directors during the current financial year as at March 31, 2015 and the lastthree financial years:

Name 2014-2015 2013-2014 2012-2013 2011-2012

(` in million)

Mr. Anil Dhirubhai Ambani . . . . . . . . . . . . . . . . . . . 0.60 0.20 0.22 0.26

Mr. S. P. Talwar1 . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.06 0.30 0.34

Mr. A. K. Purwar . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00 0.18 0.30 0.30

Prof. J. Ramachandran . . . . . . . . . . . . . . . . . . . . . . . 0.52 0.24 0.28 0.30

Mr. Deepak Shourie . . . . . . . . . . . . . . . . . . . . . . . . . 0.38 0.20 0.24 0.28

Mr. R. N. Bhardwaj2 . . . . . . . . . . . . . . . . . . . . . . . . 0.96 0.12 — —

Ms. Manjari Kacker3 . . . . . . . . . . . . . . . . . . . . . . . . 0.40 — — —

1 Mr. S. P. Talwar ceased to be a Director with effect from August 9, 2013 due to his demise.

2 Mr. R. N. Bhardwaj was appointed as an additional Director with effect from August 29, 2013.

3 Ms. Manjari Kacker was appointed as a Director with effect from September 16, 2014.

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Notes:

• At its meeting held on May 15, 2010, the Board has approved the payment of commission to non-executive directors of

up to 3% of the net profits of our Company per annum for the financial year 2012 to the financial year 2016. Our

Company has not paid any amount to the Directors by way of commission for the financial year 2014.

• There were no other pecuniary relationships or transactions of non-executive Directors vis-à-vis our Company.

Interested Directors

All Directors, including independent Directors, may be deemed to be interested to the extent of fees,if any, payable to them for attending meetings of the Board or a committee thereof and reimbursementof expenses payable to them. The Directors, including independent Directors, may also be regardedas interested in the Equity Shares, if any, held by them and also to the extent of any dividend payableto them and other distributions in respect of the Equity Shares. The Directors, including independentDirectors, may also be regarded as interested in the Equity Shares held by or that may be subscribedby and allotted to the companies, firms and trusts in which they are interested as directors, members,partners or trustees.

The Directors may be deemed to be interested in the contracts, agreements or arrangements enteredinto or to be entered into by our Company with any partnership firm in which they are partners or abody corporate in which a Director along with any other Director holds more than 2% shareholdingor is a promoter, manager or Chief Executive Officer. Except as otherwise stated in this OfferingCircular and statutory registers maintained by our Company in this regard, we have not entered intoany contracts, agreements or arrangements during the preceding two years from the date of thisOffering Circular in which the Directors are interested directly or indirectly and no payments havebeen made to them in respect of these contracts, agreements or arrangements which are proposed tobe made with them.

As at the date of this Offering Circular, none of the Directors have availed themselves of any loan fromour Company. None of the Directors are related to any other Director.

Shareholding of the Directors

The Articles do not require the Directors to hold any qualification Equity Shares in our Company. Thetable below sets forth the number of Equity Shares held by the Directors, as at December 31, 2014:

Name Position

Number of Equity

Shares

Percentage of

Equity Shares

Mr. Anil D. Ambani . . . . . . . . . . Chairman and Non-ExecutiveDirector

1,859,171 0.07

Corporate Governance

Our Company believes that it is in compliance with the requirements of applicable corporategovernance regulations, including the Listing Agreement in respect of the constitution of the Boardand the Committees of the Board. The corporate governance framework is based on an effectiveindependent Board, separation of the supervisory role of the Board from the executive managementteam and constitution of the committees of the Board, as required under applicable law.

Our Company believes that its Board is constituted in compliance with the Companies Act and theListing Agreement which are currently in force. The Board functions either as a full Board or throughvarious committees constituted to oversee specific operational areas. Our Company’s managementprovides the Board with detailed reports on a periodic basis.

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Committees of the Board of Directors

There are six Board-level committees of our Company which have been constituted and function inaccordance with the relevant provisions of the Companies Act, the Listing Agreement and/or theSecurities and Exchange Board of India (Employee Stock Option Scheme and Employee StockPurchase Scheme) Guidelines, 1999 (the “ESOP Guidelines”). These are: (i) the Audit Committee, (ii)the Nomination and Remuneration Committee, (iii) the Stakeholders Relationship Committee, (iv) theCSR Committee, (v) the Risk Management Committee, and (vi) the ESOS Compensation Committee.The composition of each Committee is given below:

Audit Committee

The Audit Committee consists of five members, namely, Mr. A. K. Purwar (independent Director),Prof. J. Ramachandran (independent Director), Mr. R. N. Bhardwaj (independent Director), Ms.Manjari Kacker (non-executive and non-independent director), and Mr. Deepak Shourie (independentDirector). Prof. J. Ramachandran is the chairman of the Audit Committee.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee consists of six members, namely, Mr. Anil D. Ambani(non-executive and non-independent Director), Mr. A. K. Purwar (independent Director), Prof. J.Ramachandran (independent Director), Mr. R. N. Bhardwaj (independent Director), Ms. ManjariKacker (non-executive and non-independent director), and Mr. Deepak Shourie (independentDirector). Mr. R. N. Bhardwaj is the chairman of the Nomination and Remuneration Committee.

Stakeholders Relationship Committee

The Stakeholders Relationship Committee consists of six members, namely, Mr. Anil D. Ambani(non-executive and non-independent Director), Mr. R. N. Bhardwaj (independent Director), Mr. A. K.Purwar (independent Director), Prof. J. Ramachandran (independent Director), Ms. Manjari Kacker(non-executive and non-independent director), and Mr. Deepak Shourie (independent Director). Mr. A.K. Purwar is the chairman of the Stakeholders Relationship Committee.

CSR Committee

The CSR Committee consists of six members, namely, Mr. Anil D. Ambani (non-executive andnon-independent Director), Mr. R. N. Bhardwaj (independent Director), Mr. A. K. Purwar(independent Director), Prof. J. Ramachandran (independent Director), Ms. Manjari Kacker(non-executive and non-independent director), and Mr. Deepak Shourie (independent Director). Prof.J. Ramachandran is the chairman of the CSR Committee.

ESOS Compensation Committee

The ESOS Compensation Committee consists of six members, namely, Mr. Anil D. Ambani(non-executive and non-independent Director), Mr. R. N. Bhardwaj (independent Director), Mr. A. K.Purwar (independent Director), Prof. J. Ramachandran (independent Director), Ms. Manjari Kacker(non-executive and non-independent director), and Mr. Deepak Shourie (independent Director). Mr.Deepak Shourie is the chairman of the ESOS Compensation Committee.

Risk Management Committee

The Risk Management Committee consists of five Board members, namely, Mr. R. N. Bhardwaj(independent Director), Mr. A. K. Purwar (independent Director), Prof. J. Ramachandran (independentDirector), Ms. Manjari Kacker (non-executive and non-independent director) and Mr. Deepak Shourie(independent Director). The Chief Executive Officer, Chief Financial Officer, Chief Executive Officer— India and Chief Executive Officer — Wireless Business also participate in the Risk ManagementCommittee.

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Policy on Disclosures and Internal Procedure for the Prevention of Insider Trading

Regulation 12(1) of the Insider Trading Regulations applies to the Directors and designated employeesand requires us to implement a code of internal procedures and conduct for the prevention of insidertrading. We have implemented an employee code of conduct in line with the Insider TradingRegulations. In terms of the Companies Act, 2013, the directors and the key managerial personnel areprohibited from (a) acquiring an option over, or entering into forward dealings in, securities of ourCompany, its Subsidiaries or associated companies; and (b) engaging in insider trading.

Borrowing Powers of the Board of Directors

Pursuant to the approval of the Shareholders on September 16, 2014, the Board is authorised to borrowup to an aggregate amount not exceeding four times of the aggregate of the paid-up capital of ourCompany and its free reserves.

Key Employees of our Company

Our operations are overseen by a professional management team. Our senior management team has therequisite experience and the qualification for their respective responsibilities. In addition to the Boardas set forth above, the following are our senior management personnel:

Vinod Sawhny — President and Chief Executive Officer

Mr. Vinod Sawhny, aged 56 years, is the Chief Executive Officer of our Company. He is an alumnusof Birla Institute of Technology and Science, Pilani and XLRI, Jamshedpur.

Prior to joining our Company, Mr. Sawhny worked with the Bharti group for more than 10 years invarious roles, including, inter alia, on the management board of Bharti Airtel Limited, Joint Presidentof Airtel enterprise business, Executive Director and Chief Executive Officer of Airtel Mobility andPresident and Chief Operating Officer of Bharti Retail Limited.

Gurdeep Singh — President and Chief Executive Officer, Consumer Business

Mr. Gurdeep Singh, aged 55 years, is the President and Chief Executive Officer of the ConsumerBusiness, which includes the Wireless, Home and Infratel Businesses. Before joining our Company,he was associated with Aircel Limited, Vodafone Essar Digilink Limited, National Panasonic IndiaPrivate Limited, BPL Limited, Whirlpool of India Limited, Expo Machinery Limited and FusebaseIndia Private Limited. He holds a master’s degree in business administration from the Birla Instituteof Technology and Science, Pilani.

Punit Garg — President, Corporate Strategy and Regulatory Affairs

Mr. Punit Garg, aged 50 years, is the President, Corporate Strategy and Regulatory Affairs. He hasspent over 13 years with our Company. He led the planning and launching of our Company’s wireless,broadband and international business.

Prior to joining our Company, Mr. Garg was the managing director for Lockheed Martin GlobalTelecom and responsible for joint ventures and business management for the South Asia region. Hehad also held several senior positions in organisations including COMSAT Max Limited, Jet AirwaysIndia Limited and Equant N.V. He holds a bachelor’s degree in engineering.

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William Barney — Chief Executive Officer, Global Cloud Xchange, India Enterprise and CarrierBusiness

Mr. William Barney, aged 49 years, is the Chief Executive Officer of Global Cloud Xchange,comprising three offshore businesses, namely, Reliance Globalcom, Yipes Holdings Inc. USA andReliance Vanco Group Limited UK, India Enterprise, including IDC, and Carrier Business. Mr. Barneyhas over 15 years of experience in the telecommunications industry in Asia.

Prior to joining Reliance Globalcom, Mr. Barney was the Chief Executive Officer of Pacnet for over10 years and led Pacnet’s successful acquisition of a regional ISP, Pacific Internet, whichoperationally merged with Asia Netcom and was re-launched as Pacnet in January 2008. Prior toPacnet, Mr. Barney served as Asia Pacific President and Chief Executive Officer for MCI Worldcom(Verizon) where he led MCI Worldcom (Verizon) through a significant growth phase. He holds amaster’s degree in business administration from Columbia University.

Deepak Khanna — Joint President and Chief Executive Officer, India Enterprise

Mr. Deepak Khanna, aged 51 years, is the Joint President and Chief Executive Officer of IndiaEnterprise. He is responsible for enterprise services, capacity sales, managed services and a range ofproducts and services comprising voice, Internet solutions and value-added services including IDC.

Mr. Khanna has over 25 years of management experience. Over the last two decades, he has playeda significant role building telecommunications and technology companies, including Tulip TelecomLimited, Escotel Mobile Communications Ltd., DSS Mobile and Bharti Airtel Ltd., where he workedas both Chief Executive Officer and Operations Director. He holds a master’s diploma in businessadministration from the Symbiosis Institute of Management Studies, Pune.

Manikantan Iyer — Executive Senior Vice President and Chief Financial Officer

Mr. Manikantan Iyer, aged 50 years, is the Executive Senior Vice President and is the Chief FinancialOfficer of our Company. He has spent over 19 years with our Company. He is a Chartered Accountant.

Prakash Shenoy — Senior Vice President, Company Secretary and Manager

Mr. Prakash Shenoy, aged 42 years, is the Senior Vice President of company secretarial functions. Heis also designated as the Compliance Officer, Company Secretary and the Manager of our Company.He has experience in corporate, secretarial, legal and managerial functions and has spent over 13 yearswith our Company.

He is a member of the Institute of Company Secretaries of India with a bachelor’s degree in commerceand law.

Compensation of our Company’s Key Employees

During the year ended March 31, 2014, our Company paid a total remuneration of `208.2 million toits key employees.

Bonus or Profit Sharing Plan of the Key Employees

Our Company does not have any bonus or profit sharing plan with the key employees.

Interest of Key Employees

The key employees of our Company do not have any interest in our Company other than to the extentof their shareholding in our Company, the remuneration or benefits of which they are entitled to asper their terms of appointment and reimbursement of expenses incurred by them during the ordinarycourse of business. Further, they are entitled to such options as are vested in them pursuant to theemployee stock options granted to them by us from time to time.

None of our key employees have been paid any consideration of any nature from our Company, otherthan their remuneration.

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Payment or Benefit to Officers of our Company

Except statutory benefits upon termination of their employment in our Company or superannuation,no officer of our Company is entitled to any other benefit upon termination of his employment in ourCompany.

Shareholding of our Company’s Key Employees

Except as provided below our key employees do not hold any Equity Shares as at December 31, 2014.

S. No Name

No. of Equity Shares

held

No. of options held as

per ESOP Scheme

Percentage of paid-up

Equity Share capital

held

1 Vinod Sawhny . . . . . . . Nil Nil Nil

2 Gurdeep Singh . . . . . . . Nil Nil Nil

3 William Barney . . . . . . Nil Nil Nil

4 Punit Garg . . . . . . . . . . 1,500 Nil 0.00

5 Deepak Khanna . . . . . . Nil Nil Nil

6 Manikantan V . . . . . . . Nil 29,400 Nil

7 Prakash Shenoy . . . . . . Nil Nil Nil

Employee Stock Option Scheme

In order to share the growth in value and reward the employees for having participated in the successof our Company, our ESOP Scheme has been implemented by our Company, under Employee StockOption Plans 2008 and 2009.

The plans grant stock options to eligible employees in due compliance with the ESOS Scheme, ESOPGuidelines and other applicable laws.

Please see the table above for the shareholding of and the employee stock options held by ourCompany’s key employees under the ESOS Scheme.

Other Confirmations

None of the Directors, Promoters or senior management personnel of our Company has any financialor other material interest in the Offer and there is no effect of such interest in so far as it is differentfrom the interests of other persons.

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PRINCIPAL SHAREHOLDERS AND OTHER INFORMATION

Corporate History

Our Company was incorporated on July 15, 2004 as Reliance Infrastructure Developers PrivateLimited and subsequently changed its name in the manner set out below:

Dates Events relating to change of name

July 15, 2004 . . . . . Incorporated as Reliance Infrastructure Developers Private Limited.

July 25, 2005 . . . . . Name changed to Reliance Infrastructure Developers Limited following thechange of status from a private to a public company by a special resolutionof the members passed at the extraordinary general meeting dated July 21,2005.

August 3, 2005 . . . Name changed to Reliance Communication Ventures Limited by a specialresolution of the members passed at the extraordinary general meeting datedJuly 26, 2005.

June 7, 2006 . . . . . Name changed to Reliance Communications Limited by a special resolutionof the members passed at the extraordinary general meeting dated June 3,2006.

The registered office of our Company is at H Block, 1st floor, Dhirubhai Ambani Knowledge City,Navi Mumbai 400 710, Maharashtra.

The Equity Shares have been listed on the Stock Exchanges since March 6, 2006. The globaldepository receipts issued by our Company are listed on the Luxembourg Stock Exchange.

The following table presents information regarding the ownership of Equity Shares by theShareholders as at January 20, 2015:

Total Shareholding as apercentage of total number of

sharesShares Pledged or otherwise

encumbered

Cat.Code (I)

Category ofShareholder (II)

No of Shareholders (III)

Total No ofShares (IV)

Number ofshares held indematerialised

form (V)

As apercentage of

(A+B) (VI)

As apercentage of

(A+B+C)(VII)

No of SharesPledged(VIII)

As apercentage of

(A+B+C)(IX=

VIII/IV*100)

(A) Shareholding ofPromoter andPromoter Group

(1) Indian

(a) Individuals/HinduUndivided Family . . 12 9,845,709 9,845,709 0.40 0.40 0 0.00

(b) CentralGovernment/StateGovernments . . . . . 0 0 0 0.00 0.00 0 0.00

(c) Bodies Corporate . . . 16 1,454,851,135 1,368,184,468 58.58 58.45 195,000,000 13.12

(d) FinancialInstitutions/Banks . . 0 0 0 0.00 0.00 0 0.00

(e) Any Other (Specify) . 1 21,279,000 21,279,000 0.86 0.85 0 0.00

Sub-Total (A)(1) . . . 29 1,485,975,844 1,399,309,177 59.84 59.70 195,000,000 13.12

(2) Foreign

(a) Individuals(Non-ResidentIndividuals/ForeignIndividuals) . . . . . 0 0 0 0.00 0.00 0 0.00

(b) Bodies Corporate . . . 0 0 0 0.00 0.00 0 0.00

(c) Institutions . . . . . . 0 0 0 0.00 0.00 0 0.00

(d) Qualified ForeignInvestor . . . . . . . 0 0 0 0.00 0.00 0 0.00

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Total Shareholding as apercentage of total number of

sharesShares Pledged or otherwise

encumbered

Cat.Code (I)

Category ofShareholder (II)

No of Shareholders (III)

Total No ofShares (IV)

Number ofshares held indematerialised

form (V)

As apercentage of

(A+B) (VI)

As apercentage of

(A+B+C)(VII)

No of SharesPledged(VIII)

As apercentage of

(A+B+C)(IX=

VIII/IV*100)

(e) Any Other (Specify) . 0 0 0 0.00 0.00 0 0.00

Sub-Total (A)(2) . . . 0 0 0 0.00 0.00 0 0.00

Total Shareholdingof Promoter andPromoter Group(A)=(A)(1)+(A)(2) . . 29 1,485,975,844 1,399,309,177 59.84 59.70 195,000,000 13.12

(B) Public Shareholding

(1) Institutions N/A N/A

(a) Mutual Funds/UTI . . 149 26,900,015 26,503,204 1.08 1.08 0 0.00

(b) FinancialInstitutions/Banks . . 341 5,468,385 5,357,089 0.22 0.22 0 0.00

(c) CentralGovernment/StateGovernments . . . . . 66 1210,743 354,148 0.05 0.05 0 0.00

(d) Venture CapitalFunds . . . . . . . . 0 0 0 0.00 0.00 0 0.00

(e) Insurance Companies . 41 176,388,482 176,382,503 7.10 7.09 0 0.00

(f) Foreign InstitutionalInvestors . . . . . . . 555 538,474,298 538,356,987 21.68 21.63 0 0.00

(g) Foreign VentureCapital Investors . . . 0 0 0 0.00 0.00 0 0.00

(h) Qualified ForeignInvestor . . . . . . . 0 0 0 0.00 0.00 0 0.00

(h) Any Other (Specify) . 0 0 0 0.00 0.00 0 0.00

Sub-Total (B)(1) . . . 1,152 748,441,923 746,953,931 30.14 30.07 0 0.00

(2) Non-Institutions N/A N/A

(a) Bodies Corporate . . . 6,517 37,915,258 37,439,390 1.53 1.52 0 0.00

(b) Individuals

i. Individual holdersholding nominalshare capital upto `1 lakh . . . . 1,638,573 185,335,334 151,499,456 7.46 7.45 0 0.00

ii. Individual holdersholding nominalshare capital inexcess of `1 lakh. 176 15,150,283 15,051,889 0.61 0.61 0 0.00

(c) Qualified ForeignInvestor . . . . . . . 0 0 0 0.00 0.00 0 0.00

(d) Any Other (Specify) . 0 0 0 0.00 0.00 N/A N/A

1 NRIs/OCBs. . . . . . 15,271 10,517,991 7,906,194 0.42 0.42 0 0.00

Sub-Total (B)(2) . . . 1,660,537 248,918,866 211,896,929 10.02 10.00 0 0.00

Total PublicShareholding(B)=(B)(1)+(B)(2) . . 1,661,689 997,360,789 958,850,860 40.16 40.07 0 0.00

TOTAL (A) +(B) . . . 1,661,718 2,483,336,633 2,358,160,037 100.00 99.77 195,000,000 7.85

(C) Shares held byCustodians andagainst which DRhave been issued

1 Promoter andPromoter Group . . . 0 0 0 0.00 0.00 0 0.00

2 Public . . . . . . . . 1 5,643,112 5,643,112 0.00 0.23 0 0.00

Sub-Total (C) . . . . 1 5,643,112 5,643,112 0.00 0.23 0 0.00

GRAND TOTAL(A)+(B)+(C) . . . . . 1,661,719 2,488,979,745 2,363,803,149 100.00 100.00 195,000,000 7.83

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The table below gives details of shareholdings of the Promoters as at January 20, 2015:

I(b) Statement showing holdings of Securities (including shares, warrants and convertiblesecurities) of persons belonging to the category “Promoter and Promoter Group”

Details of shares held Encumbered shares Details of warrantsDetails of convertible

securities

Total shares(inc.

underlyingshares

assumingfull conv. of

warrantsand conv.securities)as a % of

dilutedshare

capital (XII)Sr No(I)

Name of theshareholder (II)

No. of sharesheld (III)

As a %of grand

total(A)+(B)+(C)

(IV) No. (V)

As a%(VI)=V/III*

100

As a %of grand

totalA+B+C of

subcl.(l)(a)

(VII)

No. ofwarrants

Held(VIII)

As a %of totalno. of

warrantsof thesame

class (IX)

No. ofconv. Sec.held (X)

As a %of totalno. of

conv. Sec.of thesame

class (XI)

1 RelianceCommunicationsEnterprises PrivateLimited (formerlyknown as AAACommunicationPrivate Limited) . . . 723,110,172 29.05 195,000,000 26.97 7.83 — 0.00 — 0.00 29.05

2 Reliance Wind TurbineInstallators IndustriesPrivate Limited(formerly known asAAA IndustriesPrivate Limited) . . . 300,000,000 12.05 — — 0.00 — 0.00 — 0.00 12.05

3 Reliance OrnatusEnterprises andVentures PrivateLimited (formerlyknown as ADAEnterprises andVentures PrivateLimited) . . . . . . . 300,000,000 12.05 — — 0.00 — 0.00 — 0.00 12.05

4 Shri Jai Anmol A.Ambani . . . . . . . 1,669,759 0.07 — — 0.00 — 0.00 — 0.00 0.07

5 Shri Jai Anshul A.Ambani . . . . . . . 100 0.00 — — 0.00 — 0.00 — 0.00 0.00

6 Reliance ADA GroupTrustees PrivateLimited - Trustees ofRCOM ESOS Trust . . 21,279,000 0.85 — — 0.00 — 0.00 — 0.00 0.85

7 Reliance CapitalLimited . . . . . . . 29,695,295 1.19 — — 0.00 — 0.00 — 0.00 1.19

8 Shreeji Comtrade LLP. 1,500,000 0.06 — — 0.00 — 0.00 — 0.00 0.06

9 Shrikrishna TradecomLLP . . . . . . . . . 1,500,000 0.06 — — 0.00 — 0.00 — 0.00 0.06

10 Reliance InnoventuresPrivate Limited . . . . 12,379,001 0.50 — — 0.00 — 0.00 — 0.00 0.50

11 Shri Anil D. Ambani . 1,859,171 0.07 — — 0.00 — 0.00 — 0.00 0.07

12 Smt. Kokila D.Ambani . . . . . . . 4,665,847 0.19 — — 0.00 — 0.00 — 0.00 0.19

13 Smt. Tina A. Ambani . 1,650,832 0.07 — — 0.00 — 0.00 — 0.00 0.07

14 Telecom InfrastructureFinance PrivateLimited . . . . . . . 86,666,667 3.48 — — 0.00 — 0.00 — 0.00 3.48

TOTAL . . . . . . . 1,485,975,844 59.70 195,000,000 13.12 7.83 — 0.00 — 0.00 59.70

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The table below is a list of the Shareholders in the public category holding more than 1% of thepaid-up capital of our Company as at January 20, 2015:

Sr. No.Name of theshareholder

No. of sharesheld

Shares as apercentage oftotal numberof shares{i.e.,Grand Total(A)+(B)+(C)indicated instatement at

para(I)(a)above}

Details of warrantsDetails of convertible

securities

Total shares(inc.

underlyingshares

assuming fullconv. of

warrants andconv.

securities) asa % of

diluted sharecapital

No. ofwarrants held

As a % oftotal no. ofwarrants of

the sameclass

No. of conv.Sec. held

% w.r.t. totalno. of conv.Sec. of thesame class

1 Life InsuranceCorporation of India . 164,690,275 6.62 — — — — 6.62

2 Europacific GrowthFund . . . . . . . . 91,597,000 3.68 — — — — 3.68

3 New World Fund Inc 64,516,096 2.59 — — — — 2.59

4 Clsa (Mauritius)Limited . . . . . . . 42,285,000 1.70 — — — — 1.70

5 Vanguard Funds . . . 28,796,176 1.16 — — — — 1.16

6 Blackrock Funds . . . 27,394,034 1.10 — — — — 1.10

7 Ontario Teachers’Pension PlanBoard-Np3A — All . 25,000,000 1.00 — — — — 1.00

Total . . . . . . . . 444,279,481 17.85 — — — — 17.85

The table below is a list of the Shareholders in the public category holding more than 5% of thepaid-up capital of our Company as at January 20, 2015:

Sr. No.

Name of theshareholder(s) andthe persons Actingin concert (PAC)

with themNo of shares

held

Shares as apercentage oftotal numberof shares{i.e.,Grand Total(A)+(B)+(C)indicated instatement at

para(I)(a)above}

Details of warrantsDetails of convertible

securities

Total shares(inc.

underlyingshares

assuming fullconv. of

warrants andconv.

securities) asa % of

diluted sharecapital

No. ofwarrants held

As a % oftotal no. ofwarrants of

the sameclass

No. of conv.Sec. held

% w.r.t. totalno. of conv.Sec. of thesame class

1 Life InsuranceCorporation of India . 164,690,275 6.62 — — — — 6.62

Total . . . . . . . . 164,690,275 6.62 — — — — 6.62

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RELATED PARTY TRANSACTIONS

We have in the past engaged, and in the future may engage, in transactions with related parties,including with our affiliates. Such transactions could be for, among other things, purchase and sale ofservices, rent or lease of certain properties, sale and purchase of fixed assets, dividends, remuneration,the purchase or sale of investments and deposits. We believe each of these arrangements has beenentered into on arm’s length terms, or on terms that we believe are at least as favourable to us assimilar transactions with unrelated parties. For additional details of our related party transactions inaccordance with the requirements under AS 18 issued by the ICAI, see our audited FinancialStatements as at and for the years ended March 31, 2012, 2013 and 2014, and the related notes thereto.

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TERMS AND CONDITIONS OF THE NOTES

The following is the text of the Conditions of the Notes which (subject to completion and amendmentand as supplemented or varied and except for the paragraphs in italics) will be applicable to the Notesin definitive form (if any) issued in exchange for the Global Certificate representing the Notes. Theseterms and conditions as so amended, supplemented or varied shall be endorsed on the Certificatesissued in respect of the Notes. All capitalised terms that are not defined in these Conditions will havethe meanings given to them in the Trust Deed.

The US$300,000,000 6.5 per cent. senior secured notes due November 6, 2020 (the “Notes”, whichexpression includes any further notes issued pursuant to Condition 14 (Further Issues) and forminga single series therewith) of Reliance Communications Limited (the “Issuer”) are constituted by, aresubject to, and have the benefit of, a trust deed dated May 6, 2015 (as amended or supplemented fromtime to time, the “Trust Deed”) between the Issuer and Standard Chartered Bank as trustee (the“Trustee”, which expression includes all persons for the time being trustee or trustees appointed underthe Trust Deed) and are the subject of an agency agreement dated May 6, 2015 (as amended orsupplemented from time to time, the “Agency Agreement”) between the Issuer, Standard CharteredBank as registrar (the “Registrar”, which expression includes any successor registrar appointed fromtime to time in connection with the Notes), Standard Chartered Bank as principal paying agent (the“Principal Paying Agent”, which expression includes any successor principal paying agent appointedfrom time to time in connection with the Notes), the transfer agents named therein (the “TransferAgents”, which expression includes any successor or additional transfer agents appointed from timeto time in connection with the Notes), the paying agents named therein (together with the PrincipalPaying Agent, the “Paying Agents”, which expression includes any successor or additional payingagents appointed from time to time in connection with the Notes) and the Trustee. References hereinto the “Agents” are to the Registrar, the Transfer Agents and the Paying Agents and any reference toan “Agent” is to any one of them. Certain provisions of these Conditions are summaries of the TrustDeed and the Agency Agreement and subject to their detailed provisions. The Noteholders (as definedin Condition 2(a) (Register, Title and Transfers)) are bound by, and are deemed to have notice of, allthe provisions of the Trust Deed and the Agency Agreement applicable to them. Copies of the TrustDeed and the Agency Agreement are available for inspection by Noteholders during normal businesshours at the registered office for the time being of the Trustee, being at the date hereof at 5th Floor,1 Basinghall Avenue, London, EC2V 5DD, United Kingdom and at the Specified Offices (as definedin the Agency Agreement) of each of the Agents, the initial Specified Offices of which are set outbelow.

1. Form, Denomination and Status

(a) Form and denomination: The Notes are in registered form in the denominations ofUS$200,000 and integral multiples of US$1,000 in excess thereof (each, an “AuthorisedDenomination”).

(b) Status of the Notes: The Notes constitute direct, general and unconditional obligations ofthe Issuer and the performance of all the obligations of the Issuer under the Notes and theTrust Deed are or, as the case may be, will be secured by inter alia:

(i) a first pari passu charge on the whole of the movable plant and machinery, including(without limitations) tower assets and optic fibre cables, if any (whether attached orotherwise), capital work in progress (pertaining to movable fixed assets), both presentand future, including all the rights, title, interest, benefits, claims and demands inrespect of all insurance contracts relating thereto of the Issuer, Reliance TelecomLimited (“RTL”), Reliance Infratel Limited (“RITL”) and Reliance CommunicationsInfrastructure Limited (“RCIL”) (collectively, the “Fixed Asset Collateral”);

(ii) assignment of certain telecommunication licences of the Issuer (but not of any of itsSubsidiaries) relating to unified access services and national long distance andinternational long distance services (collectively, the “Licences”); and

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(iii) a pledge over all the equity shares held by the Issuer in RCIL and all the equity sharesheld by the Issuer and Reliance Infocomm Infrastructure Limited in RTL,

(collectively, the “Share Collateral” and, together with the Fixed Asset Collateral and theLicences, the “Collateral”, and the pledge and security agreements and other instrumentspursuant to which the security interests in the Collateral are created, the “CollateralDocuments”, and the Issuer and those of its Restricted Subsidiaries party to the CollateralDocuments, the “Pledgor Group”).

The Collateral will be created for the benefit of the Noteholders by way of a first prioritysecurity interest and will be shared on a pari passu basis with the holders of long-termIndebtedness of the Issuer and the Pledgor Group existing on the Issue Date and certainadditional long-term Indebtedness that may be incurred in the future in compliance with theTrust Deed. The Notes will at all times rank pari passu among themselves and at least paripassu with all other present and future unsecured obligations of the Issuer, save for suchobligations as may be preferred by provisions of law that are both mandatory and of generalapplication.

The Notes shall initially be represented by a Global Certificate in the aggregate principalamount of the Notes issued on the Issue Date registered in the name of a nominee for, and heldby or to the order of, a depositary (the “Common Depositary”) common to, Euroclear BankS.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream”) and asdescribed in the section of the Offering Circular entitled “The Global Certificate”. Except in thelimited circumstances described in the section of the Offering Circular entitled “The GlobalCertificate”, owners of interests in Notes represented by a Global Certificate will not be entitledto receive Definitive Notes in respect of their individual holdings of Notes.

2. Register, Title and Transfers

(a) Register: The Registrar will maintain a register (the “Register”) in respect of the Notes inaccordance with the provisions of the Agency Agreement. In these Conditions, the“Holder” of a Note means the person in whose name such Note is for the time beingregistered in the Register (or, in the case of a joint holding, the first named thereof) and“Noteholder” shall be construed accordingly. A certificate (each, a “Note Certificate”)will be issued to each Noteholder in respect of its registered holding. Each Note Certificatewill be numbered serially with an identifying number which will be recorded in theRegister.

(b) Title: The Holder of each Note shall (except as otherwise required by law) be treated as theabsolute owner of such Note for all purposes (whether or not it is overdue and regardlessof any notice of ownership, trust or any other interest therein, any writing on the NoteCertificate relating thereto (other than the endorsed form of transfer) or any notice of anyprevious loss or theft of such Note Certificate) and no person shall be liable for so treatingsuch Holder. No person shall have any right to enforce any term or condition of the Notesor the Trust Deed under the Contracts (Rights of Third Parties) Act 1999.

(c) Transfers: Subject to paragraphs (f) (Closed periods) and (g) (Regulations concerningtransfers and registration) below, a Note may be transferred upon surrender of the relevantNote Certificate, with the endorsed form of transfer duly completed, at the Specified Officeof the Registrar or any Transfer Agent, together with such evidence as the Registrar or (asthe case may be) such Transfer Agent may reasonably require to prove the title of thetransferor and the authority of the individuals who have executed the form of transfer;provided, however, that a Note may not be transferred unless the principal amount of Notestransferred and (where not all of the Notes held by a Holder are being transferred) theprincipal amount of the balance of Notes not transferred are in Authorised Denominations.Where not all the Notes represented by the surrendered Note Certificate are the subject ofthe transfer, a new Note Certificate in respect of the balance of the Notes will be issued tothe transferor.

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Transfer of interests in the Notes evidenced by the Global Certificate will only be effectedin accordance with the rules and procedures for the time being of the relevant clearingsystems.

(d) Registration and delivery of Note Certificates: Within five business days of the surrenderof a Note Certificate in accordance with paragraph (c) (Transfers) above, the Registrar willregister the transfer in question and deliver a new Note Certificate of a like principalamount to the Notes transferred to each relevant Holder at its Specified Office or (as thecase may be) the Specified Office of any Transfer Agent or (at the request and risk of anysuch relevant Holder) by uninsured first class mail (airmail if overseas) to the addressspecified for the purpose by such relevant Holder. In this paragraph, “business day” meansa day on which commercial banks are open for general business (including dealings inforeign currencies) in the city where the Registrar or, as the case may be, the relevantTransfer Agent has its Specified Office.

Except in the limited circumstances described in the section of the Offering Circularentitled “The Global Certificate”, owners of interests in the Notes will not be entitled toreceive physical delivery of Certificates. Issues of Certificates upon a transfer of Notes aresubject to compliance by the transferor and transferee with the certification proceduresdescribed above and in the Agency Agreement.

(e) No charge: The transfer of a Note will be effected without charge by or on behalf of theIssuer, the Registrar or any Transfer Agent but against such indemnity as the Registrar or,as the case may be, such Transfer Agent may require in respect of any tax or other duty ofwhatsoever nature which may be levied or imposed in connection with such transfer.

(f) Closed periods: Noteholders may not require transfers to be registered during the period of15 days ending on the due date for any payment of principal or interest in respect of theNotes (including with respect to redemptions pursuant to Condition 5 (Redemption andPurchase)).

(g) Regulations concerning transfers and registration: All transfers of Notes and entries on theRegister are subject to the detailed regulations concerning the transfer of Notes scheduledto the Agency Agreement. The regulations may be changed by the Issuer with the priorwritten approval of the Trustee and the Registrar. A copy of the current regulations will bemailed (free of charge) by the Registrar to any Noteholder who requests in writing a copyof such regulations.

3. Covenants

(a) Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock: The Issuer willnot, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur,issue, assume, guarantee or otherwise become directly or indirectly liable, contingently orotherwise, with respect to (collectively, “incur” and the terms “incurrence” and“incurred” have meanings correlative with the foregoing) any Indebtedness (includingAcquired Debt), and the Issuer will not issue any Disqualified Stock and will not permit anyof its Restricted Subsidiaries to issue any shares of Preferred Stock; provided, however, thatthe Issuer and any Restricted Subsidiary may incur Indebtedness (including AcquiredDebt), the Issuer may issue Disqualified Stock, and any Restricted Subsidiary of the Issuermay issue shares of Preferred Stock, if after giving effect to the Incurrence or issuancethereof and the receipt and application of the proceeds therefrom, (1) no Default hasoccurred and is continuing and (2) the Issuer’s Fixed Charge Coverage Ratio would not beless than 2.25 to 1.0 (the “Fixed Charge Coverage Ratio Test”).

The foregoing paragraph will not prohibit the incurrence of any of the following items ofIndebtedness (collectively, “Permitted Debt”):

(i) the incurrence by the Issuer and its Restricted Subsidiaries of the ExistingIndebtedness;

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(ii) the incurrence by (a) the Issuer of the Indebtedness represented by the Notes issuedon the Issue Date and (b) the Pledgor Group of their respective obligations under theCollateral Documents to the extent such obligations constitute Indebtedness;

(iii) the incurrence by the Issuer or any of its Restricted Subsidiaries of PermittedRefinancing Indebtedness in exchange for, or the net proceeds of which are used torenew, refund, refinance, replace, defease or discharge, any Indebtedness (other thanintercompany Indebtedness), Disqualified Stock or Preferred Stock that was permittedby the Trust Deed to be incurred under the first paragraph and clauses (i), (ii), (iii),(x), (xiv) and (xv) of this Condition 3(a);

(iv) the incurrence by the Issuer or any of its Restricted Subsidiaries of intercompanyIndebtedness, Disqualified Stock or Preferred Stock between or among the Issuer andany of its Restricted Subsidiaries; provided, however, that:

(A) such Indebtedness, Disqualified Stock or Preferred Stock is incurred incompliance with Condition 3(b) (Limitation on Restricted Payments); and

(B) (1) any subsequent issuance or transfer of Equity Interests that results in anysuch Indebtedness, Disqualified Stock or Preferred Stock being held by a Personother than the Issuer or a Restricted Subsidiary of the Issuer and (2) any sale orother transfer of any such Indebtedness, Disqualified Stock or Preferred Stock toa Person that is not the Issuer or a Restricted Subsidiary of the Issuer, will bedeemed, in the case of both (1) and (2), to constitute an incurrence of suchIndebtedness, Disqualified Stock or Preferred Stock by the Issuer or suchRestricted Subsidiary, as the case may be, that was not permitted by thisCondition 3(a)(iv);

(v) Indebtedness arising from agreements of the Issuer or a Restricted Subsidiary of theIssuer providing for indemnification, adjustment of purchase price or similarobligations or from guarantees or letters of credit, surety bonds or performance bondssecuring any obligations of the Issuer or a Restricted Subsidiary of the Issuer pursuantto such agreements, in each case, incurred in connection with the disposition of anybusiness, assets or Subsidiary, other than guarantees of Indebtedness incurred by anyPerson acquiring all or any portion of such business, assets or Subsidiary for thepurpose of financing such acquisition; provided that the maximum aggregate liabilityin respect of all such Indebtedness will at no time exceed the gross proceeds(including the Fair Market Value of non-cash consideration) actually received by (orheld in escrow for later release to) the Issuer or by such Restricted Subsidiary inconnection with such disposition;

(vi) the incurrence by the Issuer or any of its Restricted Subsidiaries of HedgingObligations in the ordinary course of business and not for speculative purposes;

(vii) the Guarantee by the Issuer or any of its Restricted Subsidiaries of Indebtedness of theIssuer or a Restricted Subsidiary of the Issuer that was permitted to be incurred byanother provision of this Condition 3(a); provided that if the Indebtedness beingguaranteed is subordinated to the Notes, then the Guarantee shall be subordinated tothe same extent as the Indebtedness being guaranteed;

(viii) the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness inrespect of workers’ compensation claims, self-insurance obligations, bankers’acceptances, performance bonds, surety bonds and similar obligations in the ordinarycourse of business;

(ix) the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtednessarising from the honouring by a bank or other financial institution of a cheque, draftor similar instrument inadvertently drawn against insufficient funds, so long as suchIndebtedness is covered within five Business Days;

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(x) Indebtedness (including Acquired Debt) incurred in connection with the acquisition ofa Permitted Business; provided that on the date of the incurrence of suchIndebtedness, after giving effect to the incurrence thereof and the use of proceedstherefrom, either

(A) the Issuer would be permitted to incur at least US$1.00 of additionalIndebtedness pursuant to the Fixed Charge Coverage Ratio Test; or

(B) the Fixed Charge Coverage Ratio of the Issuer would be no less than the FixedCharge Coverage Ratio of the Issuer immediately prior to the incurrence of suchIndebtedness;

(xi) Indebtedness incurred by the Issuer or any of its Restricted Subsidiaries constitutingreimbursement obligations with respect to letters of credit, trade guarantees,performance bonds, surety bonds or completion or performance guarantees in theordinary course of business to the extent that such letters of credit, trade guarantees,performance bonds, surety bonds or completion or performance guarantees are notdrawn upon or, if drawn upon, to the extent such drawing is reimbursed no later than30 days following such drawing;

(xii) Indebtedness of the Issuer or any of its Restricted Subsidiaries consisting of (x) thefinancing of insurance premiums or (y) take-or-pay obligations contained in supplyarrangements entered into, in each case, in the ordinary course of business;

(xiii) Indebtedness of the Issuer or any of its Restricted Subsidiaries consisting ofcustomary cash pooling or customary cash management arrangements incurred in theordinary course of business;

(xiv) Indebtedness incurred by the Issuer or any of its Restricted Subsidiaries in connectionwith deferred payments or other permitted payment modes (and refinancings thereof)of the final bid price to be made to the DoT or any other body designated by theGovernment of India with respect to auctions conducted to allot the rights to usecertain radio spectrum frequencies in various Telecom Service Areas, provided thatthe amount of such Indebtedness does not exceed the purchase price paid in any suchauction and Liens in the acquired rights/spectrum are granted to the Collateral Agentfor the benefit of the Noteholders if and to the extent required by the CollateralDocument; and

(xv) the incurrence by the Issuer or any of its Restricted Subsidiaries of additionalIndebtedness in an aggregate amount at any time outstanding pursuant to thisCondition 3(a)(xv) (together with all refinancings thereof) not to exceed an amountequal to 3.0 per cent. of Total Assets.

For purposes of determining compliance with this Condition 3(a), in the event that an itemof Indebtedness meets the criteria of more than one of the categories of Permitted Debtdescribed in clauses (i) through (xv) above, or is entitled to be incurred pursuant to the firstparagraph of this Condition 3(a), the Issuer will be permitted to classify such item ofIndebtedness on the date of its incurrence, or later reclassify all or a portion of such itemof Indebtedness, in any manner that complies with this Condition 3(a). The accrual ofinterest, the accretion or amortisation of original issue discount and the payment of interestor dividends on any Indebtedness, Disqualified Stock or Preferred Stock in the form ofadditional Indebtedness, Disqualified Stock or Preferred Stock with the same terms, willnot be deemed to be an incurrence of Indebtedness for purposes of this Condition 3(a);provided, in each such case, that the amount of any such accrual, accretion, amortisation orpayment is included in the determination of Consolidated Fixed Charges of the Issuer asaccrued.

With respect to any U.S. dollar-denominated restriction on the incurrence of Indebtedness,the U.S. dollar equivalent amount of Indebtedness denominated in a foreign currency shallbe calculated based on the relevant currency exchange rate in effect on the date suchIndebtedness was incurred, in the case of term Indebtedness, or first committed, in the case

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of revolving credit Indebtedness; provided that if such Indebtedness is incurred to renew,refund, refinance, replace, defease or discharge other Indebtedness denominated in aforeign currency, and such renewal, refunding, refinancing, replacement, defeasance ordischarge would cause the applicable U.S. dollar-denominated restriction to be exceeded ifcalculated at the relevant currency exchange rate in effect on the date thereof, such U.S.dollar-denominated restriction shall be deemed not to have been exceeded so long as theamount of such Indebtedness does not exceed the amount of such Indebtedness beingrenewed, refunded, refinanced, replaced, defeased or discharged.

Notwithstanding any other provision of this Condition 3(a), the maximum amount ofIndebtedness that the Issuer or any Restricted Subsidiary of the Issuer may incur pursuantto this Condition 3(a) shall not be deemed to be exceeded solely as a result of fluctuationsin currency exchange rates or currency values.

(b) Limitation on Restricted Payments: The Issuer will not, and will not permit any of itsRestricted Subsidiaries to, directly or indirectly:

(i) declare or pay any dividend or make any other payment or distribution on account ofthe Issuer’s or any of its Restricted Subsidiaries’ Equity Interests (including, withoutlimitation, any payment in connection with any merger, amalgamation orconsolidation involving the Issuer or any of its Restricted Subsidiaries) or to the director indirect holders of the Issuer’s or any of its Restricted Subsidiaries’ EquityInterests in their capacity as such (other than dividends or distributions payable inEquity Interests (other than Disqualified Stock) of the Issuer or such RestrictedSubsidiary), in each case held by Persons other than the Issuer or any of its RestrictedSubsidiaries;

(ii) purchase, call for redemption or redeem or otherwise acquire or retire for value(including, without limitation, in connection with any merger, amalgamation orconsolidation involving the Issuer) any Equity Interests of the Issuer or any direct orindirect parent of the Issuer;

(iii) make any voluntary or optional payment on or with respect to, or voluntary or optionalpurchase, redemption, defeasance, or other acquisition or retirement for value of anySubordinated Indebtedness (excluding any intercompany Subordinated Indebtednessbetween or among the Issuer and any of its Restricted Subsidiaries), except a paymentof interest or principal at any Stated Maturity thereof; or

(iv) make any Investment, other than a Permitted Investment,

(all such payments and other actions set forth in the clauses (i) through (iv) above beingcollectively referred to as “Restricted Payments”), unless on the Transaction Date andafter giving effect to such Restricted Payments:

(i) no Default or Event of Default has occurred and is continuing or would occur as aconsequence of such Restricted Payment;

(ii) the Issuer would, at the time of such Restricted Payment and after giving pro formaeffect thereto as if such Restricted Payment had been made at the beginning of theapplicable four-quarter period, have been permitted to incur at least US$1.00 ofadditional Indebtedness pursuant to the Fixed Charge Coverage Ratio Test; and

(iii) such Restricted Payment, together with the aggregate amount of all other RestrictedPayments made by the Issuer and its Restricted Subsidiaries since the Issue Date(including Restricted Payments permitted by clause (i) of the next succeedingparagraph), is less than the sum, without duplication, of:

(A) 50.0 per cent. of the aggregate amount of the Consolidated Net Income of theIssuer (or, if the Consolidated Net Income is a loss, minus 100.0 per cent. of theamount of such loss) accrued on a cumulative basis during the period (taken asone accounting period) beginning on the first day of the fiscal quarter during

183

which the Issue Date occurs and ending on the last day of the Issuer’s mostrecently ended fiscal quarter for which consolidated financial statements of theIssuer (which the Issuer will use its best efforts to compile in a timely mannerand which may be internal financial statements) are available; plus

(B) 100.0 per cent. of the aggregate net cash proceeds received by the Issuer sincethe Issue Date as a contribution to its common equity capital or from the issuanceor sale of Equity Interests of the Issuer (other than Disqualified Stock) or fromthe issuance or sale of convertible or exchangeable Disqualified Stock orconvertible or exchangeable debt securities of the Issuer that have beenconverted into or exchanged for such Equity Interests (other than EquityInterests (or Disqualified Stock or debt securities) sold to a Subsidiary of theIssuer); plus

(C) to the extent that any Investment (other than a Permitted Investment) that wasmade after the Issue Date is sold or otherwise cancelled, liquidated or repaid forcash, 100.0 per cent. of the aggregate amount received in cash and CashEquivalents plus the Fair Market Value of other consideration received by theIssuer or any of its Restricted Subsidiaries; plus

(D) an amount equal to the net reduction in Investments (other than reductions inPermitted Investments) that were made after the Issue Date in any Personresulting from (1) payments of interest on Indebtedness, dividends or repaymentsof loans or advances by such Person, in each case to the Issuer or any RestrictedSubsidiary (except, in each case, to the extent any such payment or proceeds areincluded in the calculation of Consolidated EBITDA) after the Issue Date, or (2)the unconditional release of a Guarantee provided by the Issuer or a RestrictedSubsidiary after the Issue Date of an obligation of another Person; plus

(E) the amount by which Indebtedness of the Issuer or its Restricted Subsidiaries isreduced on the Issuer’s balance sheet upon the conversion or exchange (otherthan by a Subsidiary of the Issuer) subsequent to the Issue Date of anyIndebtedness of the Issuer or its Restricted Subsidiaries convertible orexchangeable for Equity Interests (other than Disqualified Stock) of the Issuer(less the amount of any cash, or the fair market value of any other property,distributed by the Issuer upon such conversion or exchange); plus

(F) to the extent that any Unrestricted Subsidiary is redesignated as a RestrictedSubsidiary of the Issuer after the Issue Date, 100.0 per cent. of the Fair MarketValue of the Issuer’s Investment in such Subsidiary as of the date of suchredesignation; plus

(G) 100.0 per cent. of any dividends received by the Issuer or any of its RestrictedSubsidiaries after the Issue Date from an Unrestricted Subsidiary, to the extentthat such dividends were not otherwise included in the Consolidated EBITDA ofthe Issuer for such period.

The preceding provisions will not prohibit:

(i) the payment of any dividend or the consummation of any irrevocable redemptionwithin 60 days after the date of declaration of the dividend or giving of the redemptionnotice, as the case may be, if the date of declaration or notice is after the Issue Dateand at the date of declaration or notice, the dividend or redemption payment wouldhave complied with the provisions of the Trust Deed;

(ii) the redemption, purchase or other acquisition of Equity Interests of the Issuer inexchange for, or out of or with, the net cash proceeds of the substantially concurrentsale (other than to a Subsidiary of the Issuer) of Equity Interests of the Issuer (otherthan Disqualified Stock) or from the substantially concurrent contribution of common

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equity capital to the Issuer (other than from a Restricted Subsidiary); provided that theamount of any such net cash proceeds that are utilised for any such RestrictedPayment will be excluded from clause (B) of the preceding paragraph of thisCondition 3(b);

(iii) the repurchase, redemption, defeasance or other acquisition or retirement for value ofSubordinated Indebtedness, Disqualified Stock or Preferred Stock with the net cashproceeds from (a) a substantially concurrent incurrence of Permitted RefinancingIndebtedness or (b) the substantially concurrent sale (other than to a Subsidiary of theIssuer) of Equity Interests of the Issuer (other than Disqualified Stock) or from thesubstantially concurrent contribution of common equity capital to the Issuer (otherthan from a Restricted Subsidiary); provided that the amount of any such net cashproceeds that are utilised for any such Restricted Payment will be excluded fromclause (B) of the preceding paragraph of this Condition 3(b);

(iv) any Restricted Payment to pay for the repurchase, redemption or other acquisition orretirement for value of any Equity Interests of the Issuer, any direct or indirect parentof the Issuer or any Restricted Subsidiary of the Issuer held by any current or formerofficer, director or employee of the Issuer, any direct or indirect parent of the Issueror any of Restricted Subsidiary of the Issuer; provided that the aggregate price paidfor all such repurchased, redeemed, acquired or retired Equity Interests may notexceed US$5.0 million (or the Dollar Equivalent) in any twelve-month period (withunused amounts in any twelve-month period being carried over to the succeedingtwelve-month period);

(v) the repurchase of Equity Interests deemed to occur upon the vesting or exercise ofstock options, warrants, restricted stock or other similar rights to the extent suchEquity Interests represent a portion of the exercise price or tax withholding costthereof;

(vi) the payment of any dividends or distributions declared, paid or made by a RestrictedSubsidiary payable to persons other than the Issuer and/or its Restricted Subsidiaries(including, for the avoidance of doubt, payments or distributions made in connectionwith a merger or consolidation of a Restricted Subsidiary); provided, however, thatsuch dividend or distribution is payable, in each case on a pro rata basis or on a basismore favourable to the Issuer and/or its Restricted Subsidiary receiving such dividendor distribution, to all holders of any class of Capital Stock of such RestrictedSubsidiary;

(vii) the declaration and payment of dividends to holders of any class or series ofDisqualified Stock or any preferred stock of a Restricted Subsidiary of the Issuerissued on or after the Issue Date, provided that the issuance of such Disqualified Stockor preferred stock, as the case may be, was permitted in accordance with the terms ofCondition 3(a) (Limitation on Incurrence of Indebtedness and Issuance of PreferredStock); and

(viii) other Restricted Payments in an aggregate amount not to exceed US$100.0 million (orthe Dollar Equivalent thereof) after the Issue Date,

provided that, in the case of clauses (iv) and (viii), no Default or Event of Defaultshall have occurred and be continuing or would occur as a consequence of the actionsor payments set forth herein.

The amount of all Restricted Payments (other than cash) shall be the Fair Market Value onthe date of the Restricted Payment of the asset(s) or securities proposed to be transferredor issued by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to theRestricted Payment.

The Fair Market Value of any assets or securities that are required to be valued pursuantto this Condition 3(b) shall be (1) set forth in an Officers’ Certificate delivered to the

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Trustee if such value is equal to or greater than US$25.0 million (or the Dollar Equivalentthereof) but no more than US$100.0 million (or the Dollar Equivalent thereof) and (2) setforth in a certified resolution of the Board of Directors of the Issuer delivered to the Trusteewhere the Fair Market Value exceeds US$100.0 million (or the Dollar Equivalent thereof)and such determination by the Board of Directors may be based upon an opinion or anappraisal issued by an accounting, appraisal or investment banking firm of recognisedinternational standing.

(c) Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries:The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly orindirectly, create or permit to exist or become effective any consensual encumbrance orrestriction on the ability of any Restricted Subsidiary of the Issuer to:

(i) pay dividends or make any other distributions on its Capital Stock to the Issuer or anyof its Restricted Subsidiaries, or with respect to any other interest or participation in,or measured by, its profits;

(ii) pay any Indebtedness or other obligation owed to the Issuer or any of its RestrictedSubsidiaries;

(iii) make loans or advances to the Issuer or any of its Restricted Subsidiaries; or

(iv) sell, lease or transfer any of its properties or assets to the Issuer or any of itsRestricted Subsidiaries,

provided that (i) the priority of any Preferred Stock in receiving dividends or liquidatingdistributions prior to dividends or liquidating distributions being paid on Common Stock;(ii) the subordination of loans or advances made to the Issuer or any Restricted Subsidiaryto other Indebtedness incurred by the Issuer or any Restricted Subsidiary; and (iii) theprovisions contained in documentation governing Indebtedness requiring transactionsbetween or among the Issuer and any Restricted Subsidiary or between or among anyRestricted Subsidiaries to be on fair and reasonable terms or on an arm’s length basis, ineach case, shall not constitute an encumbrance or restriction prohibited by this Condition3(c).

However, the preceding restrictions will not apply to encumbrances or restrictions existingunder or by reason of:

(i) provisions in agreements as in effect on the Issue Date and any amendments,restatements, modifications, renewals, supplements, refundings, replacements orrefinancings of those agreements; provided that the encumbrances or restrictions inany such amendments, restatements, modifications, renewals, supplements,refundings, replacements or refinancings, taken as a whole, are no more restrictive inany material respect than those contained in those agreements on the Issue Date;

(ii) the Trust Deed, the Notes and the Collateral Documents;

(iii) customary non-assignment provisions in contracts and licences entered into in theordinary course of business;

(iv) purchase money obligations for property acquired in the ordinary course of businessand Capital Lease Obligations that impose restrictions on the property purchased orleased;

(v) Permitted Refinancing Indebtedness; provided that the restrictions contained in theagreements governing such Permitted Refinancing Indebtedness are not materiallymore restrictive, taken as a whole, than those contained in the agreements governingthe Indebtedness, Disqualified Stock or Preferred Stock being refinanced;

(vi) Permitted Liens that limit the right of the debtor to dispose of the assets subject tosuch Liens;

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(vii) restrictions on cash or other deposits or net worth imposed by customers undercontracts entered into in the ordinary course of business;

(viii) provisions limiting the disposition or distribution of assets or property in joint ventureagreements, asset sale agreements, sale-leaseback agreements, stock sale agreementsand other similar agreements (including agreements entered into in connection with aRestricted Investment), which limitation is applicable only to the assets that are thesubject of such agreements;

(ix) with respect to any Restricted Subsidiary and imposed pursuant to an agreement thathas been entered into for the incurrence of Indebtedness or the issuance ofDisqualified Stock or Preferred Stock in compliance with Condition 3(a) (Limitationon Incurrence of Indebtedness and Issuance of Preferred Stock) if, as determined bythe Board of Directors of the Issuer, the encumbrances or restrictions are (a)customary for such types of agreements and (b) would not be reasonably expected tomaterially and adversely affect the ability of the Issuer to make required payments onthe Notes;

(x) customary restrictions imposed on the transfer of, or in licences related to, copyrights,patents or other intellectual property and contained in agreements entered into in theordinary course of business;

(xi) any instrument of a Person acquired by the Issuer or any Restricted Subsidiary as ineffect at the time of such acquisition (except to the extent such instrument relates toIndebtedness that was incurred in connection with or in contemplation of suchacquisition), which encumbrance or restriction is not applicable to any Person, or theproperties or assets of any Person, other than the Person, or the property or assets ofthe Person, so acquired; provided that, in the case of Indebtedness, such Indebtednesswas permitted by the terms of the Trust Deed to be incurred; and

(xii) existing under or by reason of applicable law, rule, regulation or order.

(d) Limitation on Sales and Issuances of Capital Stock in Restricted Subsidiaries: The Issuerwill not sell, and will not permit any Restricted Subsidiary, directly or indirectly, to issueor sell, any shares of Capital Stock of a Restricted Subsidiary (including options, warrantsor other rights to purchase shares of such Capital Stock) except:

(i) to the Issuer or a Restricted Subsidiary;

(ii) to the extent such Capital Stock represents director’s qualifying shares or is requiredby applicable law to be held by a Person other than the Issuer or a RestrictedSubsidiary;

(iii) the issuance or sale of Capital Stock of a Restricted Subsidiary if, immediately aftergiving effect to such issuance or sale, such Restricted Subsidiary would no longerconstitute a Restricted Subsidiary and any remaining Investment in such Person wouldhave been permitted to be made under Condition 3(b) (Limitation on RestrictedPayments) if made on the date of such issuance or sale and provided that the Issuerapplies the Net Cash Proceeds of such issuance or sale in accordance with Condition3(h) (Limitation on Asset Sales) to the extent required thereunder; and

(iv) (a) the issuance or sale of Capital Stock of a Restricted Subsidiary (which remains aRestricted Subsidiary after any such issuance or sale); provided that the Issuer or suchRestricted Subsidiary applies the Net Cash Proceeds of such issuance or sale inaccordance with Condition 3(h) (Limitation on Asset Sales) to the extent requiredthereunder or (b) the issuance or sale of Preferred Stock of a Restricted Subsidiary,provided that such issuance is made in accordance with Condition 3(a) (Limitation onIncurrence of Indebtedness and Issuance of Preferred Stock).

For purposes of this Condition 3(d), the creation of a Lien on any Capital Stock of aRestricted Subsidiary to secure Indebtedness of the Issuer or any of its RestrictedSubsidiaries that was permitted to be incurred pursuant to Condition 3(a) (Limitation onIncurrence of Indebtedness and Issuance of Preferred Stock) shall not be deemed to be aviolation of this Condition 3(d).

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(e) Limitation on Transactions with Shareholders and Affiliates: The Issuer will not, and willnot permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transferor otherwise dispose of any of its properties or assets to, or purchase any property or assetsfrom, or enter into or make or amend any transaction, contract, agreement, understanding,loan, advance or guarantee with, or for the benefit of, (x) any holder (or any Affiliate ofsuch holder) of 10.0 per cent. or more of any class of Capital Stock of the Issuer or (y) anyAffiliate of the Issuer (each, an “Affiliate Transaction”), unless:

(i) the Affiliate Transaction is on terms that are no less favourable to the Issuer or therelevant Restricted Subsidiary of the Issuer than those that would have been obtainedin a comparable transaction by the Issuer or such Restricted Subsidiary with anunrelated Person; and

(ii) the Issuer delivers to the Trustee:

(A) with respect to any Affiliate Transaction or series of related AffiliateTransactions involving aggregate consideration in excess of US$25.0 million (orthe Dollar Equivalent thereof) but no more than US$100.0 million (or the DollarEquivalent thereof), a resolution of the Board of Directors of the Issuer set forthin an Officers’ Certificate certifying that such Affiliate Transaction complieswith this Condition 3(e) and that such Affiliate Transaction has been approvedby a majority of the disinterested members of the Board of Directors of theIssuer; and

(B) with respect to any Affiliate Transaction or series of related AffiliateTransactions involving aggregate consideration in excess of US$100.0 million(or the Dollar Equivalent thereof), an opinion as to the fairness to the Issuer orsuch Subsidiary of such Affiliate Transaction from a financial point of viewissued by an accounting, appraisal or investment banking firm of recognisedinternational standing.

The following items will not be deemed to be Affiliate Transactions and, therefore, exceptas set forth below will not be subject to the provisions of the prior paragraph:

(i) the payment or reimbursement of reasonable expenses (pursuant to indemnityarrangements or otherwise) of officers, directors, employees or consultants of theIssuer or any of its Restricted Subsidiaries;

(ii) transactions between or among the Issuer and any Wholly Owned RestrictedSubsidiary (or any entity that becomes a Wholly Owned Restricted Subsidiary as aresult of such transaction), or between or among Wholly Owned RestrictedSubsidiaries;

(iii) any Restricted Payment, provided such Restricted Payment is permitted by Condition3(b) (Limitation on Restricted Payments) and any Permitted Investment;

(iv) any issuance or sale of Capital Stock (other than Disqualified Stock) of the Issuer;

(v) transactions with a Person (other than an Unrestricted Subsidiary) that is an Affiliateof the Issuer solely because the Issuer owns, directly or through one or more of itsRestricted Subsidiaries, an Equity Interest in, or controls, such Person;

(vi) Affiliate Transactions undertaken pursuant to (a) any contractual obligations,arrangements or rights in existence on the Issue Date and disclosed in the OfferingCircular and (b) any amendments, modifications, supplements, extensions,replacements, terminations or renewals to the contractual obligations, arrangements orrights described in clause (a), so long as such contractual obligations, arrangementsor rights together with all such amendments, modifications, supplements, extensions,replacements, terminations or renewals, would not, individually or in the aggregate,materially affect the ability of the Issuer to make required payments on the Notes;

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(vii) transactions involving the Issuer or one or more Restricted Subsidiaries withcustomers, clients, suppliers, or purchasers or sellers of goods or services, in eachcase in the ordinary course of business and otherwise in compliance with the terms ofthe Trust Deed that are fair to the Issuer or the Restricted Subsidiaries (as applicable),in the reasonable determination of the members of the Board of Directors of the Issuer,or are on terms at least as favourable as might reasonably have been obtained at suchtime from an unaffiliated Person; or

(viii) loans or advances, in the ordinary course of business, to employees of the Issuer orits Restricted Subsidiaries, but in any event not to exceed US$10.0 million (or theDollar Equivalent thereof) in the aggregate outstanding at any one time.

In addition, the requirements of this Condition 3(e) shall not apply to any transactionbetween or among any of the Issuer, any Wholly Owned Restricted Subsidiary and anyRestricted Subsidiary that is not a Wholly Owned Restricted Subsidiary; provided that inthe case of a transaction with a Restricted Subsidiary that is not a Wholly Owned RestrictedSubsidiary, none of the minority shareholders or minority partners of or in such RestrictedSubsidiary is a Person described in clauses (x) or (y) of the first paragraph of this Condition3(e) (other than by reason of such minority shareholder or minority partner being an officeror director of such Restricted Subsidiary or being a Subsidiary of the Issuer).

(f) Limitation on Liens: The Issuer will not, and will not permit any of its RestrictedSubsidiaries to, directly or indirectly, incur, assume or permit to exist any Lien, other thanPermitted Liens, on the Collateral.

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly orindirectly, incur, assume or permit to exist any Lien of any nature whatsoever on any of itsassets or properties of any kind that does not constitute Collateral, whether owned at theIssue Date or thereafter acquired, except Permitted Liens, unless the Notes are equally andratably secured by such Lien.

(g) Limitation on Sale and Leaseback Transactions: The Issuer will not, and will not permit anyof its Restricted Subsidiaries to, enter into any Sale and Leaseback Transaction; providedthat the Issuer or any of its Restricted Subsidiaries may enter into a Sale and LeasebackTransaction if:

(i) the Issuer or such Restricted Subsidiary, as applicable, could have (a) incurredIndebtedness in an amount equal to the Attributable Debt relating to such Sale andLeaseback Transaction under Condition 3(a) (Limitation on Incurrence ofIndebtedness and Issuance of Preferred Stock) and (b) incurred a Lien to secure suchIndebtedness pursuant to Condition 3(f) (Limitation on Liens), in which case, thecorresponding Indebtedness will be deemed incurred and the corresponding Lien willbe deemed incurred pursuant to those provisions;

(ii) the gross cash proceeds of that Sale and Leaseback Transaction are at least equal tothe Fair Market Value of the property that is the subject of such Sale and LeasebackTransaction; and

(iii) the transfer of assets in that Sale and Leaseback Transaction is permitted by, and theIssuer applies the proceeds of such transaction in compliance with, Condition 3(h)(Limitation on Asset Sales).

(h) Limitation on Asset Sales: The Issuer will not, and will not permit any of its RestrictedSubsidiaries to, consummate an Asset Sale unless:

(i) no Default shall have occurred and be continuing and no Default would occur as aresult of such Asset Sale;

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(ii) the Issuer (or the applicable Restricted Subsidiary, as the case may be) receivesconsideration at the time of the Asset Sale at least equal to the Fair Market Value(measured as of the date of the definitive agreement with respect to such Asset Sale)of the assets or Equity Interests issued or sold or otherwise disposed of; and

(iii) at least 75.0 per cent. of the consideration received in the Asset Sale by the Issuer orsuch Restricted Subsidiary is in the form of cash, Cash Equivalents or a combinationthereof. For purposes of this provision, each of the following will be deemed to becash:

(A) any liabilities, as shown on the Issuer’s most recent consolidated balance sheet,of the Issuer or any of its Restricted Subsidiaries (other than contingentliabilities and liabilities that are by their terms subordinated to the Notes) thatare assumed by the transferee of any such assets pursuant to (i) a customarynovation agreement that releases the Issuer or such Restricted Subsidiary fromfurther liability or (ii) a customary indemnity agreement that indemnifies theIssuer or such Restricted Subsidiary from and against any loss, liability orexpense in respect of such assumed liability;

(B) any securities, notes or other obligations received by the Issuer or any suchRestricted Subsidiary from such transferee that are, subject to ordinarysettlement periods, converted within 30 days of receipt thereof by the Issuer orsuch Restricted Subsidiary into cash, to the extent of the cash received in thatconversion; and

(C) any stock or assets of the kind referred to in clauses (ii) or (iv) of the secondparagraph of this Condition 3(h).

Within 365 days after the receipt of any Net Cash Proceeds from an Asset Sale, the Issuer(or the applicable Restricted Subsidiary, as the case may be) may apply an amount equalto such Net Cash Proceeds:

(i) to the extent such Net Cash Proceeds are attributable to an Asset Sale of assets, rightsor Equity Interests, in each case that do not constitute Collateral, to repay, redeem orpurchase Indebtedness, if any, secured by such assets, rights or Equity Interests;

(ii) to acquire (a) all or substantially all of the assets of another Person or a division orline of business of such Person engaged in a Permitted Business or (b) any CapitalStock of another Person engaged in a Permitted Business, if, after giving effect to anysuch acquisition, the Permitted Business is or becomes a Restricted Subsidiary of theIssuer;

(iii) to make a capital expenditure;

(iv) to acquire other assets that are not classified as current assets under GAAP and thatare used or intended to be used in a Permitted Business of the Issuer or a RestrictedSubsidiary; or

(v) to prepay, repay or purchase any Pari Passu Obligations; provided, however, that, inconnection with any prepayment, repayment or purchase of Indebtedness pursuant tothis clause, the Issuer or such Restricted Subsidiary will retire such Indebtedness andwill cause the related commitment (if any) to be permanently reduced in an amountequal to the principal amount so prepaid, repaid or purchased.

Pending the final application of any Net Cash Proceeds, the Issuer or the RestrictedSubsidiary that consummated the applicable Asset Sale may temporarily reduce revolvingcredit or other short-term borrowings or otherwise apply such Net Cash Proceeds in amanner that does not violate the Trust Deed.

Any Net Cash Proceeds from Asset Sales that are not applied or invested as provided in thesecond paragraph of this Condition 3(h) will constitute “Excess Proceeds”. Within 60 daysafter the date that the aggregate amount of Excess Proceeds exceeds US$50.0 million (or

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the Dollar Equivalent thereof), the Issuer will make an Offer to Purchase to all holders ofNotes (an “Asset Sale Offer”) and will redeem or repay (or make an offer to do so) PariPassu Obligations the terms of which require redemption or repayment (or the making ofan offer to do so) with the proceeds of any sales of assets the maximum principal amountof Notes and such Pari Passu Obligations that may be purchased, redeemed and repaid outof the Excess Proceeds as follows:

(i) the Issuer or any of its Subsidiaries will (a) make an Offer to Purchase Notes to allholders of Notes in accordance with the procedures set forth in the Trust Deed and (b)redeem or repay (or make an offer to do so) Pari Passu Obligations (and permanentlyreduce the related loan commitment (if any)) in an amount equal to the principalamount so redeemed or repaid, pro rata in proportion to the respective principalamounts of the Notes and Pari Passu Obligations required to be redeemed or repaid,the maximum principal amount of Notes and Pari Passu Obligations that may berepurchased, repaid and redeemed out of the Excess Proceeds;

(ii) the offer price for the Notes will be equal to 100.0 per cent. of the principal amountthereof plus accrued and unpaid interest and Additional Amounts, to the date ofrepurchase and will be payable in cash and the redemption or repayment price for thePari Passu Obligations will be equal to 100.0 per cent. of the principal amount oraccreted value, as applicable, thereof plus accrued and unpaid interest to the date ofredemption or repayment;

(iii) if the aggregate amount offered to holders of the Notes validly tendered and notwithdrawn by holders thereof exceeds the pro rata portion of the aggregate amount ofExcess Proceeds available to be paid to holders of the Notes, Notes to be purchasedwill be selected on a pro rata basis (provided that the minimum denomination of Notesis maintained); and

(iv) if any Excess Proceeds remain after consummation of the applicable offer to purchaseNotes and redemption or repayment of applicable Pari Passu Obligations, the amountof Excess Proceeds will be reset at zero and such remaining Excess Proceeds may beused for any purpose not otherwise prohibited by the Trust Deed.

The Issuer will comply with the requirements of securities laws and regulations to theextent those laws and regulations are applicable in connection with each repurchase ofNotes pursuant to an Asset Sale Offer. To the extent that the provisions of any securitieslaws or regulations (including, for the avoidance of doubt, any necessary approvals orrequirements from the RBI) conflict with the Asset Sale provisions of the Trust Deed, theIssuer will comply with the applicable securities laws and regulations and will not bedeemed to have breached its obligations under the Asset Sale provisions of the Trust Deedby virtue of such compliance.

(i) Limitation on Business Activities: The Issuer will not, and will not permit any of itsRestricted Subsidiaries to, engage in any business other than a Permitted Business.

(j) Use of Proceeds: The Issuer will not, and will not permit any Restricted Subsidiary to, usethe net proceeds from the sale of the Notes, in any amount, for any purpose other than (i)in the amounts and for the purposes specified under the caption “Use of Proceeds” in theOffering Circular and (ii) pending the application of all of such net proceeds in suchmanner, to invest the portion of such net proceeds not yet so applied in cash or TemporaryCash Investments, in accordance with any requirements set by the RBI, and as permittedunder the ECB Guidelines and in compliance with applicable laws and regulations.

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(k) Designation of Restricted and Unrestricted Subsidiaries: The Board of Directors maydesignate any Restricted Subsidiary to be an Unrestricted Subsidiary; provided that (i) noDefault shall have occurred and be continuing at the time of or after giving effect to suchdesignation; (ii) neither the Issuer nor any Restricted Subsidiary guarantees or otherwiseprovides credit support for the Indebtedness of such Restricted Subsidiary (except to theextent permitted under Condition 3(a) (Limitation on Incurrence of Indebtedness andIssuance of Preferred Stock)); (iii) such Restricted Subsidiary does not own anyDisqualified Stock of the Issuer or Disqualified Stock or Preferred Stock of anotherRestricted Subsidiary or hold any Indebtedness, or any Lien on any property, of the Issueror any Restricted Subsidiary, if such Disqualified Stock or Preferred Stock or Indebtednesscould not be incurred under Condition 3(a) (Limitation on Incurrence of Indebtedness andIssuance of Preferred Stock) or such Lien would violate the covenant described inCondition 3(f) (Limitation on Liens); (iv) such Restricted Subsidiary does not own anyVoting Stock of another Restricted Subsidiary, and all of its Subsidiaries are UnrestrictedSubsidiaries or are being concurrently designated as Unrestricted Subsidiaries inaccordance with this paragraph; and (v) the Investment deemed to have been made therebyin such newly designated Unrestricted Subsidiary and each other newly designatedUnrestricted Subsidiary being concurrently redesignated would be permitted to be madeunder Condition 3(b) (Limitation on Restricted Payments).

The Board of Directors may designate any Unrestricted Subsidiary to be a RestrictedSubsidiary; provided that (i) no Default shall occur after giving effect to such designation;(ii) any Indebtedness of such Unrestricted Subsidiary outstanding at the time of suchdesignation which will be deemed to have been incurred by such newly designatedRestricted Subsidiary as a result of such designation would be permitted to be incurredunder Condition 3(a) (Limitation on Incurrence of Indebtedness and Issuance of PreferredStock); (iii) any Lien on the property of such Unrestricted Subsidiary at the time of suchdesignation which will be deemed to have been incurred by such newly designatedRestricted Subsidiary as a result of such designation would be permitted to be Incurredunder Condition 3(f) (Limitation on Liens); and (iv) such Unrestricted Subsidiary is not aSubsidiary of another Unrestricted Subsidiary (that is not concurrently being designated asa Restricted Subsidiary).

On the Issue Date, all of the Issuer’s Subsidiaries will be Restricted Subsidiaries, other thanGlobal Cloud Xchange Limited and its Subsidiaries, which, as of the Issue Date, have beendesignated by the Board of Directors as Unrestricted Subsidiaries.

(l) Post-Closing Collateral Requirement: To the extent that any of the Collateral Documentsrequired in connection with the creation, perfection and registration of the First Prioritysecurity interests in the Fixed Asset Collateral and the Share Collateral have not beenexecuted and delivered on or prior to the Issue Date, or the Issuer has not procured theregistration of such security interests on or prior to the Issue Date (in each case, to theextent required by the Trust Deed and the Collateral Documents), the Issuer shall ensurethat all such actions are completed as soon as reasonably practicable, and in no event laterthan 60 days following the Issue Date. To the extent that any of the Collateral Documentsrequired in connection with the creation, perfection and registration of the First Prioritysecurity interests in the Licences have not been executed and delivered on or prior to theIssue Date, or the Issuer has not procured the registration of such security interests on orprior to the Issue Date (in each case, to the extent required by the Trust Deed and theCollateral Documents), the Issuer shall on a best efforts basis ensure that all such actionsare completed as soon as practicable and shall ensure that the requisite application(s) aremade for all regulatory approvals necessary to create such security interests in the Licenceswithin 180 days of the Issue Date (to the extent required by the Trust Deed and theCollateral Documents) and, without prejudice to the foregoing, shall ensure that all suchactions are completed no later than 60 days following the receipt of all regulatory approvalsnecessary to create such security interests in the Licences (to the extent required by theTrust Deed and the Collateral Documents).

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(m) Government Approvals and Licences; Compliance with Law: The Issuer will, and will causeeach Restricted Subsidiary to, (i) obtain and maintain in full force and effect all materialgovernmental approvals, authorisations, consents, permits, concessions and licences as arenecessary to engage in the Permitted Business, as it is conducted from time to time, (ii)preserve and maintain good and valid title to its properties and assets free and clear of anyLiens other than Permitted Liens and (iii) comply with all laws, regulations, orders,judgments and decrees of any governmental body, except to the extent that failure so toobtain, maintain, preserve and comply would not reasonably be expected to have a materialadverse effect on (a) the business, results of operations or prospects of the Issuer and itsRestricted Subsidiaries, taken as a whole, or (b) the ability of the Issuer to perform itsobligations under the Notes or the Trust Deed.

(n) Anti-Layering: The Issuer will not incur any Indebtedness if such Indebtedness iscontractually subordinated in right of payment to any other Indebtedness of the Issuer,unless such Indebtedness is also contractually subordinated in right of payment to the Noteson substantially identical terms. This does not apply to distinctions between categories ofIndebtedness that exist by reason of any Liens or guarantees securing or in favour of somebut not all of such Indebtedness, provided, however, that no Indebtedness will be deemedto be contractually subordinated in right of payment to any other Indebtedness of the Issuersolely by virtue of being unsecured or by virtue of being secured on a first or junior lienbasis.

(o) Merger, Amalgamation, Consolidation or Sale of Assets: The Issuer will not, directly orindirectly: (1) merge, amalgamate or consolidate with or into another Person (whether ornot the Issuer is the surviving entity) or (2) sell, assign, transfer, convey or otherwisedispose of all or substantially all of the properties or assets of the Issuer and its RestrictedSubsidiaries taken as a whole, in one or more related transactions, to another Person,unless:

(i) either: (a) the Issuer is the surviving entity or (b) the Person formed by or survivingany such merger, amalgamation or consolidation (if other than the Issuer) or to whichsuch sale, assignment, transfer, conveyance or other disposition has been made is acorporation or company organised or existing under the laws of another QualifiedJurisdiction;

(ii) the security interests in the Collateral granted to the Collateral Agents under theCollateral Documents shall remain in full force and effect and perfected to at least thesame extent as in effect immediately prior to such merger, amalgamation orconsolidation or such disposition;

(iii) the Person formed by or surviving any such merger, amalgamation or consolidation (ifother than the Issuer) or the Person to which such sale, assignment, transfer,conveyance or other disposition has been made assumes in writing (i) all theobligations of the Issuer under the Notes and the Trust Deed pursuant to agreementssatisfactory to the Trustee and (ii) all of the obligations of the Issuer under theCollateral Documents pursuant to agreements or instruments satisfactory to theTrustee and the Collateral Agent (and shall cause such instruments to be filed andrecorded in such jurisdictions and take such other actions as may otherwise berequired to comply with the requirements of immediately preceding clause (ii));

(iv) except in the case of a merger of a Restricted Subsidiary into the Issuer, immediatelyafter giving effect to such transaction, no Default or Event of Default would exist; and

(v) except in the case of a merger of a Restricted Subsidiary into the Issuer, the Issuer orthe Person formed by or surviving any such merger, amalgamation or consolidation (ifother than the Issuer), or to which such sale, assignment, transfer, conveyance or otherdisposition has been made would, on the date of such transaction after giving proforma effect thereto and any related financing transactions as if the same had occurredat the beginning of the applicable four-quarter period, either (1) be permitted to incur

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at least US$1.00 of additional Indebtedness pursuant to the Fixed Charge CoverageRatio Test or (2) the Fixed Charge Coverage Ratio would be no less than the FixedCharge Coverage Ratio of the Issuer immediately prior to the incurrence of suchIndebtedness;

In addition, the Issuer will not, directly or indirectly, lease all or substantially all of theproperties and assets of it and its Restricted Subsidiaries, taken as a whole, in one or morerelated transactions, to any other Person.

In addition, the Issuer may merge or amalgamate with an Affiliate solely for the purposeof reincorporating the Issuer in any Qualified Jurisdiction without complying with clauses(iv) and (v) of the first paragraph of this Condition 3(o).

A successor Person (i) formed by any consolidation or amalgamation with or into, (ii) withwhich the Issuer is merged or (iii) to which a sale, assignment, transfer, lease, conveyanceor other disposition governed by this Condition 3(o) is made shall, in each case, succeedto and be substituted for the Issuer (and the provisions of the Trust Deed referring to theIssuer shall refer instead to the successor Person).

(p) Suspension of Certain Conditions when Notes Rated Investment Grade: If on any datefollowing the Issue Date:

(i) the Notes have achieved Investment Grade Status; and

(ii) no Default or Event of Default shall have occurred and be continuing on such date,

then, beginning on that day and continuing until such time, if any, at which the Notes ceaseto have Investment Grade Status (such period, the “Suspension Period”), the Conditionsspecifically listed under the following captions in this Offering Circular will no longer beapplicable to the Notes and any related default provisions of the Trust Deed will cease tobe effective and will not be applicable to the Issuer and the Restricted Subsidiaries:

(a) Condition 3(a) (Limitation on Incurrence of Indebtedness and Issuance of PreferredStock);

(b) Condition 3(b) (Limitation on Restricted Payments);

(c) Condition 3(c) (Limitation on Dividend and Other Payment Restrictions AffectingRestricted Subsidiaries);

(d) Condition 3(d) (Limitation on Sales and Issuances of Capital Stock in RestrictedSubsidiaries);

(e) Condition 3(g) (Limitation on Sale and Leaseback Transactions);

(f) Condition 3(h) (Limitation on Asset Sales); and

(g) Condition 3(i) (Limitation on Business Activities).

Such Conditions will not, however, be of any effect with regard to the actions of the Issuerand the Restricted Subsidiaries properly taken during the continuance of the SuspensionPeriod; provided that (1) with respect to the Restricted Payments made after any suchreinstatement, the amount of Restricted Payments will be calculated as though Condition3(b) (Limitation on Restricted Payments) had been in effect prior to, but not during, theSuspension Period and (2) all Indebtedness incurred, or Disqualified Stock or PreferredStock issued, during the Suspension Period will be classified to have been incurred orissued pursuant to clause 3(a)(i) of Condition 3(a) (Limitation on Incurrence ofIndebtedness and Issuance of Preferred Stock). Upon the occurrence of a SuspensionPeriod, the amount of Excess Proceeds shall be reset at zero.

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4. Interest

The Notes bear interest from May 6, 2015 (the “Issue Date”) at the rate of 6.5 per cent. perannum (the “Rate of Interest”), payable semi-annually in arrear on May 6 and November 6 ineach year (each, an “Interest Payment Date”), subject as provided in Condition 6 (Payments).

Each Note will cease to bear interest from the due date for redemption unless, upon duepresentation, payment of principal is improperly withheld or refused, in which case it willcontinue to bear interest at such rate (both before and after judgment) until whichever is theearlier of (a) the day on which all sums due in respect of such Note up to that day are receivedby or on behalf of the relevant Noteholder and (b) the day which is seven days after the PrincipalPaying Agent or the Trustee has notified the Noteholders that it has received all sums due inrespect of the Notes up to such seventh day (except to the extent that there is any subsequentdefault in payment).

The amount of interest payable on each Interest Payment Date shall be US$32.5 in respect ofUS$1,000 in principal amount of the Notes. When interest is to be calculated in respect of aperiod of less than six months, the day-count fraction used will be the number of days in therelevant period, from (and including) the date from which interest begins to accrue to (butexcluding) the date on which it falls due, divided by 360.

5. Redemption and Purchase

(a) Scheduled Redemption: Unless previously redeemed, or purchased and cancelled, the Noteswill be redeemed at their principal amount on November 6, 2020, subject as provided inCondition 6 (Payments).

(b) Optional Redemption: At any time and from time to time, the Issuer may redeem up to 35.0per cent. of the aggregate principal amount of the Notes with the net cash proceeds of oneor more sales of common stock of the Issuer in an Equity Offering at a redemption priceof 106.5 per cent. of the principal amount of the Notes redeemed, plus accrued and unpaidinterest, if any, to, but not including, the applicable redemption date; provided that at least65.0 per cent. of the aggregate principal amount of the Notes originally issued on the IssueDate (excluding Notes held by the Issuer and its Subsidiaries) remain outstanding after eachsuch redemption and any such redemption takes place within 60 days after the closing ofthe related Equity Offering.

In addition, the Issuer may on any one or more occasions redeem all or a part of the Notes,upon not less than 30 nor more than 60 days’ prior notice, at a redemption price equal to100.0 per cent. of the principal amount of the Notes to be redeemed plus the ApplicablePremium as of, and accrued and unpaid interest if any, to the redemption date. The noticeof redemption with respect to the redemption described in this paragraph need not set forththe redemption price, but shall set forth the manner of calculation thereof. The Issuer willnotify the Trustee of the redemption price with respect to any redemption described in thisparagraph promptly after the calculation and the Trustee shall not be responsible for suchcalculation or the verification of such calculation.

(c) Redemption for tax reasons: The Notes may be redeemed at the option of the Issuer inwhole, but not in part, at any time, on giving not less than 30 nor more than 60 days’ noticeto the Noteholders (which notice shall be irrevocable) at their principal amount, togetherwith interest accrued to the date fixed for redemption, if, immediately before giving suchnotice:

(i) the Issuer has or will become obliged to pay Additional Amounts as provided orreferred to in Condition 7 (Taxation) as a result of any change in, or amendment to,the laws, regulations or rulings of India or any political subdivision or any authoritythereof or therein having power to tax, or any change in the application or officialinterpretation of such laws, regulations or rulings (including a holding, judgment or

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order by a court of competent jurisdiction or a change in published practice), whichchange or amendment becomes effective on or after May 6, 2015 in excess of theAdditional Amounts it would be required to pay in absence of such change oramendment; and

(ii) such obligation cannot be avoided by the Issuer taking reasonable measures availableto it;

provided, however, that no such notice of redemption shall be given earlier than 90 daysprior to the earliest date on which the Issuer would be obliged to pay such additionalamounts if a payment in respect of the Notes were then due.

Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuershall deliver to the Trustee:

(i) an Officers’ Certificate stating that the Issuer is entitled to effect such redemption andsetting forth a statement of facts showing that the conditions precedent to the right ofthe Issuer so to redeem have occurred; and

(ii) an opinion in form and substance satisfactory to the Trustee of independent legaladvisers of recognised standing to the effect that the Issuer has or will become obligedto pay such additional amounts as a result of such change or amendment.

The Trustee shall be entitled to accept such certificate and opinion as sufficient evidenceof the satisfaction of the circumstances set out in (i) and (ii) above, in which event it shallbe conclusive and binding on the Noteholders.

Upon the expiry of any such notice as is referred to in this Condition 5(c) the Issuer shallbe bound to redeem the Notes in accordance with this Condition 5(c).

(d) Purchase at the option of the Noteholders upon a Change of Control: Not later than 30 daysfollowing the occurrence of a Change of Control, the Issuer shall make an Offer to Purchaseto all holders of Notes at a purchase price equal to 101.0 per cent. of the principal amountthereof plus accrued and unpaid interest, if any, to (but not including) the Offer to PurchasePayment Date.

Notwithstanding the above, the Issuer will not be required to make an Offer to Purchasefollowing a Change of Control if a third party makes the Offer to Purchase in the samemanner, at the same times and otherwise in compliance with the requirements set forth inthe Trust Deed applicable to an Offer to Purchase made by the Issuer and purchases allNotes validly tendered and not withdrawn under such Offer to Purchase.

The Issuer will comply with the requirements of securities laws and regulations to theextent those laws and regulations are applicable in connection with each repurchase ofNotes pursuant to an Offer to Purchase following a Change of Control. To the extent thatthe provisions of any securities laws or regulations (including, for the avoidance of doubt,any necessary approvals or requirements from the RBI) conflict with the Change of Controlprovisions of the Trust Deed, the Issuer will comply with the applicable securities laws andregulations and will not be deemed to have breached its obligations under the Change ofControl provisions of the Trust Deed by virtue of such compliance.

Except as described above with respect to a Change of Control, the Trust Deed does notcontain provisions that permit the Noteholders to require that the Issuer purchase orredeem the Notes in the event of a takeover, recapitalisation or similar transaction.

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(e) No other redemption: The Issuer shall not be entitled to redeem the Notes otherwise thanas provided in paragraphs (a) (Scheduled redemption) to (d) (Purchase at the option of theNoteholders upon a Change of Control) above and in Condition 3(h) (Limitation on AssetSales). The Issuer will be required to obtain the prior approval of the RBI under the ECBGuidelines before effecting any redemption prior to the stated maturity of the Notes.

(f) Purchase: The Issuer or any of its Subsidiaries may at any time purchase Notes in the openmarket or otherwise and at any price. The Notes so purchased, while held by or on behalfof the Issuer or any such Subsidiary, shall not entitle the Holder to vote at any meetings ofthe Holders of the Notes and shall not be deemed to be outstanding for the purposes ofcalculating quorums at meetings of the Holders of the Notes or for the purposes ofCondition 12(a) (Meetings of Noteholders; Modification and Waiver; Substitution).

(g) Cancellation: All Notes so redeemed or purchased by the Issuer or any of its Subsidiariesshall be cancelled and may not be reissued or resold.

6. Payments

(a) Principal: Payments of principal shall be made by U.S. dollar cheque drawn on, or, uponapplication by a Holder of a Note to the Specified Office of the Principal Paying Agent notlater than the fifteenth day before the due date for any such payment by transfer to a U.S.dollar account maintained by the payee with, a bank in New York City and (in the case ofredemption) upon surrender (or, in the case of part payment only, endorsement) of therelevant Note Certificates at the Specified Office of any Paying Agent. Any payments madeby the Issuer will be within the all-in-cost ceilings prescribed under the ECB Guidelines.

(b) Interest: Subject to the applicable Indian laws and regulations, including the ECBGuidelines, payments of interest shall be made by transfer to the registered account of aHolder of a Note or by U.S. dollar cheque drawn on, or upon application by a Holder of aNote to the Specified Office of the Principal Paying Agent not later than the fifteenth daybefore the due date for any such payment, by transfer to a U.S. dollar account maintainedby the payee with, a bank in New York City and (in the case of interest payable onredemption) upon surrender (or, in the case of part payment only, endorsement) of therelevant Note Certificates at the Specified Office of any Paying Agent.

(c) Payments subject to fiscal laws: Payments will be subject in all cases to (i) any fiscal orother laws and regulations applicable thereto in the place of payment, but without prejudiceto the provisions of Condition 7 (Taxation) and (ii) any withholding or deduction requiredpursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Codeof 1986 (the “Code”) or otherwise imposed pursuant to Sections 1471 through 1474 of theCode, any regulations or agreements thereunder, any official interpretations thereof, or(without prejudice to the provisions of Condition 7 (Taxation)) any law implementing anintergovernmental approach thereto.

(d) Payments on business days: Where payment is to be made by transfer to a U.S. dollaraccount, payment instructions (for value the due date, or, if the due date is not a BusinessDay, for value the next succeeding Business Day) will be initiated and, where payment isto be made by U.S. dollar cheque, the cheque will be mailed (i) (in the case of paymentsof principal and interest payable on redemption) on the later of the due date for paymentand the day on which the relevant Note Certificate is surrendered (or, in the case of partpayment only, endorsed) at the Specified Office of a Paying Agent and (ii) (in the case ofpayments of interest payable other than on redemption) on the due date for payment. AHolder of a Note shall not be entitled to any interest or other payment in respect of anydelay in payment resulting from (A) the due date for a payment not being a Business Dayor (B) a cheque mailed in accordance with this Condition 6 arriving after the due date forpayment or being lost in the mail.

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(e) Partial payments: If a Paying Agent makes a partial payment in respect of any Note, theIssuer shall procure that the amount and date of such payment are noted on the Register and,in the case of partial payment upon presentation of a Note Certificate, that a statementindicating the amount and the date of such payment is endorsed on the relevant NoteCertificate.

(f) Record date: Each payment in respect of a Note will be made to the person shown as theHolder in the Register at the opening of business in the place of the Registrar’s SpecifiedOffice on the fifteenth day before the due date for such payment (the “Record Date”),regardless of whether a Business Day. Where payment in respect of a Note is to be madeby cheque, the cheque will be mailed to the address shown as the address of the Holder inthe Register at the opening of business on the relevant Record Date.

7. Taxation

All payments of principal and interest in respect of the Notes by or on behalf of the Issuer shallbe made free and clear of, and without withholding or deduction for or on account of, any presentor future taxes, duties, assessments or governmental charges of whatever nature imposed, levied,collected, withheld or assessed, unless the withholding or deduction of such taxes, duties,assessments or governmental charges is required by law. If any such deduction or withholdingis imposed by India or any political subdivision thereof or any authority therein or thereof havingpower to tax, the Issuer shall pay such additional amounts (the “Additional Amounts”) as willresult in receipt by the Noteholders after such withholding or deduction of such amounts aswould have been received by them had no such withholding or deduction been required, exceptthat no such additional amounts shall be payable in respect of any Note:

(a) held by a Holder which is liable to such taxes, duties, assessments or governmental chargesin respect of such Note by reason of its having some connection with India or other politicalsubdivision thereof thereof other than the mere holding of the Note; or

(b) where such withholding or deduction is imposed on a payment to an individual and isrequired to be made pursuant to European Council Directive 2003/48/EC on the taxation ofsavings income or any law implementing or complying with, or introduced in order toconform to, this Directive; or

(c) held by a Holder who would have been able to avoid such withholding or deduction byarranging to receive the relevant payment through another Paying Agent; or

(d) where (in the case of a payment of principal or interest on redemption) the relevant NoteCertificate is surrendered for payment more than 30 days after the Relevant Date except tothe extent that the relevant Holder would have been entitled to such additional amounts ifit had surrendered the relevant Note Certificate on the last day of such period of 30 days;or

(e) to the extent such taxes were imposed or withheld as a result of the failure of the Holderof the Notes to comply with any reasonable written request, timely made to the relevantHolder in writing before any such withholding or deduction would be payable, by the Issuerto provide information concerning the nationality, residence or identity of such Holder orto make any valid declaration or similar claim or satisfy any certification, information orother reporting requirement applicable to such Holder (to the extent, in each case, suchHolder is legally eligible to do so), which is required or imposed by a statute, treaty,regulation or administrative practice of India or any political subdivision thereof as aprecondition to exemption from all or part of such taxes; or

(f) any estate, inheritance, gift, sale, transfer, personal property or similar tax or assessment;or

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(g) any combination of paragraphs (a) through (f) of this Condition 7 above.

In these Conditions, “Relevant Date” means whichever is the later of (1) the date on which thepayment in question first becomes due and (2) if the full amount payable has not been receivedin a city in which banks have access to the TARGET System by the Principal Paying Agent orthe Trustee on or prior to such due date, the date on which (the full amount having been soreceived) notice to that effect has been given to the Noteholders.

Any reference in these Conditions to principal or interest shall be deemed to include anyadditional amounts in respect of principal or interest (as the case may be) which may be payableunder this Condition 7 or any undertaking given in addition to or in substitution of this Condition7 pursuant to the Trust Deed.

If at any time taxes are imposed by any jurisdiction other than India in which the Issuer is thenorganized or incorporated, engaged in business or otherwise resident for tax purposes, or by anyjurisdiction other than India by or through which payment is made by or on behalf of the Issuer(each, a “Tax Jurisdiction”), solely with respect to such taxes, references in these Conditionsto India shall be construed instead as references to such Tax Jurisdiction.

8. Events of Default

If any of the following events (each, an “Event of Default”) occurs, then the Trustee at itsdiscretion may and, if so requested in writing by Holders of at least one quarter of the aggregateprincipal amount of the outstanding Notes or if so directed by an Extraordinary Resolution (asdefined in the Trust Deed), shall (subject to the Trustee having been indemnified, prefunded orprovided with security to its satisfaction) give written notice to the Issuer declaring the Notesto be immediately due and payable, whereupon they shall become immediately due and payableat their principal amount together with accrued interest without further action or formality, savethat any redemption pursuant to this Condition 8 occurring prior to the stated maturity of theNotes will be subject to the approval of the RBI:

(a) Non-payment: the Issuer (i) fails to pay any amount of principal in respect of the Notes onthe due date for payment thereof, or (ii) fails to pay any amount of interest in respect ofthe Notes within seven days of the due date for payment of such interest thereof; or

(b) Breach of other obligations: the Issuer defaults in the performance or observance of any ofits other obligations under or in respect of the Notes or the Trust Deed and such default (i)is, in the opinion of the Trustee, incapable of remedy or (ii) remains unremedied for 30consecutive days after the Trustee has given written notice thereof to the Issuer; or

(c) Default of the Issuer or any Restricted Subsidiary: there occurs with respect to anyIndebtedness of the Issuer or any Restricted Subsidiary having an outstanding principalamount of US$10.0 million (or the Dollar Equivalent thereof) or more in the aggregate,whether such Indebtedness now exists or shall hereafter be created, (i) an event of defaultthat has caused the holder thereof to declare such Indebtedness to be due and payable priorto its Stated Maturity and/or (ii) a failure to pay principal of when the same becomes due(after giving effect to any originally applicable grace periods); or

(d) Unsatisfied Judgment: one or more final judgments or orders for the payment of money arerendered against the Issuer or any Restricted Subsidiary and are not paid or discharged, andthere is a period of 60 consecutive days following entry of the final judgment or order thatcauses the aggregate amount of all such final judgments or orders outstanding and not paidor discharged against all such person to exceed US$10.0 million (or the Dollar Equivalentthereof) during which a stay of enforcement, by reason of a pending appeal or otherwise,is not in effect; or

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(e) Security enforced: a secured party takes possession, or a receiver, manager or other similarofficer is appointed, of the whole or a substantial part of the undertaking, assets andrevenues of the Issuer or any of its Significant Subsidiaries or any group of its RestrictedSubsidiaries that, taken together, would constitute a Significant Subsidiary; or

(f) Insolvency, etc.: (i) the Issuer, any of its Significant Subsidiaries or any group of itsRestricted Subsidiaries that, taken together, would constitute a Significant Subsidiarybecomes insolvent or is unable to pay its debts as they fall due, (ii) an administrator orliquidator is appointed (or application for any such appointment is made) in respect of theIssuer, any of its Significant Subsidiaries or any group of its Restricted Subsidiaries that,taken together, would constitute a Significant Subsidiary, or the whole or a substantial partof the undertaking, assets and revenues of the Issuer, any of its Significant Subsidiaries orany group of its Restricted Subsidiaries that, taken together, would constitute a SignificantSubsidiary, (iii) the Issuer, any of its Significant Subsidiaries or any group of its RestrictedSubsidiaries that, taken together, would constitute a Significant Subsidiary takes any actionfor a readjustment or deferment of any of its obligations or makes a general assignment oran arrangement or composition with or for the benefit of its creditors or declares amoratorium in respect of any of its Indebtedness or any Guarantee of any Indebtednessgiven by it or (iv) the Issuer any of its Significant Subsidiaries or any group of itsRestricted Subsidiaries that, taken together, would constitute a Significant Subsidiaryceases or threatens to cease to carry on all or any substantial part of its business; or

(g) Winding up, etc.: an order is made or an effective resolution is passed for the winding up,liquidation or dissolution of the Issuer or any of its Significant Subsidiaries or any groupof its Restricted Subsidiaries that, taken together, would constitute a Restricted Subsidiaryexcept in the case of a Significant Subsidiary, (i) for the purpose of and followed by areconstruction, amalgamation, reorganisation, merger or consolidation which does notbreach any of the Conditions or the Trust Deed, (ii) on terms approved by the Trustee orthe Noteholders by way of Extraordinary Resolution or (iii) where the undertaking (if any)and assets of such Restricted Subsidiary are transferred to or otherwise vested in the Issueror another of its Restricted Subsidiaries before or substantially concurrent with the windingup, liquidation or dissolution of such Restricted Subsidiary; or

(h) Analogous event: any event occurs which under the laws of any Qualified Jurisdiction hasan analogous effect to any of the events referred to in paragraphs (d) (UnsatisfiedJudgment) to (g) (Winding up, etc.) above; or

(i) Failure to take action, etc.: any action, condition or thing at any time required to be taken,fulfilled or done in order to make the Note Certificates and the Trust Deed admissible inevidence in the courts of India is not taken, fulfilled or done; or

(j) Unlawfulness: it is or will become unlawful for the Issuer to perform or comply with anyof its obligations under or in respect of the Notes or the Trust Deed; or

(k) Government intervention: (i) all or any substantial part of the undertaking, assets andrevenues of the Issuer or any of its Significant Subsidiaries or any group of its RestrictedSubsidiaries that, taken together, would constitute a Significant Subsidiary is condemned,seized or otherwise appropriated by any person acting under the authority of any national,regional or local government or (ii) the Issuer or any of its Significant Subsidiaries or anygroup of its Restricted Subsidiaries that, taken together, would constitute a SignificantSubsidiary is prevented by any such person from exercising normal control over all or anysubstantial part of its undertaking, assets and revenues; or

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(l) Failure of any Collateral Document to provide security: except as expressly permitted bythe applicable Collateral Documents and the Trust Deed, any Collateral Document at anytime for any reason shall cease to be in full force and effect in all material respects, or shallcease to give the Collateral Agents a First Priority Lien (to the extent required by the TrustDeed and the Collateral Documents) in any Collateral or the rights, powers, privileges andpriority purported to be created thereby, subject to no other Liens (other than PermittedLiens), in any such case other than with respect to an immaterial portion of the Collateral,and such failure continues unremedied for 30 consecutive days after the earlier of (i) theIssuer obtaining knowledge thereof or (ii) the Trustee giving written notice thereof to theIssuer; or

(m) Contestation of the effectiveness, validity, binding nature or enforceability of any the TrustDeed or Collateral Document or misrepresentation: (i) the Issuer or any of its RestrictedSubsidiaries, directly or indirectly, contests the effectiveness, validity, binding nature orenforceability of the Trust Deed or any Collateral Document or (ii) any representation orwarranty made by the Issuer or any of its Restricted Subsidiaries in any CollateralDocument fails to be true in all material respects and such failure continues unremedied for30 consecutive days after the Trustee has given written notice thereof to the Issuer.

9. Prescription

Claims for principal and interest on redemption shall become void unless the relevant NoteCertificates are surrendered for payment within ten years of the appropriate Relevant Date.

10. Replacement of Note Certificates

If any Note Certificate is lost, stolen, mutilated, defaced or destroyed, it may be replaced at theSpecified Office of the Registrar and the Transfer Agent, subject to all applicable laws and stockexchange requirements, upon payment by the claimant of the expenses incurred in connectionwith such replacement and on such terms as to evidence, security, indemnity and otherwise as theIssuer may reasonably require. Mutilated or defaced Note Certificates must be surrenderedbefore replacements will be issued.

11. Trustee and Agents

Under the Trust Deed, the Trustee is entitled to be indemnified and relieved from responsibilityin certain circumstances and to be paid its fees, costs and expenses in priority to the claims ofthe Noteholders. In addition, the Trustee is entitled to enter into business transactions with theIssuer and any entity relating to the Issuer without accounting for any profit.

In the exercise of its powers and discretions under these Conditions and the Trust Deed, theTrustee will have regard to the interests of the Noteholders as a class and will not be responsiblefor any consequence for individual Holders of Notes as a result of such Holders being connectedin any way with a particular territory or taxing jurisdiction.

In acting under the Agency Agreement and in connection with the Notes, the Agents act solelyas agents of the Issuer and (to the extent provided therein) the Trustee and do not assume anyobligations towards or relationship of agency or trust for or with any of the Noteholders.

The initial Agents and their initial Specified Offices are listed below. The Issuer reserves theright (with the prior approval of the Trustee) at any time to vary or terminate the appointmentof any Agent and to appoint a successor registrar or principal paying agent and additional orsuccessor paying agents and transfer agents; provided, however, that the Issuer shall at all timesmaintain (a) a principal paying agent and a registrar, and (b) a paying agent in a European Unionmember state that will not be obliged to withhold or deduct tax pursuant to any law implementingEuropean Council Directive 2003/48/EC.

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Notice of any change in any of the Agents or in their Specified Offices shall promptly be givento the Noteholders.

12. Meetings of Noteholders; Modification and Waiver; Substitution

(a) Meetings of Noteholders: The Trust Deed contains provisions for convening meetings ofNoteholders to consider matters relating to the Notes, including the modification of anyprovision of these Conditions or the Trust Deed. Any such modification may be made ifsanctioned by an Extraordinary Resolution. Such a meeting may be convened by the Issueror by the Trustee and shall be convened by the Trustee upon the request in writing ofNoteholders holding not less than one-tenth of the aggregate principal amount of theoutstanding Notes. The quorum at any meeting convened to vote on an ExtraordinaryResolution will be two or more persons holding or representing one more than half of theaggregate principal amount of the outstanding Notes or, at any adjourned meeting, two ormore persons being or representing Noteholders whatever the principal amount of the Notesheld or represented; provided, however, that certain proposals (including any proposal tochange any date fixed for payment of principal or interest in respect of the Notes, to reducethe amount of principal or interest payable on any date in respect of the Notes, to alter themethod of calculating the amount of any payment in respect of the Notes or the date for anysuch payment, to change the currency of payments under the Notes or to change the quorumrequirements relating to meetings or the majority required to pass an ExtraordinaryResolution (each, a “Reserved Matter”)) may only be sanctioned by an ExtraordinaryResolution passed at a meeting of Noteholders at which two or more persons holding orrepresenting not less than three-quarters or, at any adjourned meeting, one quarter of theaggregate principal amount of the outstanding Notes form a quorum. Any ExtraordinaryResolution duly passed at any such meeting shall be binding on all the Noteholders, whetherpresent or not.

In addition, a resolution in writing signed by or on behalf of all Noteholders who for thetime being are entitled to receive notice of a meeting of Noteholders under the Trust Deedwill take effect as if it were an Extraordinary Resolution. Such a resolution in writing maybe contained in one document or several documents in the same form, each signed by or onbehalf of one or more Noteholders.

(b) Modification and waiver: The Trustee may, without the consent of the Noteholders, agreeto any modification of these Conditions or the Trust Deed (other than in respect of aReserved Matter) which is, in the opinion of the Trustee, proper to make if, in the opinionof the Trustee, such modification will not be materially prejudicial to the interests ofNoteholders and to any modification of the Notes or the Trust Deed which is of a formal,minor or technical nature or is to correct a manifest error. In addition, the Trustee may,without the consent of the Noteholders, authorise or waive any proposed breach or breachof the Notes or the Trust Deed (other than a proposed breach or breach relating to thesubject of a Reserved Matter) if, in the opinion of the Trustee, the interests of theNoteholders will not be materially prejudiced thereby.

Unless the Trustee agrees otherwise, any such authorisation, waiver or modification shallbe notified to the Noteholders as soon as practicable thereafter.

(c) Substitution: The Trust Deed contains provisions under which a successor in business of theIssuer or any other company may, without the consent of the Noteholders, assume theobligations of the Issuer as principal debtor under the Trust Deed and the Notes providedthat certain conditions specified in the Trust Deed are fulfilled.

No Noteholder shall, in connection with any substitution, be entitled to claim anyindemnification or payment in respect of any tax consequence thereof for such Noteholder exceptto the extent provided for in Condition 7 (Taxation) (or any undertaking given in addition to orsubstitution for it pursuant to the provisions of the Trust Deed).

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13. Enforcement

The Trustee may at any time, at its discretion and without notice, institute such actions, steps orproceedings as it thinks fit to enforce its rights under the Trust Deed in respect of the Notes, butit shall not be bound to do so unless:

(a) it has been so requested in writing by the Holders of at least one quarter of the aggregateprincipal amount of the outstanding Notes or has been so directed by an ExtraordinaryResolution; and

(b) it has been indemnified, prefunded or provided with security to its satisfaction.

No Noteholder may proceed directly against the Issuer unless the Trustee, having become boundto do so, fails to do so within a reasonable time and such failure is continuing.

14. Further Issues

The Issuer may from time to time, without the consent of the Noteholders and in accordance withthe Trust Deed, create and issue further notes having the same terms and conditions as the Notesin all respects (or in all respects except for the first payment of interest and the Issue Price) soas to form a single series with the Notes.

15. Notices

Notices to the Noteholders will be sent to them by first class mail (or its equivalent) or (if postedto an overseas address) by airmail at their respective addresses on the Register. Any such noticeshall be deemed to have been given on the fourth day after the date of mailing. In addition, solong as Notes are listed on the SGX-ST and the rules of the SGX-ST so require, notices toNoteholders will be published on the date of such mailing in a daily newspaper of generalcirculation in Singapore (which is expected to be The Business Times).

So long as the Notes are represented by the Global Certificate and the Global Certificate is heldon behalf of Euroclear or Clearstream or the Alternative Clearing System (as defined in the formof the Global Certificate), notices to Noteholders shall be given by delivery of the relevant noticeto Euroclear or Clearstream or the Alternative Clearing System, for communication by it toentitled accountholders in substitution for notification as required by the Conditions.

16. Governing Law and Jurisdiction

(a) Governing law: The Notes and the Trust Deed and any non-contractual obligations arisingout of or in connection with the Notes and the Trust Deed are governed by English law.

(b) Jurisdiction: The Issuer has in the Trust Deed (i) agreed for the benefit of the Trustee andthe Noteholders that the courts of England shall have exclusive jurisdiction to settle anydispute (a “Dispute”) arising out of or in connection with the Notes (including anynon-contractual obligation arising out of or in connection with the Notes); (ii) agreed thatthose courts are the most appropriate and convenient courts to settle any Dispute and,accordingly, that it will not argue that any other courts are more appropriate or convenient;(iii) designated a person in England to accept service of any process on its behalf; (iv)consented to the enforcement of any judgment; and (v) to the extent that it may in anyjurisdiction claim for itself or its assets immunity from suit, execution, attachment (whetherin aid of execution, before judgment or otherwise) or other legal process, and to the extentthat in any such jurisdiction there may be attributed to itself or its assets or revenues suchimmunity (whether or not claimed), agreed not to claim and irrevocably waived suchimmunity to the full extent permitted by the laws of such jurisdiction.

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17. Definitions

As used in these Conditions:

“Acquired Debt” means, with respect to any specified Person:

(i) Indebtedness of any other Person existing at the time such other Person is amalgamatedwith or merged with or into or becomes a Subsidiary of such specified Person, whether ornot such Indebtedness is incurred in connection with, or in contemplation of, such otherPerson merging with or into, or becoming a Subsidiary of, such specified Person; and

(ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controllingor controlled by or under direct or indirect common control with such Person. For purposes ofthis definition, “control,” as used with respect to any Person, means the possession, directly orindirectly, of the power to direct or cause the direction of the management or policies of suchPerson, whether through the ownership of voting securities, by agreement or otherwise. Forpurposes of this definition, the terms “controlling,” “controlled by” and “under common controlwith” have correlative meanings.

“Applicable Premium” means, with respect to a Note at any redemption date, the greater of (i)1.0 per cent. of the principal amount of such Note and (ii) the excess of (a) the present value atsuch redemption date of the redemption price of such Note at November 6, 2020, plus allrequired remaining scheduled interest payments due on such Note (but excluding accrued andunpaid interest to the redemption date) through November 6, 2020, computed using a discountrate equal to the Adjusted Treasury Rate plus 50 basis points, over (b) the principal amount ofsuch Note on such redemption date.

“Asset Sale” means:

(i) the sale, lease, conveyance or other disposition of any assets or rights by the Issuer or anyof its Restricted Subsidiaries; provided that the sale, lease, conveyance or other dispositionof all or substantially all of the assets of the Issuer and its Restricted Subsidiaries taken asa whole will be governed by the provisions of the Trust Deed described in Condition 5(d)(Purchase at the option of Noteholders upon a Change of Control) and/or the provisionsdescribed in Condition 3(o) (Merger, Amalgamation, Consolidation or Sale of Assets) andnot by the provisions of Condition 3(h) (Limitation on Asset Sales); and

(ii) the issuance of Equity Interests by any of the Issuer’s Restricted Subsidiaries or the saleby the Issuer or any of its Restricted Subsidiaries of Equity Interests in any of itsSubsidiaries.

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(i) sales or other dispositions of inventory, trading stock, equipment, receivables and othercurrent assets in the ordinary course of business;

(ii) a transfer of assets between or among the Issuer and its Restricted Subsidiaries not inviolation of the covenant set forth in Condition 3(b) (Limitation on Restricted Payments);

(iii) an issuance of Equity Interests by a Restricted Subsidiary of the Issuer to the Issuer or toa Restricted Subsidiary of the Issuer, or an issuance of Preferred Stock of a RestrictedSubsidiary in compliance with Condition 3(a) (Limitation on Incurrence of Indebtednessand Issuance of Preferred Stock);

(iv) sales of property or equipment that, in the reasonable determination of the Issuer, hasbecome worn out, obsolete or damaged or otherwise unsuitable for use in connection withthe business of the Issuer or any of its Restricted Subsidiaries;

(v) the sale or other disposition of cash, Cash Equivalents or Temporary Cash Investments;

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(vi) a Permitted Investment or a Restricted Payment that does not violate Condition 3(b)(Limitation on Restricted Payments);

(vii) any transfer, assignment or other disposition deemed to occur in connection with creatingor granting any Permitted Lien;

(viii) dispositions of receivables and related assets or interests in connection with thecompromise, settlement or collection thereof in the ordinary course of business or inbankruptcy or similar proceedings and exclusive of factoring or similar arrangements; and

(ix) any transaction or series of related transactions in any fiscal year that involves assetshaving a Fair Market Value of less than US$25.0 million in aggregate (or the DollarEquivalent thereof).

“Attributable Debt” in respect of a Sale and Leaseback Transaction means, at the time ofdetermination, the present value of the obligation of the lessee for net rental payments during theremaining term of the lease included in such Sale and Leaseback Transaction including anyperiod for which such lease has been extended or may, at the option of the lessor, be extended.Such present value shall be calculated using a discount rate equal to the rate of interest implicitin such transaction, determined in accordance with GAAP; provided, however, that if such Saleand Leaseback Transaction results in a Capital Lease Obligation, the amount of Indebtednessrepresented thereby will be determined in accordance with the definition of Capital LeaseObligation.

“Board of Directors” means:

(i) with respect to a company or corporation, the board of directors of the company orcorporation or any committee thereof duly authorised to act on behalf of such board(including, in the case of the Issuer, the board designated by the Issuer’s Board of Directorsas the “RCOM Management Board”);

(ii) with respect to a partnership, the board of directors of the general partner of thepartnership;

(iii) with respect to a limited liability company, the managing member or members or anycontrolling committee of managing members thereof; and

(iv) with respect to any other Person, the board or committee of such Person serving a similarfunction.

“Book Value” means the book value of property or assets, other than cash, as set forth on thebooks and records of the Issuer and its Restricted Subsidiaries and determined in accordance withGAAP.

“Business Day” means, unless otherwise specifically defined, a day (other than a Saturday orSunday) on which commercial banks are open for business in London, Singapore, New York,Mumbai and, in the case of presentation of a Note Certificate, in the place in which the NoteCertificate is presented.

“Capital Lease Obligation” means, at the time any determination is to be made, the amount ofthe liability in respect of a capital lease that would at that time be required to be capitalised ona balance sheet prepared in accordance with GAAP, and the Stated Maturity thereof shall be thedate of the last payment of rent or any other amount due under such lease prior to the first dateupon which such lease may be prepaid by the lessee without payment of a penalty.

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“Capital Stock” means:

(i) in the case of a company or corporation, shares or corporate stock, respectively, whetheroutstanding on the Issue Date or issued thereafter, including, without limitation, allCommon Stock and Preferred Stock;

(ii) in the case of an association or business entity, any and all shares, interests, participations,rights or other equivalents (however designated) of corporate stock;

(iii) in the case of a partnership or limited liability company, partnership interests (whethergeneral or limited) or membership interests; and

(iv) any other interest or participation that confers on a Person the right to receive a share ofthe profits and losses of, or distributions of assets of, the issuing Person,

but excluding from all of the foregoing any debt securities convertible into Capital Stock,whether or not such debt securities include any right of participation with Capital Stock.

“Cash Equivalents” means:

(i) Euros, United States dollars, Rupees or such local currencies held by the Issuer and any ofits Subsidiaries from time to time in the ordinary course of business;

(ii) securities issued or directly and fully guaranteed or insured by the government of India,Canada, the United States, the United Kingdom or Australia or any agency orinstrumentality of such government (provided that the full faith and credit of suchgovernment is pledged in support of those securities) having maturities of not more thanone year from the date of acquisition;

(iii) certificates of deposit, time deposits and eurodollar time deposits with maturities of oneyear or less from the date of acquisition, bankers’ acceptances with maturities notexceeding one year and overnight bank deposits, in each case, with any lender party toCredit Facilities, or with any bank whose debt has a rating, at the time as of which anyinvestment made therein is made of, that is one of the two highest ratings by Moody’s orFitch;

(iv) commercial paper at the time of investment having one of the two highest ratings obtainablefrom Moody’s or Fitch and, in each case, maturing within six months after the date ofacquisition;

(v) securities issued or fully guaranteed by any state or commonwealth of the United States, orby any political subdivision or taxing authority thereof having one of the two highestratings obtainable from Moody’s or Fitch, and, in each case, maturing within one year afterthe date of acquisition; and

(vi) money market funds at least 95.0 per cent. of the assets of which constitute CashEquivalents of the kinds described in paragraphs (i) through (v) of this definition.

“Change of Control” means the occurrence of any transaction or transactions that result in eitherof the following:

(i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of theExchange Act), other than the Permitted Holders, is or becomes the “beneficial owner” (assuch term is used in Rule 13d-3 of the Exchange Act) of more than 50.0 per cent. of the totalvoting power of the Voting Stock of the Issuer; or

(ii) the Permitted Holders are the beneficial owners (as such term which is used in Rule 13d-3of the Exchange Act) of less than 26.0 per cent. of the total voting power of the VotingStock of the Issuer.

“Collateral Agent” shall mean each of the Security Trustee, the Share Pledge Security Trusteeand the Lender’s Agent, as such terms are defined in the Collateral Documents.

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“Collateral Documents” shall have the meaning ascribed to it in Condition 1(b) (Status of theNotes).

“Commodity Hedging Agreement” means any spot, forward or option commodity priceprotection agreements or other similar agreement or arrangement designed to protect againstfluctuations in commodity prices.

“Common Stock” means, with respect to any Person, any and all shares, interests or otherparticipations in, and other equivalents (however designated and whether voting or non-voting)of such Person’s common stock or ordinary shares, whether or not outstanding at the Issue Date,and include, without limitation, all series and classes of such common stock or ordinary shares.

“Consolidated EBITDA” means, with respect to any Person for any period, Consolidated NetIncome of such Person for such period plus, to the extent such amount was deducted incalculating such Consolidated Net Income, without duplication:

(i) Consolidated Interest Expense;

(ii) income taxes (other than income taxes attributable to extraordinary and non-recurring gains(or losses) or sales of assets);

(iii) depreciation expense, amortisation expense and all other non-cash items reducingConsolidated Net Income (other than non-cash items in a period which reflect cashexpenses paid or to be paid in another period), less all non-cash items increasingConsolidated Net Income other than accrual of revenues in the ordinary course of business;

(iv) legal, accounting and other fees and expenses incurred in connection with the issuance andsale of the Notes on the Issue Date and the write-off of deferred financing costs from timeto time to the extent the same were deducted in computing Consolidated Net Income;

(v) any losses or write-offs arising from the acquisition of any securities or extinguishment,redemption, purchase, cancellation, defeasance or assignment of Indebtedness to the extentsuch losses or write-offs were deducted in computing Consolidated Net Income,

all as determined on a consolidated basis for such Person and its Restricted Subsidiaries inconformity with GAAP; provided that if any Restricted Subsidiary is not a Wholly OwnedRestricted Subsidiary, Consolidated EBITDA will be reduced (to the extent not otherwisereduced in accordance with GAAP) by an amount equal to (A) the amount of the ConsolidatedNet Income attributable to such Restricted Subsidiary multiplied by (B) the percentageownership interest in the income of such Restricted Subsidiary not owned on the last day of suchperiod by the Issuer or any of the Restricted Subsidiaries.

“Consolidated Fixed Charges” means, with respect to any Person for any period, the sum(without duplication) of (i) Consolidated Interest Expense for such period and (ii) all cash andnon-cash dividends paid, declared, accrued or accumulated during such period on anyDisqualified Stock or Preferred Stock of such Person or any of its Subsidiaries (other thanUnrestricted Subsidiaries) held by Persons other than the Issuer or any Wholly Owned RestrictedSubsidiary, except for dividends payable in the Issuer’s Capital Stock (other than DisqualifiedStock).

“Consolidated Interest Expense” means, with respect to any Person for any period, the amountthat would be included in gross interest expense on a consolidated income statement prepared inaccordance with GAAP for such period of such Person and its Restricted Subsidiaries, plus, tothe extent not included in such gross interest expense, and to the extent incurred, accrued orpayable during such period by such Person and its Restricted Subsidiaries, without duplication,(i) interest expense attributable to Capitalised Lease Obligations, (ii) amortisation of debtissuance costs and original issue discount expense and non-cash interest payments in respect ofany Indebtedness, (iii) the interest portion of any deferred payment obligation, (iv) allcommissions, discounts and other fees and charges with respect to letters of credit or similarinstruments issued for financing purposes or in respect of any Indebtedness, (v) the net costsassociated with Hedging Obligations (including the amortisation of fees), (vi) interest accruingon Indebtedness of any other Person that is Guaranteed by, or secured by a Lien on any asset of,

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such Person or any of its Restricted Subsidiaries and (vii) any capitalised interest; provided thatinterest expense attributable to interest on any Indebtedness bearing a floating interest rate willbe computed on a pro forma basis as if the rate in effect on the date of determination had beenthe applicable rate for the entire relevant period.

“Consolidated Net Income” means, with respect to any specified Person (the “Subject Person”)for any period, the aggregate of the Net Income (or loss) of such Person and its RestrictedSubsidiaries for such period, on a consolidated basis, determined in conformity with GAAP;provided that the following items will be excluded in computing Consolidated Net Income(without duplication):

(i) the Net Income (or loss) of any Person that is not a Restricted Subsidiary or that isaccounted for by the equity method of accounting except that:

(A) subject to the exclusion contained in clause (v) below, the Issuer’s equity in the netincome of any such Person for such period will be included in such Consolidated NetIncome up to the aggregate amount of cash actually distributed by such Person duringsuch period to the Issuer or a Restricted Subsidiary as a dividend or other distribution(subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary,to the limitations contained in clause (iii) below); and

(B) the Issuer’s equity in a net loss of any such Person for such period will be includedin determining such Consolidated Net Income to the extent funded with cash or otherassets of the Issuer or any of its Restricted Subsidiaries;

(ii) the Net Income (or loss) of any Person accrued prior to the date it becomes a RestrictedSubsidiary or is merged into or consolidated with the Issuer or any of the RestrictedSubsidiaries or all or substantially all of the property and assets of such Person are acquiredby the Issuer or any of its Restricted Subsidiaries;

(iii) the net income (but not loss) of any Restricted Subsidiary to the extent that the declarationor payment of dividends or similar distributions by such Restricted Subsidiary of such netincome is not at the time permitted by the operation of the terms of its charter, articles ofassociation or other constitutive document or any agreement, instrument, judgment, decree,order, statute, rule or governmental regulation applicable to such Restricted Subsidiary;

(iv) the cumulative effect of a change in accounting principles;

(v) any net after tax gains (but not losses) realised on the sale or other disposition of (a) anyproperty or asset of the Issuer or any Restricted Subsidiary that is not sold in the ordinarycourse of its business or (b) any Capital Stock of any Person (including any gains by theIssuer or a Restricted Subsidiary realised on sales of Capital Stock of the Issuer or of anyRestricted Subsidiary);

(vi) any translation gains and losses due solely to fluctuations in currency values and related taxeffects; and

(vii) any net after-tax extraordinary or non-recurring gains (but not losses).

“Credit Facilities” means indentures or debt facilities with banks or other institutional lenders,as amended, restated, modified, renewed, refunded, replaced or refinanced (including by sales ofdebt securities to institutional investors) in whole or in part from time to time, in each caseproviding for loans, notes, lines of credit, letters of credit, guarantees, other credit facilities,other debt securities or other credit support.

“Currency Hedging Agreement” means any currency swap agreement, currency cap agreement,currency floor agreement, currency futures agreement, commodity option agreement or any othersimilar agreement or arrangement which may consist of one or more of the foregoing agreements,designed to protect against fluctuations in currency prices.

“Default” means any event that is, or with the passage of time or the giving of notice or bothwould be, an Event of Default.

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“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any securityinto which it is convertible, or for which it is exchangeable, in each case, at the option of theholder of the Capital Stock), or upon the happening of any event, matures or is mandatorilyredeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option ofthe holder of the Capital Stock, in whole or in part, on or prior to the date that is 183 days afterthe date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stockthat would constitute Disqualified Stock solely because the holders of the Capital Stock have theright to require the Issuer to purchase such Capital Stock upon the occurrence of a change ofcontrol, asset sale or event of loss will not constitute Disqualified Stock if the terms of suchCapital Stock provide that the Issuer may not purchase or redeem any such Capital Stockpursuant to such provisions unless such purchase or redemption complies with Condition 3(b)(Limitation on Restricted Payments). The amount of Disqualified Stock deemed to be outstandingat any time for purposes of the Trust Deed will be the maximum amount that the Issuer and itsRestricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to anymandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

“Dollar Equivalent” means, with respect to any monetary amount in a currency other than U.S.dollars, at any time for the determination thereof, the amount of U.S. dollars obtained byconverting such foreign currency involved in such computation into U.S. dollars at the base ratefor the purchase of U.S. dollars with the applicable foreign currency as quoted by the FederalReserve Bank of New York on the date of determination.

“DoT” means the Department of Telecommunications, Ministry of Communications andInformation Technology, Government of India.

“ECB Guidelines” means the Foreign Exchange Management (Borrowing or Lending in ForeignExchange) Regulations, 2000, as amended from time to time, and the circulars issued thereunderby the RBI which are to be read with the Master Circular — External Commercial Borrowingsand Trade Credits dated 1 July 2014, as amended from time to time by any rules, regulations,notifications, circulars, press notes or orders issued by the RBI or other governmental authorityof India in relation to external commercial borrowings.

“Equity Interest” means Capital Stock and all warrants, options or other rights to acquireCapital Stock (but excluding any debt security that is convertible into, or exchangeable for,Capital Stock).

“Equity Offering” means any underwritten primary public offering or private placement ofcommon stock of the Issuer after the Issue Date.

“Event of Default” shall have the meaning ascribed to it in Condition 8 (Events of Default).

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Existing Indebtedness” means Indebtedness of the Issuer and its Restricted Subsidiaries inexistence on the Issue Date, until such amounts are repaid.

“Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliatedwilling seller in a transaction not involving distress or necessity of either party, as determinedin good faith by (i) the chief financial officer of the Issuer, if such value is equal to or less thanUS$25.0 million (or the Dollar Equivalent) and (ii) the Board of Directors of the Issuer, if suchvalue exceeds US$25.0 million (or the Dollar Equivalent), in each case, unless otherwiseprovided in the Trust Deed.

“First Priority” means, with respect to any Lien purported to be created pursuant to anyCollateral Document, that such Lien is a duly perfected and registered first priority Lienprovided, however, that a Lien shall not cease to be a first priority Lien due to the sole fact thatsuch Lien is shared among other lenders or creditors.

“Fitch” means Fitch Ratings Inc., or any of its successors or assigns that is a NationallyRecognised Statistical Rating Organization.

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“Fixed Charge Coverage Ratio” means, with respect to any specified Person as of any date ofdetermination, the ratio of (x) the aggregate amount of Consolidated EBITDA for the FourQuarter Period to (y) the aggregate Consolidated Fixed Charges during such Four Quarter Period.In making the foregoing calculation:

(i) pro forma effect will be given to any acquisitions or dispositions consummated orIndebtedness incurred (including to give effect to the application of the net proceedsthereof), repaid or redeemed during the period (the “Reference Period”) commencing onand including the first day of the Four Quarter Period and ending on and including theTransaction Date (other than Indebtedness incurred or repaid under a revolving credit orsimilar arrangement (or under any predecessor revolving credit or similar arrangement) ineffect on the last day of such Four Quarter Period), in each case as if such acquisitions ordispositions had occurred, or such Indebtedness had been incurred, repaid or redeemed, onthe first day of such Reference Period; provided that, in the event of any such repaymentor redemption, Consolidated EBITDA for such period will be calculated as if the Issuer orsuch Restricted Subsidiary had not earned any interest income actually earned during suchperiod in respect of the funds used to repay or redeem such Indebtedness;

(ii) Consolidated Interest Expense attributable to interest on any Indebtedness (whetherexisting or being incurred) computed on a pro forma basis and bearing a floating interestrate will be computed as if the rate in effect on the Transaction Date (taking into accountany Interest Rate Hedging Agreement applicable to such Indebtedness if such Interest RateHedging Agreement has a remaining term in excess of 12 months or, if shorter, at leastequal to the remaining term of such Indebtedness) had been the applicable rate for the entireperiod; and

(iii) pro forma effect will be given to the creation, designation or redesignation of RestrictedSubsidiaries and Unrestricted Subsidiaries as if such creation, designation or redesignationhad occurred on the first day of such Reference Period.

“Four Quarter Period” means, as of any date, the most recently ended four full fiscal quartersfor which consolidated financial statements of the Issuer are available (which may be internalconsolidated financial statements) immediately preceding such date.

“GAAP” means generally accepted accounting principles in India as in effect from time to time.All ratios and computations contained or referred to in the Trust Deed shall be computed inconformity with GAAP applied on a consistent basis.

“Guarantee” means a guarantee other than by endorsement of negotiable instruments forcollection in the ordinary course of business, direct or indirect, in any manner including, withoutlimitation, by way of a pledge of assets or through letters of credit or reimbursement agreementsin respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnershiparrangements, or by agreements to keep-well, to purchase assets, goods, securities or services,to take or pay or to maintain financial statement conditions or otherwise).

“Hedging Obligations” means, with respect to any specified Person, the obligations of suchPerson under:

(i) interest rate swap agreements (whether from fixed to floating or from floating to fixed),interest rate cap agreements and interest rate collar agreements;

(ii) other agreements or arrangements designed to manage interest rates or interest rate risk;

(iii) other agreements or arrangements designed to protect such Person against fluctuations incurrency exchange rates or commodity prices; and

(iv) other agreements with respect to one or more options or other derivative transactionsentered into in connection with the issuance of convertible Indebtedness.

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“Indebtedness” means, with respect to any Person, at any date of determination (without duplication):

(i) all indebtedness of such Person for borrowed money;

(ii) all obligations of such Person evidenced by bonds, debentures, notes or other similarinstruments;

(iii) all obligations of such Person in respect of letters of credit, bankers’ acceptances or othersimilar instruments;

(iv) all obligations of such Person to pay the deferred and unpaid purchase price of property orservices, except Trade Payables;

(v) all Capital Lease Obligations and Attributable Debt;

(vi) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whetheror not such Indebtedness is assumed by such Person; provided that the amount of suchIndebtedness will be the lesser of (a) the Fair Market Value of such asset at such date ofdetermination and (b) the amount of such Indebtedness; and

(vii) to the extent not otherwise included in this definition, Hedging Obligations.

The amount of Indebtedness of any Person at any date will be the outstanding balance at suchdate of all unconditional obligations as described above and, with respect to contingentobligations, the maximum liability upon the occurrence of the contingency giving rise to theobligation; provided:

(i) that the amount outstanding at any time of any Indebtedness issued with original issuediscount is the face amount of such Indebtedness less the remaining unamortised portion ofthe original issue discount of such Indebtedness at such time as determined in conformitywith GAAP;

(ii) that money borrowed and set aside at the time of the incurrence of Indebtedness in orderto prefund the payment of the interest on such Indebtedness will not be deemed to beIndebtedness so long as such money is held to secure the payment of such interest; and

(iii) that the amount of Indebtedness with respect to any Hedging Obligation will be equal to thenet amount payable if the Commodity Hedging Agreement, Currency Hedging Agreementor Interest Rate Hedging Agreement giving rise to such Hedging Obligation terminated atthat time due to default by such Person.

Notwithstanding the foregoing, Indebtedness shall not include (i) deferred revenue arising fromthe sale of bandwidth, network capacity or indefeasible rights of use, (ii) any capitalcommitment, pre-sale receipts, deposits of advances from customers or any contingentobligations to refund payments (including deposits or advances) to customers (or any guaranteethereof) in the ordinary course of business and (iii) obligations of the Issuer or a RestrictedSubsidiary to pay the deferred and unpaid purchase price of property or services due to suppliersof equipment or other assets (including parts thereof) not more than one year after such propertyis acquired or such services are completed and the amount of unpaid purchase price retained bythe Issuer or any Restricted Subsidiary in the ordinary course of business in connection with anacquisition of equipment or other assets (including parts thereof) pending full operation orcontingent on certain conditions during a warranty period of such equipment or assets inaccordance with the terms of the acquisition; provided that, in clauses (ii) and (iii), such debt isnot reflected on the balance sheet for the Issuer or any Restricted Subsidiary, including ascontingent obligations and commitments referred to in a footnote to the financial statements andis not otherwise reflected as borrowings on the balance sheet.

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“Interest Rate Hedging Agreement” means any interest rate protection agreement, interest ratefuture agreement, interest rate option agreement, interest rate swap agreement, interest rate capagreement, interest rate collar agreement, interest rate hedge agreement, option or future contractor other similar agreement or arrangement designed to protect against fluctuations in interestrates.

“Investment Grade Status” shall occur when the Notes are rated Baa3 or better by Moody’s andBBB- or better by Fitch (or, if either such entity ceases to rate the Notes, the equivalentinvestment grade credit rating from any other Nationally Recognised Statistical RatingOrganization selected by the Issuer as a replacement agency).

“Investments” means, with respect to any Person, all direct or indirect investments by suchPerson in other Persons (including Affiliates) in the forms of loans (including Guarantees orother obligations), advances or capital contributions (excluding the extension of trade credit anddeposits, in each case in the ordinary course of business in accordance with customary practiceand on reasonable terms, and commission, travel and similar advances to officers, directors andemployees made in the ordinary course of business), purchases or other acquisitions forconsideration of Indebtedness, Equity Interests or other securities, together with all items thatare or would be classified as investments on a balance sheet prepared in accordance with GAAP.If the Issuer or any of its Restricted Subsidiaries sells or otherwise disposes of any EquityInterests of any direct or indirect Restricted Subsidiary of the Issuer such that, after giving effectto any such sale or disposition, such Person is no longer a Subsidiary of the Issuer, the Issuerwill be deemed to have made an Investment on the date of any such sale or disposition equal tothe Fair Market Value of the Issuer’s Investments in such Subsidiary that were not sold ordisposed of in an amount determined as provided in the final paragraph of Condition 3(b)(Limitation on Restricted Payments). The acquisition by the Issuer or any of its RestrictedSubsidiaries of a Person that holds an Investment in a third Person will be deemed to be anInvestment by the Issuer or such Restricted Subsidiary in such third Person in an amount equalto the Fair Market Value of the Investments held by the acquired Person in such third Person inan amount determined as provided in the final paragraph of Condition 3(b) (Limitation onRestricted Payments). Except as otherwise provided in the Trust Deed, the amount of anInvestment will be determined at the time the Investment is made and without giving effect tosubsequent changes in value.

“Issue Date” shall have the meaning ascribed to it in Condition 4 (Interest).

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest orencumbrance of any kind, whether or not filed, recorded or otherwise perfected or registeredunder applicable law, including any conditional sale or other title retention agreement, any leasein the nature thereof, any option or other agreement to sell or give a security interest in and anyfiling or agreement to give any financing statement of any jurisdiction.

“Moody’s” means Moody’s Investors Service, Inc., or any of its successors or assigns that is aNationally Recognised Statistical Rating Organization.

“Nationally Recognised Statistical Rating Organization” means a nationally recognizedstatistical rating organization within the meaning of Rule 15c3-1(c)(2)(vi)(F) under theExchange Act.

“Net Cash Proceeds” means:

(i) with respect to any Asset Sale (other than the issuance or sale of Capital Stock), theproceeds of such Asset Sale in the form of cash or Cash Equivalents, including paymentsin respect of deferred payment obligations (to the extent corresponding to the principal, butnot interest, component thereof) when received in the form of cash or Cash Equivalents andproceeds from the conversion of other property received when converted to cash or CashEquivalents, net of:

(a) brokerage commissions and other fees and expenses (including fees and expenses ofcounsel and investment bankers) related to such Asset Sale;

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(b) provisions for all taxes (whether or not such taxes will actually be paid or are payable)as a result of such Asset Sale;

(c) payments made to repay Indebtedness or any other obligation outstanding at the timeof such Asset Sale that either (1) is secured by a Lien on the property or assets soldor (2) is required to be paid as a result of such sale; and

(d) appropriate amounts as a reserve against any liabilities associated with such AssetSale, including, without limitation, pension and other post-employment benefitliabilities, liabilities related to environmental matters and liabilities under anyindemnification obligations associated with such Asset Sale, all as determined inconformity with GAAP and reflected in an Officers’ Certificate delivered to theTrustee; and

(ii) with respect to any issuance or sale of Capital Stock, the proceeds of such issuance or salein the form of cash or Cash Equivalents, including payments in respect of deferred paymentobligations (to the extent corresponding to the principal, but not interest, componentthereof) when received in the form of cash or Cash Equivalents and proceeds from theconversion of other property received when converted to cash or Cash Equivalents, net ofattorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts orcommissions and brokerage, consultant and other fees incurred in connection with suchissuance or sale and net of taxes paid or payable as a result thereof.

“Net Income” means, with respect to any specified Person, the net income (loss) of such Person,determined in accordance with GAAP and before any reduction in respect of preferred stockdividends, excluding, however:

(i) any gain or loss, together with any related provision for taxes on such gain or loss, realisedin connection with: (a) any asset sale which is not in the ordinary course of business; or (b)the disposition of any securities by such Person or any of its Restricted Subsidiaries or theextinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries;and

(ii) any extraordinary gain or loss, together with any related provision for taxes on suchextraordinary gain or loss.

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements,damages and other liabilities payable under the documentation governing any Indebtedness.

“Offer to Purchase” means an offer to purchase the Notes by the Issuer (or a Person on itsbehalf, as permitted by the Trust Deed) from the Noteholders commenced by delivering to theTrustee and each Noteholder at its last address appearing in the Note register stating:

(i) the provision of the Trust Deed pursuant to which the offer is being made and that all Notesvalidly tendered will be accepted for payment on a pro rata basis;

(ii) the purchase price and the date of purchase (which shall be a Business Day no earlier than30 days nor later than 60 days from the date such notice is mailed) (the “Offer to PurchasePayment Date”);

(iii) that any Note not tendered will continue to accrue interest pursuant to its terms;

(iv) that, unless the Issuer defaults in the payment of the purchase price, any Note accepted forpayment pursuant to the Offer to Purchase shall cease to accrue interest on and after theOffer to Purchase Payment Date;

(v) that Noteholders electing to have a Note purchased pursuant to the Offer to Purchase willbe required to surrender the Note, together with the form entitled “Option of the Holder toElect Purchase” on the reverse side of the Note completed, to the Paying Agent at theaddress specified in the notice prior to the close of business two Business Days immediatelypreceding the Offer to Purchase Payment Date;

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(vi) that Noteholders of Notes will be entitled to withdraw their election if the Paying Agentreceives, not later than the close of business on the third Business Day immediatelypreceding the Offer to Purchase Payment Date, a facsimile transmission or letter settingforth the name of such Noteholder, the principal amount of Notes of that series deliveredfor purchase and a statement that such Noteholder is withdrawing its election to have itsNotes purchased; and

(vii) that Noteholders whose Notes are being purchased only in part will be issued new Notesequal in principal amount to the unpurchased portion of the Notes surrendered; providedthat each Note purchased and each new Note issued shall be in Authorised Denominations.

On the Offer to Purchase Payment Date, the Issuer shall (a) accept for payment on a pro ratabasis Notes tendered pursuant to the Offer to Purchase; (b) deposit with the Paying Agent moneysufficient to pay the purchase price of all Notes so accepted; and (c) deliver, or cause to bedelivered, to the Trustee all Notes so accepted together with an Officers’ Certificate specifyingthe Notes accepted for payment by the Issuer. The Principal Paying Agent shall promptly mailto the Noteholders of accepted Notes payment in an amount equal to the purchase price, and theTrustee shall, if applicable, promptly authenticate and mail (or cause to be transferred bybook-entry) to such Noteholders a new Note equal in principal amount to any unpurchasedportion of the Note surrendered; provided that each Note purchased and each new Note issuedshall be in Authorised Denominations. The Issuer will publicly announce the results of an Offerto Purchase as soon as practicable after the Offer to Purchase Payment Date. The Issuer willcomply with all applicable securities laws and regulations, in the event that the Issuer is requiredto purchase Notes pursuant to an Offer to Purchase.

The materials used in connection with an Offer to Purchase are required to contain or incorporateby reference information concerning the business of the Issuer and its Subsidiaries which theIssuer in good faith believes will assist such Noteholders to make an informed decision withrespect to the Offer to Purchase, including a brief description of the events requiring the Issuerto make the Offer to Purchase, and any other information required by applicable law to beincluded therein. The offer is required to contain all instructions and materials necessary toenable such Noteholders to tender Notes pursuant to the Offer to Purchase.

“Offering Circular” means the final offering circular dated on or around April 27, 2015 inrelation to the Notes.

“Officer” means one of the executive officers of the Issuer.

“Officers’ Certificate” means a certificate signed by two Officers, one of whom is the chieffinancial officer of the Issuer or a duly appointed officer serving in an equivalent role.

“Opinion of Counsel” means a written opinion from legal counsel which opinion is acceptableto the Trustee that meets the requirements of the Trust Deed.

“Pari Passu Obligations” means all Obligations of the Issuer in respect of any Indebtedness:

(i) representing Hedging Obligations incurred by the Issuer or any Restricted Subsidiarysecured by a Lien on Collateral pursuant to, and in accordance with, clause (x) of thedefinition of Permitted Liens, all of which Hedging Obligations shall be valued at the netamount that the same are reflected as a liability upon the most recent consolidated balancesheet of the Issuer prepared in accordance with GAAP; or

(ii) incurred pursuant to the Fixed Charge Coverage Ratio Test or pursuant to clause (i), (xiv)or (xv) of Condition 3(a) (Limitation on Incurrence of Indebtedness and Issuance ofPreferred Stock).

“Permitted Business” means: (i) any businesses, services or activities engaged in by the Issueror any of the Restricted Subsidiaries on the Issue Date and (ii) any businesses, services andactivities engaged in by the Issuer or any of the Restricted Subsidiaries that are related, ancillaryor similar to any of the foregoing or are extensions or developments of any thereof.

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“Permitted Holders” means:

(i) (a) Anil Dhirubhai Ambani (“ADA”) and the children and spouse of ADA; and (b) anyfamily trust set up by Persons listed in sub-clause (a) of this clause (i) provided that oneor more of such Persons are the initial grantors or trust beneficiaries; and

(ii) any Person both the Capital Stock and the Voting Stock of which (or in the case of a trust,the beneficial interests in which) are owned 80.0 per cent. or more by one or more Personsspecified in clause (i).

“Permitted Investments” means:

(i) any investment (a) by the Issuer in any Restricted Subsidiary or (b) by any RestrictedSubsidiary of the Issuer in the Issuer or any Restricted Subsidiary (or in any Person that,as a result of the relevant Investment (1) becomes a Restricted Subsidiary or (2) is merged,amalgamated or consolidated with or into, or transfers or conveys substantially all of itsassets to, or is liquidated into, the Issuer or a Restricted Subsidiary);

(ii) any Investment in Cash Equivalents;

(iii) any acquisition of assets or Capital Stock solely in exchange for the issuance of EquityInterests (other than Disqualified Stock) of the Issuer;

(iv) any Investments received in compromise or resolution of (a) obligations of trade creditorsor customers that were incurred in the ordinary course of business of the Issuer or any ofits Restricted Subsidiaries, including pursuant to any plan of reorganization or similararrangement upon the bankruptcy or insolvency of any trade creditor or customer or (b) anylitigation, arbitration or other dispute;

(v) Investments represented by Hedging Obligations in the ordinary course of business and notfor speculative purposes;

(vi) loans or advances to employees made in the ordinary course of business of the Issuer or itsRestricted Subsidiaries, but in any event not to exceed US$10.0 million (or the DollarEquivalent thereof) in the aggregate outstanding at any one time;

(vii) purchases of the Notes and related Guarantees;

(viii) any Investment (including Investments in Subsidiaries) existing on, or made pursuant towritten agreements existing on, the Issue Date and any Investment consisting of anextension or renewal of any Investment existing on, or made pursuant to a writtenagreement existing on, the Issue Date;

(ix) guarantees of Indebtedness permitted to be incurred under Condition 3(a) (Limitation onIncurrence of Indebtedness and Issuance of Preferred Stock);

(x) any Investment made as a result of the receipt of non-cash consideration from an Asset Salethat was made pursuant to and in compliance Condition 3(h) (Limitation on Asset Sales);

(xi) receivables, trade credits or other current assets owing to the Issuer or any RestrictedSubsidiary, if created or acquired in the ordinary course of business and payable ordischargeable in accordance with customary trade terms, including such concessionarytrade terms as the Issuer or such Restricted Subsidiary considers reasonable under thecircumstances (as determined in good faith by the Issuer); and

(xii) Investments in any person other than a Subsidiary of the Issuer, engaged in a PermittedBusiness, having an aggregate Fair Market Value (measured on the date each suchInvestment was made and without giving effect to subsequent changes in value), whentaken together with all other Investments made pursuant to this clause (xii) that are at thetime outstanding, not to exceed US$100.0 million (or the Dollar Equivalent thereof).

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“Permitted Liens” means:

(i) Liens on assets of the Issuer and its Restricted Subsidiaries created by the Trust Deed andthe Collateral Documents with respect to the Notes issued on the Issue Date and other PariPassu Obligations;

(ii) Liens for taxes, assessments, governmental charges or claims that are not yet delinquent orthat are being contested in good faith by appropriate legal or administrative proceedingspromptly instituted and diligently conducted and for which a reserve or other appropriateprovision, if any, as will be required in conformity with GAAP will have been made;

(iii) statutory and common law Liens of landlords and carriers, warehousemen, mechanics,suppliers, materialmen, repairmen or other similar Liens arising in the ordinary course ofbusiness and with respect to amounts not yet delinquent or being contested in good faith byappropriate legal or administrative proceedings promptly instituted and diligentlyconducted and for which a reserve or other appropriate provision, if any, as will be requiredin conformity with GAAP will have been made;

(iv) Liens incurred or deposits made to secure the performance of statutory or regulatoryobligations, insurance, workers compensation obligations, performance bonds, surety andappeal bonds and other obligations of a similar nature incurred in the ordinary course ofbusiness (exclusive of obligations for the payment of borrowed money);

(v) Liens on property of a Person existing at the time such Person becomes a RestrictedSubsidiary or is merged with or into or consolidated with the Issuer or any RestrictedSubsidiary; provided that such Liens were in existence prior to the contemplation of suchPerson becoming a Restricted Subsidiary or such merger or consolidation and do not extendto any assets other than those of the Person that becomes a Restricted Subsidiary or ismerged with or into or consolidated with the Issuer or any Restricted Subsidiary;

(vi) Liens in favour of the Issuer or any Restricted Subsidiary;

(vii) Liens securing reimbursement obligations with respect to letters of credit, performance andsurety bonds and completion guarantees that encumber documents and other propertyrelating to such letters of credit and the products and proceeds thereof;

(viii) Liens existing on the Issue Date;

(ix) Liens securing any Permitted Refinancing Indebtedness which is incurred to refinancesecured Indebtedness which is permitted to be incurred under clause 3(a)(iii) of Condition3(a) (Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock), providedthat such Liens do not extend to or cover any property or assets of the Issuer or anyRestricted Subsidiary other than the property or assets securing the Indebtedness beingrefinanced;

(x) Liens securing Hedging Obligations permitted to be incurred under clause 3(a)(vi) ofCondition 3(a) (Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock),provided that (a) Indebtedness relating to any such Hedging Obligation is, and is permittedunder Condition 3(f) (Limitation on Liens) to be, secured by a Lien on the same propertysecuring such Hedging Obligation or (b) such Liens are encumbering customary initialdeposits or margin deposits or are otherwise within the general parameters customary in theindustry and incurred in the ordinary course of business;

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(xi) survey exceptions, encumbrances, easements or reservations of, or rights of others for,licences, rights-of-way, leases, sewers, electric lines, gas lines, telegraph and telephonelines and other similar purposes, or zoning or building codes or other restrictions(including, without limitation, minor defects or irregularities in title and similarencumbrances) or other restrictions as to the use of real property that were not incurred inconnection with Indebtedness and that do not in the aggregate materially adversely affectthe value of said properties or materially impair their use in the operation of the businessof the Issuer and its Restricted Subsidiaries;

(xii) Liens incurred or pledges or deposits made in the ordinary course of business in connectionwith workers’ compensation, unemployment insurance and other types of social securityand employee health and disability benefits;

(xiii) Liens arising out of conditional sale, title retention consignment or similar arrangementsfor the sale of goods entered into by the Issuer or any of its Restricted Subsidiaries in theordinary course of business;

(xiv) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cashand Cash Equivalents on deposit in one or more accounts maintained by the Issuer grantedin the ordinary course of business in favour of the bank or banks with which such accountsare maintained, securing amounts owing to such bank with respect to cash management andoperating account arrangements, including those involving pooled accounts, nettingarrangements or sweep accounts; provided that, unless such Liens are non-consensual andarise by operation of law, in no case will any such Liens secure (directly or indirectly) therepayment of any Indebtedness;

(xv) Liens relating to purchase orders and other agreements entered into with customers of theIssuer or any of its Restricted Subsidiaries in the ordinary course of business;

(xvi) Liens on equipment of the Issuer or any Restricted Subsidiary and located on the premisesof any client or supplier in the ordinary course of business;

(xvii) Liens on cash, Cash Equivalents or other property arising in connection with thedefeasance, discharge or redemption of Indebtedness; and

(xviii) Liens securing Indebtedness of the Issuer or any Restricted Subsidiary with a maturity ofone year or less and used by the Issuer or such Restricted Subsidiary for working capitalpurposes in an aggregate amount at any time outstanding pursuant to this clause (xvii) notto exceed an amount equal to 0.5 per cent. of Total Assets (determined at the time at theincurrence of any such Indebtedness).

provided that the only “Permitted Liens” that relate to Liens securing Indebtedness for moneyborrowed that may apply to the Collateral and the Collateral Documents shall be those PermittedLiens identified in clauses (i), (viii) and (ix).

“Permitted Refinancing Indebtedness” means any Indebtedness, Disqualified Stock orPreferred Stock of the Issuer or any of its Restricted Subsidiaries issued in exchange for, or thenet proceeds of which are used to renew, refund, refinance, replace, defease or discharge otherIndebtedness, Disqualified Stock or Preferred Stock, respectively, of the Issuer or any of itsRestricted Subsidiaries (other than intercompany Indebtedness); provided that:

(i) the principal amount (or accreted value or liquidation preference, if applicable) of suchPermitted Refinancing Indebtedness does not exceed the principal amount (or accretedvalue or liquidation preference, if applicable) of the Indebtedness, Disqualified Stock orPreferred Stock renewed, refunded, refinanced, replaced, defeased or discharged (plus allaccrued interest and dividends on the Indebtedness, Disqualified Stock or Preferred Stockand the amount of all fees and expenses, including premiums, incurred in connectiontherewith);

(ii) such Permitted Refinancing Indebtedness has a final maturity date later than the finalmaturity date of, and has a Weighted Average Life to Maturity equal to or greater than theWeighted Average Life to Maturity of, the Indebtedness being renewed, refunded,refinanced, replaced, defeased or discharged;

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(iii) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased or dischargedis subordinated in right of payment to the Notes, such Permitted Refinancing Indebtednessis subordinated in right of payment to the Notes on terms at least as favourable to Holdersof Notes as those contained in the documentation governing the Indebtedness beingrenewed, refunded, refinanced, replaced, defeased or discharged; and

(iv) such Indebtedness, Disqualified Stock or Preferred Stock is incurred or issued either by theIssuer or by a Restricted Subsidiary of the Issuer that is the obligor or Issuer on theIndebtedness, Disqualified Stock or Preferred Stock being renewed, refunded, refinanced,replaced, defeased or discharged.

“Person” means any individual, corporation, partnership, joint venture, association, joint-stockcompany, trust, unincorporated organization, limited liability company or government or otherentity.

“Preferred Stock” as applied to the Capital Stock of any Person means Capital Stock of anyclass or classes that by its term is preferred as to the payment of dividends, or as to thedistribution of assets upon any voluntary or involuntary liquidation or dissolution of suchPerson, over any other class of Capital Stock of such Person.

“Qualified Jurisdiction” means each of Australia, Bermuda, the British Virgin Islands, theCayman Islands, France, Germany, Hong Kong, India, Ireland, Singapore, the United States andthe United Kingdom, and any state, province or territory or other political subdivision of theforegoing.

“RBI” means the Reserve Bank of India.

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not anUnrestricted Subsidiary.

“Sale and Leaseback Transaction” means any direct or indirect arrangement relating toproperty (whether real, personal or mixed), now owned or hereafter acquired whereby the Issueror any Restricted Subsidiary transfers such property to another Person and the Issuer or anyRestricted Subsidiary leases it from such Person.

“Securities Act” means the United States Securities Act of 1933, as amended.

“SGX-ST” means the Singapore Exchange Securities Trading Limited (or any other or furtherstock exchange or stock exchanges or any relevant authority or authorities on which the Notesmay, from time to time, be listed or admitted to trading).

“Significant Subsidiary” means any Restricted Subsidiary that meets any of the followingconditions:

(i) the Issuer’s and its Restricted Subsidiaries’ investments in and advances to the RestrictedSubsidiary exceed 10.0 per cent. of the Total Assets of the Issuer and its RestrictedSubsidiaries on a consolidated basis as of the end of the most recently completed fiscalyear;

(ii) the Issuer’s and its Restricted Subsidiaries’ proportionate share of the total assets (afterintercompany eliminations) of the Restricted Subsidiary exceeds 10.0 per cent. of the TotalAssets of the Issuer and its Restricted Subsidiaries on a consolidated basis as of the end ofthe most recently completed fiscal year; or

(iii) the Issuer’s and its Restricted Subsidiaries’ equity in the income from continuing operationsbefore income taxes, extraordinary items and cumulative effect of a change in accountingprinciple of the Restricted Subsidiary exceeds 10.0 per cent. of such income of the Issuerand its Restricted Subsidiaries on a consolidated basis for the most recently completedfiscal year.

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“Stated Maturity” means, with respect to any installment of interest or principal on any seriesof Indebtedness, the date on which the payment of interest or principal was scheduled to be paidin the documentation governing such Indebtedness as of the Issue Date, and will not include anycontingent obligations to repay, redeem or purchase any such interest or principal prior to thedate originally scheduled for the payment thereof; provided that in the case of any Indebtednesson which payment of interest or principal is due upon demand by the obligee thereof, the StatedMaturity of such installment of interest or principal shall be the date on which demand forpayment is made.

“Subordinated Indebtedness” means Indebtedness of the Issuer that is contractuallysubordinated in right of payment (by the terms of any documents or instrument relating thereto)to the Notes.

“Subsidiary” means, with respect to any specified Person:

(i) any corporation, association or other business entity (a) of which more than 50.0 per cent.of the total voting power of shares of Capital Stock entitled (without regard to theoccurrence of any contingency and after giving effect to any voting agreement orshareholders’ or stockholders’ agreement that effectively transfers voting power) to vote inthe election of directors, managers or trustees of the corporation, association or otherbusiness entity is at the time owned or controlled, directly or indirectly, by that Person orone or more of the other Subsidiaries of that Person (or a combination thereof) or (b) whichis “controlled” and consolidated by that Person in accordance with GAAP. For purposes ofthis definition, “control”, as used with respect to any Person, means the possession, directlyor indirectly, of the power to direct or cause the direction of the management or policiesof such Person, whether through the ownership of voting securities, by agreement orotherwise; or

(ii) any partnership (a) the sole general partner or the managing general partner of which issuch Person or a Subsidiary of such Person or (b) the only general partners of which arethat Person or one or more Subsidiaries of that Person (or any combination thereof).

“Telecom Service Areas” means the telecommunication service areas within India into which theIndian telecommunications market has been segregated into by the Government of India and itsrelated political subdivisions and agencies.

“Temporary Cash Investment” means any of the following:

(i) direct obligations of the United States of America, any state of the European EconomicArea, the People’s Republic of China and Hong Kong or any agency of the foregoing orobligations fully and unconditionally guaranteed by the United States of America, any stateof the European Economic Area, the People’s Republic of China and Hong Kong or anyagency of the foregoing, in each case maturing within one year;

(ii) demand or time deposit accounts, certificates of deposit and money market depositsmaturing within 180 days of the date of acquisition thereof issued by a bank or trustcompany which is organised under the laws of the United States of America or any statethereof, any state of the European Economic Area, Switzerland, Australia, Japan, SouthKorea, Brazil, Singapore, India or Hong Kong, and which bank or trust company hascapital, surplus and undivided profits aggregating in excess of US$100.0 million (or theDollar Equivalent thereof) and has outstanding debt which is rated “A” (or such similarequivalent rating) or higher by at least one nationally recognised statistical ratingorganization (as defined in Rule 436 under the Securities Act) or any money market fundsponsored by a registered broker dealer or mutual fund distributor;

(iii) purchase obligations with a term of not more than 30 days for underlying securities of thetypes described in clause (i) above entered into with a bank or trust company meeting thequalifications described in clause (ii) above;

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(iv) commercial paper, maturing within 180 days of the date of acquisition thereof, issued bya corporation (other than an Affiliate of the Company) organised and in existence under thelaws of the United States of America, any state thereof or any foreign country recognisedby the United States of America with a rating at the time as of which any investment thereinis made of “P-1” (or higher) according to Moody’s or “F1” (or higher) according to Fitch;

(v) securities, maturing within one year of the date of acquisition thereof, issued or fully andunconditionally guaranteed by any state, commonwealth or territory of the United States ofAmerica, or by any political subdivision or taxing authority thereof and rated at least “A”by Fitch or Moody’s; and

(vi) any money market fund that has at least 95.0 per cent. of its assets continuously investedin investments of the types described in clauses (i) through (v) above.

“Total Assets” means, as of any date, the total consolidated assets of the Issuer and its RestrictedSubsidiaries measured in accordance with GAAP as of the last day of the most recent fiscalquarter for which consolidated financial statements of the Issuer are available (which may beinternal consolidated financial statements), calculated after giving pro forma effect to (i)material acquisitions and dispositions that have occurred subsequent to the date of such financialstatements, (ii) designations of Restricted Subsidiaries and Unrestricted Subsidiaries that haveoccurred subsequent to the date of such financial statements, and (iii) the application of the netproceeds of any Indebtedness, the proposed incurrence of which has given rise to the need tomake such calculation of Total Assets.

“Trade Payables” means, with respect to any Person, any accounts payable or any otherindebtedness or monetary obligation to trade creditors created, assumed or guaranteed by suchPerson or any of its Subsidiaries arising in the ordinary course of business in connection withthe acquisition of goods or services and payable within 180 Business Days.

“Transaction Date” means, with respect to the incurrence of any Indebtedness, the date suchIndebtedness is to be incurred and, with respect to any Restricted Payment, the date suchRestricted Payment is to be made.

“Unrestricted Subsidiary” means (i) Global Cloud Xchange Limited and its Subsidiaries and(ii) any other Subsidiary of the Issuer that is designated as an Unrestricted Subsidiary incompliance with Condition 3(k) (Designation of Restricted and Unrestricted Subsidiaries).

“Voting Stock” means, with respect to any Person, Capital Stock of any class or kind ordinarilyhaving the power to vote for the election of directors, managers or other voting members of thegoverning body of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, thenumber of years obtained by dividing:

(i) the sum of the products obtained by multiplying (a) the amount of each then remaininginstallment, sinking fund, serial maturity or other required payments of principal, includingpayment at final maturity, in respect of the Indebtedness, by (b) the number of years(calculated to the nearest one-twelfth) that will elapse between such date and the makingof such payment; by

(ii) the then outstanding principal amount of such Indebtedness.

“Wholly Owned” means, with respect to any Subsidiary of any Person, the ownership of all ofthe outstanding Capital Stock of such Subsidiary (other than any director’s qualifying shares orInvestments by foreign nationals mandated by applicable law) by such Person or one or moreWholly Owned Subsidiaries of such Person.

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THE GLOBAL CERTIFICATE

The Global Certificate contains provisions which apply to the Notes in respect of which the GlobalCertificate is issued, some of which modify the effect of the Terms and Conditions of the Notes set outin this Offering Circular. Terms defined in the Terms and Conditions have the same meaning in theparagraphs below. The following is a summary of those provisions:

The Notes will be represented by a Global Certificate which will be registered in the name of RafflesNominees (Pte) Ltd as nominee for, and deposited with, a common depositary for Euroclear andClearstream.

Under the Global Certificate, the Issuer, for value received, promises to pay distributions on suchprincipal sum in arrears on the dates and at the rate specified in the Terms and Conditions, togetherwith any additional amounts payable in accordance with the Terms and Conditions, all subject to andin accordance with the Terms and Conditions.

The Global Certificate will become exchangeable in whole, but not in part, for individual certificates(“Individual Certificates”) if Euroclear or Clearstream is closed for business for a continuous periodof 14 days (other than by reason of legal holidays) or announces an intention to permanently ceasebusiness.

Whenever the Global Certificate is to be exchanged for Individual Certificates, such IndividualCertificates will be issued in an aggregate principal amount equal to the principal amount of theGlobal Certificate within five business days of the delivery, by or on behalf of the registered holderof the Global Certificate, Euroclear and/or Clearstream, to the Registrar of such information as isrequired to complete and deliver such Individual Certificates (including, without limitation, the namesand addresses of the persons in whose names the Individual Certificates are to be registered and theprincipal amount of each such person’s holding) against the surrender of the Global Certificate at theSpecified Office of the Registrar. Such exchange will be effected in accordance with the provisionsof the Agency Agreement and the regulations concerning the transfer and registration of Notesscheduled thereto and, in particular, shall be effected without charge to any holder of Notes or theTrustee, but against such indemnity as the Registrar may require in respect of any tax or other dutyof whatsoever nature which may be levied or imposed in connection with such exchange.

In addition, the Global Certificate will contain provisions which modify the Conditions as they applyto the Notes evidenced by the Global Certificate. The following is a summary of certain of thoseprovisions:

Record date: Notwithstanding Condition 6(f) (Record date), so long as the Global Certificate is heldon behalf of Euroclear, Clearstream or any other clearing system (an “Alternative Clearing System”),each payment in respect of the Global Certificate will be made to the person shown as the holder ofNotes in the Register at the close of business (of the relevant clearing system) on the “Clearing SystemBusiness Day” before the due date for such payments, where “Clearing System Business Day” meansa weekday (Monday to Friday, inclusive) except 25 December and 1 January.

Notices: Notwithstanding Condition 15 (Notices), so long as the Global Certificate is held on behalfof Euroclear, Clearstream or an Alternative Clearing System, notices to holders of Notes of Notesrepresented by the Global Certificate may be given by delivery of the relevant notice to Euroclear,Clearstream or (as the case may be) such Alternative Clearing System.

Determination of entitlement: The Global Certificate is evidence of entitlement only and is not adocument of title. Entitlements are determined in accordance with the Register and only the holder ofNotes is entitled to payment in respect of the Global Certificate.

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GLOBAL CLEARANCE AND SETTLEMENT

Investors in the Notes may hold Notes through Euroclear or Clearstream. Initial settlement and allsecondary trades will settle as described below. Although the Issuer understands that Euroclear andClearstream will comply with the procedures provided below in order to facilitate transfers of Notesamong participants of Euroclear and Clearstream, they are under no obligation to perform or continueto perform such procedures, and such procedures may be modified or discontinued at any time. Noneof the Issuer, the Trustee, the Registrar, the Transfer Agents, the Paying Agents, any other Agent orany other agent of any of them will have any responsibility for the performance by Euroclear orClearstream or their respective participants or indirect participants of their respective obligationsunder the rules and procedures governing their operations. With respect to clearance and settlementthrough Euroclear and Clearstream, the Issuer understands as follows:

The Clearing Systems — Euroclear and Clearstream

Euroclear and Clearstream hold securities for participating organisations and facilitate the clearanceand settlement of securities transactions between their respective participants through electronicbook-entry changes in accounts of such participants. Euroclear and Clearstream provide to theirparticipants, among other things, services for safekeeping, administration, clearance and settlement ofinternationally traded securities and securities lending and borrowing. Euroclear and Clearstreaminterface with domestic securities markets. Euroclear and Clearstream participants are financialinstitutions such as underwriters, securities brokers and dealers, banks, trust companies and certainother organisations. Indirect access to Euroclear or Clearstream is also available to others such asbanks, brokers, dealers and trust companies that clear through or maintain a custodial relationship witha Euroclear or Clearstream participant, either directly or indirectly.

Distributions of principal with respect to book-entry interests in the Notes held through Euroclear orClearstream will be credited, to the extent received by the relevant paying agent, to the cash accountsof Euroclear or Clearstream participants in accordance with the relevant system’s rules andprocedures.

Each of the persons shown in the records of Euroclear or Clearstream, must look solely to Euroclear,or Clearstream for his share of each payment made by the Issuer to the bearer of such GlobalCertificate in relation to all other rights arising under the Global Certificate, subject to and inaccordance with the respective rules and procedures of Euroclear and Clearstream.

Initial Settlement

The Notes will be issued initially in the form of a Global Certificate in book-entry form and will bedeposited with a common depository for Euroclear and Clearstream. The Global Certificate will beregistered in the name of a nominee for a common depositary for Euroclear and Clearstream. Asnecessary the Registrar will adjust the amount of Notes on the register for the amounts of Euroclearand Clearstream to reflect the amount of Notes held through Euroclear and Clearstream, respectively.Investors’ interests in Notes held in book-entry form by Euroclear or Clearstream, as the case may be,will be represented through financial institutions acting on their behalf as direct and indirectparticipants in Euroclear or Clearstream, as the case may be. In addition, Euroclear and Clearstreammay hold positions in the Notes on behalf of their participants through their respective depositories.

Investors electing to hold their Notes through Euroclear or Clearstream accounts will follow thesettlement procedures applicable to conventional notes. Book-entry interests in the Notes will becredited to Euroclear and Clearstream participants’ securities clearance accounts on the business dayfollowing the closing date against payment for value on the closing date. The Issuer will not imposeany fees in respect of the Notes; however, holders of book-entry interests in the Notes may incur feesnormally payable in respect of maintenance and operation of accounts in Euroclear and Clearstream.Because the purchaser determines the place of delivery, it is important to establish at the time oftrading of any Notes where both the purchaser’s and seller’s accounts are located to ensure thatsettlement can be made on the desired value date.

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Trading between Euroclear and/or Clearstream Participants

Secondary market trading between Euroclear participants and/or Clearstream participants will besettled using the procedures applicable to conventional notes in same-day funds.

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TAXATION

The information provided below does not purport to be a comprehensive description of all taxconsiderations that may be relevant to a decision to purchase Notes. In particular, the informationdoes not consider any specific facts or circumstances that may apply to a particular purchaser. Neitherthese statements nor any other statements in this Offering Circular are to be regarded as advice onthe tax position of any holder of Notes or of any person acquiring, selling or otherwise dealing insecurities or on any tax implications arising from the acquisition, sale of or other dealings in Notes.The statements do not purport to be a comprehensive description of all the tax considerations that maybe relevant to a decision to purchase, own or dispose of Notes and do not purport to deal with the taxconsequences applicable to all categories of investors, some of which (such as dealers in Notes) maybe subject to special rules.

Prospective purchasers of Notes are advised to consult their own tax advisors as to the taxconsequences of the purchase, ownership and disposition of Notes, including the effect of the taxlaws of India or any political sub division thereof. Additionally, in view of the number ofdifferent jurisdictions where local laws may apply, this Offering Circular does not discuss thelocal tax consequences to a potential holder arising from the acquisition, holding or dispositionof the Notes. Prospective investors must, therefore, inform themselves as to any tax laws andregulations in force relating to the purchase, holding or disposition of the Notes in their countryof residence and in the countries of which they are citizens or in which they purchase, hold ordispose of Notes.

INDIAN TAXATION

The following summary describes certain Indian tax consequences applicable to the ownership anddisposal of Notes by persons who are not resident for tax purposes in India and who do not hold Notesin connection with an Indian trade, business or permanent establishment.

The summary is based on existing Indian taxation law and practice in force at the date of this OfferingCircular and is subject to change, possibly with retroactive effect. It is not intended to constitute acomplete analysis of all the Indian tax consequences that may be relevant to a holder of the Notes. Itdoes not cover all tax matters that may be of importance to a particular purchaser. Prospectiveinvestors should consult their own tax advisors about the tax consequences of purchasing, holding anddisposing of an investment in the Notes. This summary is based on Indian tax law and practice as atthe date of this Offering Circular.

Payments through India

Any payments the Company makes on the Notes, including additional amounts, made through Indiawould be subject to the regulations of RBI.

Taxation of Interest

Interest on the Notes will not be subject to taxes in India if the proceeds of the issuance of the Notesare used for the purposes of business carried on by the Company outside India. Should, however, theproceeds be used for the purposes of the business of the Company in India, non-resident investorswould be liable to pay tax on the interest at the rate of 20% under Section 115A(ii) of the IT Act (plusapplicable surcharge, education cess and secondary and higher education cess) on interest paid on theNotes. However, the interest would be subject to a lower tax rate of 5% of the interest payable (plusapplicable surcharge, education cess and secondary and higher education cess) under 115A(iiaa),subject to the fulfillment of the relevant conditions prescribed in the IT Act. The obligation to paytaxes on interest will be discharged on withholdings of taxes as set out below.

The rates of tax will stand reduced if the beneficial recipient is a resident of a country with which theGovernment has entered into an agreement for granting relief of tax or for avoidance of doubletaxation (a “Tax Treaty”) and the provisions of such treaty, which provide for the taxation in Indiaof income by way of interest at a rate lower than that stated above, and of the IT Act (includingconditions pertaining to availing Treaty benefits by submitting a Tax Residency Certificate and otherdocuments) are fulfilled.

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A non-resident investor would be obligated to pay such income tax in an amount equal to, or wouldbe entitled to a refund of, as the case may be, any difference between amounts withheld in respect ofinterest paid on the Notes through India and its ultimate Indian tax liability for such interest, subjectto and in accordance with the provisions of the IT Act.

Withholding Taxes

Interest payable on the foreign currency denominated Notes to non-residents is subject to awithholding tax in India at the rate of 20% (plus applicable surcharge, education cess and secondaryand higher education cess) subject to any applicable treaty. However, pursuant to Section 194LC ofthe IT Act, the said Notes will be subject to a reduced withholding tax rate of 5% of the interestpayable (plus applicable surcharge, education cess and secondary and higher education cess) in caseswhere the interest is subject to a reduced tax rate as prescribed under Section 115A (iiaa) of the ITAct set out above, subject to fulfillment of the relevant conditions prescribed.

Pursuant to the terms and conditions of the Notes, all payments of, or in respect of, principal andinterest on the Notes, will be made free and clear of and without withholding or deduction on accountof any present or future taxes within India unless it is required by law, in which case pursuant toCondition 7 (Taxation), the Company will pay additional amounts as may be necessary in order thatthe net amounts received by the Holders of Notes after the withholding or deduction shall equal therespective amounts which would have been receivable in respect of the Notes in the absence of thewithholding or deduction, subject to certain exceptions.

Taxation of Gains Arising on Disposal of the Notes (Including Redemption)

Any gains arising to a non-resident investor from disposition of the Notes held (or deemed to be held)as a capital asset will generally be chargeable to income tax in India if the Notes are regarded asproperty situated in India. A non-resident investor generally will not be chargeable to income tax inIndia from a disposition of the Notes held as a capital asset provided the Notes are regarded as beingsituated outside India. The issue as to where the Notes should properly be regarded as being situatedis not free from doubt. The ultimate decision, however, will depend on the view taken by Indian taxauthorities on the position with respect to the situs of the rights being offered in respect of the Notes.There is a possibility that the Indian tax authorities may treat the Notes as being located in India asthe Company is incorporated in and resident in India.

If the Notes are regarded as situated in India by the Indian tax authorities, upon disposition of a Note:

(i) a non-resident investor (other than non-resident Indians), who has held the Notes for a period ofmore than 36 months immediately preceding the date of their dispositions, would be liable to paycapital gains tax at rate of 20% of the capital gains (plus applicable surcharge, education cessand secondary and higher education cess). Non-resident Indian investors in certain cases wouldbe liable to pay a tax of 10% of the capital gains — without indexation of cost of acquisition(plus applicable surcharge, education cess and secondary and higher education cess) for a similarperiod, subject to and in accordance with the provisions of the IT Act. These rates are subjectto any lower rate provided for by an applicable tax treaty;

(ii) a non-resident investor who has held the Notes for 36 months or less would be liable to paycapital gains tax at a rate of up to 40% of capital gains (plus applicable surcharge, education cessand secondary and higher education cess), depending on the legal status of the non-residentinvestor, and his taxable income in India. These rates are subject to any lower rate provided forby an applicable tax treaty; and

(iii) any surplus realised by a non-resident investor from a disposition of the Notes held asstock-in-trade would be subject to income tax in India to the extent, if any, that the surplus areattributable to a “business connection in India” or, where a tax treaty applies, to a “permanentestablishment” in India of the non-resident investor. A non-resident investor would be liable to

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pay Indian tax on the surplus which are so attributable at a rate of up to 40% of income as profitsand gains of business or profession (plus applicable surcharge, education cess and secondary andhigher education cess), depending on the legal status of the non-resident investor and his taxableincome in India, subject to any lower rate provided for by a tax treaty.

Wealth Tax

No wealth tax is payable at present in relation to the Notes. Wealth tax is not imposed in respect ofthe Notes held outside India. There are no inheritance taxes or succession duties currently imposed inrespect of the Notes held outside India.

Taxation of Persons Ordinarily Resident in India

Any income received in respect of the Notes by a person ordinarily resident in India under theprovisions of the IT Act, may generally be subject to tax in India according to the personal orcorporate rate applicable, subject to and in accordance with the provisions of any applicable tax treaty.

Estate Duty

No estate duty is payable at present in India in relation to the Notes.

Gift Tax

There is no gift tax payable at present in India in relation to the Notes.

Stamp Duty

A transfer of the Notes outside India will not give rise to any Indian stamp duty liability unlessbrought into India. Stamp duty would be payable if the Notes certificates are brought into India forenforcement or for any other purpose. If brought into India, the Notes would be subject to a stamp dutybased on the then applicable rates (currently 0.25% of the face value of the Notes, capped at`2,500,000) and the duty will have to be paid within a period of three months from the date the Notesare first received in India.

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LEGAL PROCEEDINGS

Our Company and its Subsidiaries are involved in legal proceedings, including taxation relatedproceedings, before various courts and other forums in the ordinary course of business. Except asdisclosed in this section, there have been no investigations and proceedings initiated against ourCompany and its Subsidiaries, which, if adversely determined, might have a material adverse effecton our financial condition or our results of operations.

CRIMINAL MATTERS

1 Criminal matters against our Company and its Subsidiaries

1.1 There are over 27 criminal complaints filed against our Company and some of its Subsidiariesand some of their officers and employees in relation to telecommunications infrastructure, suchas towers, poles, cable network and other infrastructure equipment, owned, installed or used bythem. These relate to, inter alia, illegal or un-authorised construction of towers, poles or layingof cable networks resulting in death, radiation, health hazards, environmental pollution, nuisanceand damage to property.

1.2 Our Company and some of its Subsidiaries and some of their officers and employees are involvedin over 24 criminal matters in relation to allegedly engaging in criminal intimidation, criminalbreach of trust, cheating, robbery, criminal conspiracy, causing insult and hurt against personswho are vendors, suppliers, franchisees, distributors, sub-distributors, service providers,contractors and sub-contractors to our Company and its Subsidiaries, including persons claimingto be acting in such capacity. These matters arise out of, inter alia, alleged non payment ofamounts due to, termination of the services of, or causing a loss to such person ornon-appointment of, such persons as vendors, suppliers, franchisees, distributors,sub-distributors, service providers, contractors and sub-contractors to our Company and itsSubsidiaries.

1.3 Over 10 criminal cases have been filed against our Company and some of its Subsidiaries andsome of their officers and employees in relation to employee related issues, such as non-paymentof wages, employment benefits and wrongful termination of employment.

1.4 Over 16 other criminal complaints have been filed against our Company and some of itsSubsidiaries and some of their officers and employees by customers, inter alia, for providingtelecommunications connections without verifying the documents and identity of the customer,issuing outstanding bills after the customers have surrendered the telecommunicationsconnection, issuing fake or forged bills, not providing the telecommunications connection afterthe customers have provided all necessary information, tampering with application forms, notproviding a satisfactory quality of the telecommunications connection and misuse of customerinformation.

1.5 There are over 9 miscellaneous criminal matters pending against our Company and some of itsSubsidiaries and some of their officers and employees in relation to, inter alia, alleged (i)electricity theft and illegally reconnecting an electrical connection, (ii) evasion of octroi (iii) notfurnishing information, and furnishing false information to a public servant, disobedience oforders of a public servant and assault or use of criminal force against a public servant (iv)violation of the Standard of Weights and Measures (Enforcement) Act, 1985, (v) issue of SIMcards to terrorist elements in violation of the Unlawful Activities (Prevention) Act, 1967, (vi)violation of orders to suspend telecommunications services during elections, (vii) offeringmobile telephone applications that are in violation of the Pre-Conception and Pre-NatalDiagnostic Techniques (Prohibition of Sex Selection) Act, 1994.

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REGULATORY CASES

2 Regulatory matters involving our Company and its Subsidiaries

2.1 Our Company and RTL obtained licences under the UASL regime permitting them to providetelecommunications services for a fixed period for a licence fee of `16,510 million and `1,195.6million, respectively, which has been paid by them. Subsequently in the financial year 2007, ourCompany paid an additional one-time non-refundable fee of `15,390.1 million to use GSMtechnology in addition to CDMA technology. However, pursuant to the orders dated December28, 2012 and March 15, 2013 (together, the “Orders”), the DoT demanded a further one-timespectrum charge from all telecommunications service providers for GSM spectrum beyond 4.4MHz and up to 6.2 MHz and CDMA spectrum beyond 2.5 MHz and up to 5 MHz respectively.Accordingly, the DoT issued demand notices (the “Demands”) requiring our Company and RTLto pay a sum of approximately `17,578.9 million and 1,734.7 million respectively, for itscurrently held/allocated spectrum failing which our Company and RTL shall have to surrenderthe already allocated spectrum. Aggrieved by the Orders and Demands, our Company and RTLhave filed writ petitions against the DoT before the Calcutta High Court on the ground, inter alia,that the Orders and Demands breach our Company and RTL’s contractual right to fully use thespectrum contracted under the UASL granted to our Company and RTL. The Calcutta High Courthas issued interim stays on the operation of the Demands and Orders. The matters are pendingbefore the Calcutta High Court.

Our Company and RTL have been paying licence fee as a percentage of the AGR as per thedefinition of AGR in the UASL agreement which includes revenue generated from several itemsunrelated to the licensed telecommunications business of our Company and RTL. In September2006, the TRAI submitted its recommendations on a new proposed definition of AGR andexcluded certain items from it such as income from capital gains, foreign exchange gains,dividends, etc. By an order dated August 30, 2007, (the “TDSAT Order”), the TDSAT acceptedthese recommendations and applied a narrower definition of AGR for determining licence fee andwireless, planning and coordination (“WPC”) charges in a matter pending before it (to which ourCompany and RTL were not a party). Based on the new definition of AGR recommended by theTRAI and accepted by the TDSAT in the previous matter, our Company and RTL filed variousapplications before the DoT for refund of excess payment made by it towards licence fees andWPC charges. The DoT, by an order dated November 5, 2008, rejected our Company’s refundapplications on the ground that the TDSAT Order was not applicable to our Company as it wasnot a party to the TDSAT Order. Aggrieved by the DoT’s decision, our Company and RTL filedseparate petitions before the TDSAT which were allowed by the TDSAT by its judgment datedMarch 26, 2009 as a result of which our Company and RTL could take advantage of the TDSATOrder with respect to the narrowed definition of AGR. The Supreme Court by its judgement datedOctober 11, 2011 has set aside the TDSAT Order and remitted the matter back to TDSAT forre-consideration. The matter is pending before the TDSAT for the final decision. A refund of`2,320 million has been sought by our Company.

The DoT issued a demand to our Company dated October 19, 2009 (the “Demand”) for paymentof approximately `485 million towards allegedly unpaid licence fees for the financial year 2007in respect of UASL held by our Company in various Circles. Aggrieved by the Demand, ourCompany filed a petition before the TDSAT challenging the Demand. On January 31, 2012, theTDSAT directed our Company to file individual petitions for each of the 20 Circles for which ademand had been issued by the DoT. Subsequently, our Company filed individual petitions beforethe TDSAT for each Circle. The matter is pending before the TDSAT for the final decision.

2.2 Our Company filed a writ petition dated July 6, 2012 before the Kerala High Court challengingthe constitutionality of Clause 19.1 of the UASL which defines “revenue share” to includerevenues generated by activities unrelated to the licensed telecommunications business under theUASL. The Kerala High Court issued an interim order dated July 10, 2012 directing ourCompany to continue paying the licence fees as it had done up to this period under the UASL.The matter is pending before the Kerala High Court.

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2.3 Pursuant to a special audit on November 8, 2012, the DoT raised consolidated demands on ourCompany for the payment of approximately `1,560 million and `4,575 million as licence fees forthe financial year 2007 and the financial year 2008 in relation to the 20 Circles for which ourCompany has been granted a UASL. A similar demand was raised on RTL for the payment ofapproximately `36 million and `58 million for the financial year 2007 and the financial year2008 in relation to the 8 Circles for which the RTL has been granted a UASL. Our Company andRTL have separately challenged the demands before the TDSAT. The DoT issued the demands onthe basis that our Company and RTL had allegedly under-paid licence fees due to under-reportingor non-reporting of certain revenue items. Our Company and RTL have sought a direction fromthe TDSAT setting aside the demands. The matters are pending before the TDSAT. Our Companyalso challenged the demands issued against it before the Kerala High Court. The Kerala HighCourt by its order dated December 6, 2012 issued an interim stay on the operation of thedemands. By an order dated June 28, 2013, a similar interim stay was issued in respect of thedemand of `1,190 million issued by the DoT for the financial year 2009. Further, by an orderdated January 30, 2015, a similar interim stay was issued in respect of the demand of `7,070million issued by the DoT for the financial year 2010. The matter is pending before the KeralaHigh Court.

2.4 Pursuant to a special audit, the DOT has raised a demand for `2,970 million towards spectrumcharges for the financial years 2007 and 2008. Our Company has, by its letter dated September25, 2014, replied to the DOT stating that the other demands raised by the DOT pursuant to thespecial audit have been challenged by our Company before the TDSAT and Kerala High Courtand the court has granted a stay order. Therefore, the DOT should not enforce the demands underthe notice until the matter is pending in the TDSAT and the Kerala High Court.

2.5 Our Company has filed a writ petition before the Madras High Court, inter alia, challenging thedemand dated January 8, 2013 issued by the DoT for payment of approximately `2,190 milliontowards, inter alia, spectrum usage charges, revenue from leased line and bandwidth subscribersand penalty and interest thereon under the UASL for 16 Circles for the period commencing fromthe financial year 2006 and ending at the conclusion of the financial year 2008. The matter ispending before the Madras High Court.

2.6 The DoT by an order dated February 25, 2010 increased the annual spectrum usage charge forCDMA and GSM service providers with effect from April 1, 2010 (the “Order”) for 2G services.Our Company filed a petition before the TDSAT challenging the Order. On September 1, 2010,the TDSAT upheld the Order. Our Company then filed a civil appeal against the TDSAT’s orderbefore the Supreme Court and our Company is currently paying increased annual spectrumcharges under protest. The matter is pending before the Supreme Court.

2.7 Formerly, under the UASL, the price for the microwave spectrum paid by CDMA serviceproviders (who paid the spectrum price as royalty) differed from that of the GSM serviceproviders (who paid the spectrum price on a revenue-sharing basis). This discriminatoryapproach was corrected by the DoT by its order dated November 3, 2006 (the “DoTNotification”). However, our Company challenged the DoT Notification before the TDSAT onthe ground that the DoT Notification did not apply retrospectively from the date of the grant ofthe UASL i.e. 2003. The TDSAT dismissed such petition on July 18, 2011. Our Company soughtto appeal against the TDSAT’s order before the Supreme Court but the appeal was not admitted.Subsequently, our Company challenged the TDSAT order dated July 18, 2011 before the DelhiHigh Court. The Delhi High Court held that the writ petition was not maintainable but permittedour Company to seek a clarification from the Supreme Court in relation to approaching the DelhiHigh Court afresh. Our Company filed an application in the Supreme Court seeking suchclarification which was not allowed to be registered by the Registrar Judicial-II. Our Companyappealed against the Registrar’s order before the Supreme Court which was set aside by theSupreme Court by its order dated April 5, 2013. Our application is pending before the SupremeCourt. The aggregate amount involved is approximately `1,500 million.

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2.8 Reliance Communications Infrastructure Limited (“RCIL”) filed a petition before the TDSATchallenging the DoT’s calculation of the annual royalty payable by RCIL for terrestrialmicrowave links at the rate of `0.29 million per BTS per annum. The TDSAT by its order datedJuly 18, 2011 (the “Order”) set aside the DoT’s calculation of royalty. The DoT has appealedagainst the Order before the Supreme Court and sought an interim relief of staying the Order. TheSupreme Court by its order dated July 8, 2013 has declined any interim relief to the DoT. Theaggregate amount involved is approximately `1,440 million. The matter is pending before theSupreme Court.

Meanwhile, RCIL has filed an execution petition in relation to the Order and has sought a refundof `702.9 million from the DoT along with an interest of `735.5 million as at June 30, 2013. OnJuly 25, 2014, the Supreme Court rejected the DoT’s interim application for stay of executionproceedings before TDSAT and directed Union to make payment to RCIL of the excess royaltycharge paid by it to the Government within four weeks. The DoT also directed RCIL to providea bank guarantee to the court in favour of the DoT for so that, in the event the DoT succeeds inits appeal, it is able to recover the amount released to RCIL. On September 26, 2014, the Unionhas, with the permission of the Supreme Court, deposited an amount of `692.7 million with theRegistry. RCIL has not yet provided the bank guarantee to the court.

2.9 The DoT allegedly granted additional spectrum beyond the licence-mandated quantity of 6.2MHz in violation of the licence conditions to certain GSM service providers (including RTL)without any additional spectrum fee. This allocation was challenged by the Association ofUnified Telecommunication Service Providers of India (the “AUSPI”) and certain othertelecommunications service providers (the “Petitioners”) before the Supreme Court by way ofa writ petition in May 2012. The Petitioners sought: (i) the cancellation of the grant of the GSMspectrum beyond 6.2 MHz to these service providers (including RTL), (ii) fresh auction of suchspectrum, and (iii) a direction to recover appropriate compensation from the service providers forthe revenue that has accrued to them in relation to the excess spectrum. The matter is pendingbefore the Supreme Court. The aggregate amount involved is approximately `390.9 million.

2.10 Our Company filed a petition before the TDSAT seeking allocation of the balance of the GSMspectrum of 1.8 MHz out of the contracted spectrum of 6.2 MHz in 18 Circles and the balanceof the CDMA spectrum of 1.25 or 2.5 MHz out of the contracted spectrum of 5 MHz, withoutany additional levy of charges. Pursuant to an order of the TDSAT dated January 31, 2014, thepetition filed by our Company was dismissed.

2.11 The Cellular Operators Association of India (the “COAI”) filed a petition before the TDSATchallenging the decisions of the DoT to allocate GSM spectrum to first time CDMA serviceproviders (including our Company). The COAI and its constituent telecommunications serviceproviders offering GSM services (together, the “GSM Service Providers”) argued that thespectrum provided to the CDMA service providers, was in fact additional spectrum, over whichthe GSM Service Providers had a vested right and for which they had applied earlier. The COAIhas filed an appeal before the Supreme Court against the order passed by the TDSAT, after theDelhi High Court ruled that the COAI had failed to establish a prima facie case for not allottingthe spectrum to the CDMA service providers. The matter is pending before the Supreme Court.

2.12 The COAI and the AUSPI, along with others including RTL and our Company, (the“Petitioners”) filed a petition before the TDSAT challenging the retrospective levy of penaltyby the DoT on telecommunications service providers for missing improper signage at BTS sitespursuant to a DoT circular dated October 11, 2012 (the “2012 Circular”) read with circularsdated April 8, 2010 and November 2, 2010 (the “2010 Circulars”) and the demands raisedthereunder. The Petitioners submitted that the 2012 Circular envisages a prospective penalty of`5,000 per BTS site if the omission by the service providers to provide proper signage is notrectified in 30 days and the 2010 Circulars do not provide for any penalty on such omission.However, the impugned demand was retrospectively levied against non-compliant BTS sites atthe rate of `0.5 million per BTS site. The TDSAT by its order dated April 25, 2014 directed theDoT to refrain from taking any coercive action against the Petitioners for realisation of thedemand. The aggregate amount involved in the matter is approximately `4 million. The matteris pending before the TDSAT.

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2.13 The AUSPI, our Company and certain others (the “Petitioners”) have challenged before theSupreme Court, the Rajasthan High Court’s order dated November 27, 2012 dismissing thePetitioners’ writ petition to quash the bye-laws framed by the State Government of Rajasthan inrelation to the erection of BTS sites in the State of Rajasthan (the “Bye-Laws”). The Petitionershave alleged that the Bye-Laws, inter alia, seek to prohibit the erection of BTS sites in certainareas, including on the grounds of public health, and such prohibition is beyond the legislativecompetence of the State of Rajasthan as BTS and mobile towers fall within the ambit of“telegraph” which is a subject on which only the Union Parliament can legislate. The SupremeCourt has issued a stay on the operation of the order of the Rajasthan High Court. The matteris pending before the Supreme Court.

2.14 Pursuant to the interconnect agreement entered into between our Company and BSNL, BSNLissued demand notices and disconnection notices for approximately `15 million and `42.7million on the grounds of alleged wrong routing and tampering of calling line identification(“CLI”) calls. Our Company had filed a petition before the TDSAT seeking the quashing of thenotices and restoration of the disconnected points of interface. The TDSAT by its order datedJanuary 21, 2011 dismissed the petition on the ground that it was barred by limitation. OurCompany has filed a civil appeal before the Supreme Court challenging the order of the TDSAT.The matter is pending before the Supreme Court.

2.15 Our Company filed a petition before the TDSAT, challenging the demand dated April 1, 2010issued by BSNL to our Company for approximately `30 million as “short amount of penalty forviolation of trunk group” for the period between May 1, 2003 and November 14, 2003 and adisconnection notice dated September 27, 2012. Our Company challenged BSNL’s demand on theground that it was barred by limitation. On March 19, 2015, the TDSAT allowed our Company’spetition and set aside the demand raised by BSNL on the grounds that it is invalid andunenforceable.

2.16 Vodafone India Limited and certain of its group companies (together, “Vodafone”) issueddemand notices to our Company dated October 25, 2012 and November 9, 2012 for payment of`151.2 million as short messaging service (“SMS”) termination charges at `0.10 per SMS for theperiod of April 1, 2011 to May 31, 2013, failing which Vodafone would withdraw theinterconnection of SMS services provided to our Company. Our Company and RTL havechallenged the demands before the TDSAT. Vodafone made additional claims of approximately`110.4 million towards our Company’s service tax liability. The TDSAT has issued an interimorder dated December 19, 2012 restraining Vodafone from enforcing its demand and withdrawingits services from our Company. The aggregate amount involved is approximately `290 million.The matter is pending before the TDSAT.

2.17 Bharti Airtel Limited (“Bharti”) and Bharti Hexacom Limited (“Bharti Hexa”) issued ademand-cum-disconnection notice to our Company dated October 8, 2012 for payment of `118.6million as SMS termination charges, failing which they threatened to withdraw theinterconnection of SMS services which Bharti and Bharti Hexa provide to our Company. InNovember 2012, Bharti and Bharti Hexa withdrew SMS interconnection services provided to ourCompany’s customers in Mumbai, Bihar and Madhya Pradesh. Our Company filed a petitionchallenging the demand, the imminent threat of withdrawal of SMS interconnection services toour Company’s networks in other Circles and the actual withdrawal of the SMS interconnectionservices in certain Circles. Bharti and Bharti Hexa have filed a counterclaim for `278.4 millionas at May 31, 2012 along with interest at the rate of 18% per annum. The matter is pending beforethe TDSAT.

2.18 Our Company and Bharti entered into a supplementary interconnect agreement on May 8, 2007pursuant to which our Company is providing toll-free services or free phone services tosubscribers of Bharti. Subsequently, Bharti withdrew access provided to its subscribers to theinterconnection for network services between the two companies and blocked several toll freenumbers of our Company unless our Company agreed to a demand for payment of charges higherthan those agreed under supplementary interconnect agreements. Our Company filed a petitionbefore the TDSAT against Bharti and the DoT challenging the demands and actions of Bharti. Thematter is pending before the TDSAT.

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2.19 Idea issued demand-cum-disconnection notices to our Company and RTL seeking a payment of`59.6 million and `32.2 million from each of the companies, respectively, as SMS terminationcharges. Our Company and RTL have separately challenged the notices before the TDSAT. Thematter is pending before the TDSAT.

2.20 BSNL issued demand-cum-disconnection notices on our Company for non-payment of point ofinterconnection usage charges for handing over inter-Circle calls on NLD points ofinterconnection for the period between February 2006 and February 2009. These notices werekept in abeyance till June 2013 when BSNL issued further demands for payment of the chargesby July 12, 2013, failing which the points of interconnection provided by BSNL to our Companywere to be disconnected. Our Company has filed a petition against BSNL before the TDSAT. Theaggregate amount involved is approximately `13.7 million. The matter is pending before theTDSAT.

2.21 Our Company filed a petition before the TDSAT challenging the demand and disconnectionnotices issued by BSNL, inter alia, seeking payment of approximately `116.2 million by ourCompany towards additional interest along with approximately `3.78 million as principal andapproximately `4.08 million as interest for the period between August 27, 2005 to February 28,2006 pursuant to the interconnect agreement executed between our Company and BSNL. Thematter is pending before the TDSAT.

2.22 Our Company received various demand and disconnection notices from BSNL in respect ofvarious areas in the States of Kerala and Uttar Pradesh: (i) penalising our Company for, interalia, alleged tampering of CLI, non-CLIs, invalid CLIs, incomplete CLIs and wrong routing ofcalls without justification or call detail records and (ii) threatening disconnection of the pointsof interconnection provided by BSNL to our Company on continued non-compliance. OurCompany has challenged these notices before the TDSAT, praying that the demands raised byBSNL be set aside. The aggregate amount involved is approximately `55 million in Meerut,`62.8 million in Uttar Pradesh (West) and `1,780 million in Kerala. The matter is pending beforethe TDSAT.

2.23 Our Company entered into interconnect agreements with BSNL and MTNL (the “Respondents”).Our Company subsequently started a home country direct (“HCD”) service by which a foreigncaller could call an Indian call recipient (who was a subscriber of the Respondents) through anumber issued by our Company which would connect the former to the latter. The Respondentsallege that, as a result, our Company did not pay the Respondents interconnect usage charges atinternational rates. Pursuant to the interconnect agreement, demands were raised by BSNL andMTNL for `3,190.4 million and `3,414.7 million, respectively, which were paid in protest by ourCompany. Our Company filed a petition before the TDSAT seeking refund of `1,116.3 millionfrom BSNL and `2,712.3 million from MTNL on various grounds including application of wrongcall rates, wrongful penalty imposed on trunk groups where our Company did not terminate HCDcalls and wrongful calculation of the number of minutes terminated in the Respondents’networks. The TDSAT by its order dated October 17, 2012 (the “TDSAT Order”) partiallyallowed our Company’s claims and directed the Respondents to reconcile their accounts withthose of our Company, issue fresh bills and refund the excess amount to our Company. OurCompany and the Respondents filed cross appeals against the TDSAT Order, which are pendingbefore the Supreme Court.

In the interim, our Company filed execution petitions in relation to the portion of the TDSATOrder which partially allowed our Company’s claim. By an order dated February 13, 2014 (the“Execution Order”), the TDSAT upheld the execution claim of our Company against MTNL.However, MTNL has not complied with the Execution Order and our Company has filed acontempt application against MTNL before the TDSAT. MTNL filed a civil appeal before theSupreme Court which was dismissed. The matter is pending before the TDSAT. The Company hasfiled two new Civil Appeals in the Supreme Court, partly challenging the Execution Orderagainst MTNL and BSNL. MTNL has also filed its Civil Appeal against the Execution Order. Thematters are pending before the Supreme Court.

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2.24 Pursuant to the interconnect agreements entered into between our Company and BSNL, thepayments required to be made by our Company to BSNL are to be made without set-off orcounter-claim. However, there is no reciprocal requirement in respect of payments required to bemade by BSNL to our Company. Our Company challenged the validity of the provision againstset-off by our Company in the agreements claiming it to be unfair and arbitrary. The TDSAT, byits order dated July 22, 2011, upheld BSNL’s right to set off amounts, irrespective of the lack ofreciprocal rights of our Company, on the grounds that our Company’s petition was barred bylimitation. A civil appeal has been filed by our Company before the Supreme Court against theorder of the TDSAT. The matter is pending before the Supreme Court.

2.25 Pursuant to the interconnect agreement executed with BSNL and the letter dated August 29, 2008issued by the Department of Expenditure, BSNL issued a notice dated June 12, 2012 to ourCompany to revise the rates and classification of cities for determining the infrastructure sharingcharges by other licensed service providers for active links retrospectively from April 1, 2009.Pursuant to the letter, BSNL raised demands for power and space charges and infrastructurecharges in various Circles including in the States of Andhra Pradesh and Rajasthan. The validityof the notice has been challenged by our Company before the Andhra Pradesh High Court. TheAndhra Pradesh High Court has issued an interim stay on the disconnection of the points ofinterconnection erected on the premises of BSNL. The aggregate amount involved isapproximately `16.5 million. The case is pending before the Andhra Pradesh High Court.

2.26 Pursuant to the interconnect agreements executed by our Company and RTL with BSNL, certaindiscrepancies had crept into the versions of the interconnect agreements whereby it was not clearwhat the consequences would be in case of disparity in billed amounts and billing informationbetween BSNL and our Company/RTL. BSNL issued circulars dated June 12, 2006 and July 24,2006 clarifying that BSNL’s billing information would prevail over the billing informationproduced by our Company/RTL. Our Company has filed petitions before the TDSAT challengingthe BSNL’s circulars. The TDSAT by order dated May 5, 2009 allowed our Company’s petition,inter alia, on the ground that BSNL had unilaterally issued these clarifications. BSNL has filedan appeal before the Supreme Court challenging the TDSAT’s order. The matter is pending beforethe Supreme Court.

2.27 Our Company has filed a petition before the TDSAT in connection with (i) demands ofinterconnection charges raised by BSNL and (ii) a disconnection notice issued by BSNL underthe interconnection agreement executed between our Company and BSNL. A writ petition wasalso filed by our Company before the Gujarat High Court as the TDSAT was not functioning atthe time. The Gujarat High Court issued an interim order dated March 25, 2013 pursuant to whichour Company deposited `30 million. The TDSAT, which subsequently started functioning, issuedan interim order dated September 2, 2013 extending the operation of the interim order passed bythe Gujarat High Court. The matter is pending before the TDSAT and the amount involved in thematter is approximately `130 million.

2.28 Pursuant to the interconnect agreements entered into between our Company and BSNL in variousCircles, and a notice dated June 12, 2012 issued by BSNL, BSNL issued demand anddisconnection notices for the payment of revised infrastructure charges for active links oflicensed telecommunications service providers retrospectively from April 1, 2009. Our Companyhas filed a petition before the TDSAT seeking the quashing of these notices. The TDSAT, by anorder dated October 3, 2012, has granted a stay on the notices. The aggregate amount involvedis approximately `12 million. The TDSAT pronounced its judgment on August 20, 2014 whereinit partly allowed the petitions of the Operators. The TDSAT held that while BSNL has power torevise the Infra Charges, the same cannot be done from a retrospective effect, so the TDSATstruck down the impugned circular dated June 12, 2012. The TDSAT further held the revisedcharges can be made applicable with effect from April 1, 2013 only and the Operators are entitledto get a refund of the amount paid based on the circular dated June 12, 2012 with interest asprovided in the interconnect agreements.

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2.29 On March 9, 2009, the TRAI notified the Telecommunication Interconnection Usage Charges(Tenth Amendment) Regulations, 2009 (the “Amendment Regulations”) by which it fixed alltermination charges at `0.20 per minute for local and national long-distance calls and mobiletelephone services. The Amendment Regulations were challenged by BSNL and various privatetelecommunications service providers, including our Company, by filing separate cross appealsbefore the TDSAT.

By an order dated September 29, 2010 (the “TDSAT Order”), the TDSAT directed the TRAI tore-consider the Amendment Regulations by way of a consultative process in a time bound mannerso that the new IUCs could be made effective by January 1, 2011. The TRAI and others partiesfiled civil appeals before the Supreme Court on the ground that the TDSAT does not have thejurisdiction to direct the TRAI to revise IUCs based on a consultative process.

The Supreme Court by its order dated December 6, 2013 ruled that the TDSAT does not have thejurisdiction to entertain the challenge to the Amendment Regulations framed by the TRAI. Thechallenge to the validity of the Amendment Regulations is being heard before the Supreme Court.

2.30 Our Company, challenged before the TDSAT the determination of annual infrastructure chargesby MTNL for establishing interconnection between the networks of our Company and MTNL.These infrastructure charges are levied by MTNL on our Company for placing terminalequipment in MTNL’s telephone exchange buildings in Delhi and Mumbai. Our Company allegedthat MTNL also levied separate charges for our Company’s ILD, NLD and UASL for the sameequipment in respect of infrastructure sharing charges and set-off the charges against the amountdue to be paid by MTNL to our Company. The TDSAT by its order dated March 19, 2007 (the“Order”) ordered MTNL to revise the charges according to directions given by the TDSAT.MTNL appealed against the Order before the Supreme Court. The aggregate amount involved inthe matter is approximately `123.6 million along with an annual payment of `9 million. Thematter is pending before the Supreme Court.

2.31 The TRAI prescribed regulations for determining port charges in Schedule 3 of theTelecommunication Interconnection (Charges and Revenue Sharing) Regulations, 1999. OnFebruary 2, 2007, the TRAI issued the Telecommunication Interconnection (Port Charges)Amendment Regulation (2007) (the “Amendment Regulations”) reducing the port chargesrequired to be paid by private telecommunications service providers to BSNL. BSNL challengedthe Amendment Regulations before the TDSAT. By an order dated May 28, 2010 (the “TDSATOrder”), the TDSAT (i) allowed the petition and (ii) directed the TRAI to review the AmendmentRegulations. Various parties including BSNL, COAI, AUSPI and the TRAI filed cross appealsbefore the Supreme Court against the TDSAT Order. BSNL, in its appeal against the TDSATorder, has contended, inter alia, that BSNL should be allowed to claim port charges from anyservice provider for the period between the date of enforcement of the Amendment Regulationsand the date of the TDSAT Order.

The Supreme Court by its order dated December 6, 2013 decreed that the TDSAT does not havethe jurisdiction to entertain the challenge to the Amendment Regulations framed by the TRAI.The challenge to the validity of the Amendment Regulations is being heard before the SupremeCourt. The aggregate amount involved is approximately `950 million.

Subsequently, the TRAI issued the Telecommunication Interconnection (Port Charges) (SecondAmendment) Regulations, 2012 by which port charges were further reduced. BSNL challengedthese regulations before the TDSAT which was dismissed in the light of the Supreme Court orderdated December 6, 2013, which held that the TDSAT does not have the jurisdiction to entertainthe challenge to these regulations framed by the TRAI. Accordingly, BSNL and MTNL have filedwrit petitions respectively challenging these regulations before the Delhi High Court which ispending.

2.32 On October 29, 2003, the TRAI notified the Telecommunication Interconnection Usage ChargesRegulation, 2003 (the “Regulation”) which, inter alia, provided for recovery of carriage chargesat a particular rate. On May 17, 2006, the TRAI issued a letter to BSNL confirming carriagecharges at a flat rate (the “Letter”). BSNL challenged the Letter before the TDSAT on the basisthat the Letter permitted recovery of carriage charges at a flat rate rather than a distance-based

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rate, which was contrary to the Regulation. The TDSAT by its order dated May 21, 2010 set asidethe Letter. The AUSPI, our Company and others filed a civil appeal before the Supreme Courtchallenging the TDSAT’s order. The aggregate amount involved is approximately `10 million.The matter is pending before the Supreme Court.

2.33 Tata Communications Limited (“TCL”) filed a writ petition before the Madras High Courtchallenging the validity of the (i) International Telecommunication Access to Essential Facilitiesat Cable Landing Stations Regulations, 2007, that was later amended in 2012 and (ii)International Telecommunication Cable Landing Station Access Facilitation Charges andCo-allocation Charges Regulations, 2012 (together, the “Cable Landing Station Regulations”)(the “TCL Case”). The Cable Landing Station Regulations seek to, inter alia, impose a ceilingon charges levied by infrastructure providers who own cable landing systems (“CLSinfrastructure providers”) and provide connectivity to other telecommunications serviceproviders by connecting them to the international subsea cable networks. TCL, which owns amajority of cable landing stations in India, contended that TRAI did not have the legislativecapacity to issue the Cable Landing Station Regulations and such delegated legislation was notpermitted under the Telecom Regulatory Authority of India Act, 1997.

The Madras High Court by its order dated January 24, 2013 directed TRAI not to implement theCable Landing Station Regulations until the disposal of the TCL Case. Our Company filed amiscellaneous petition before the Madras High Court in connection with the TCL Case, seekingthe Madras High Court’s consent to be impleaded as a party to the TCL Case. Our Company hassubmitted that the Cable Landing Station Regulations are valid and have been framed by theTRAI to (i) create a level playing field in the CLS sector, (ii) break the monopoly and dominanceof existing CLS infrastructure providers, such as TCL, and (iii) rationalise tariffs charged by theCLS infrastructure providers that would spur growth in the sector while protecting the interestof consumers and service providers. A similar petition challenging the Cable Landing StationRegulations has been filed by Bharti in which our Company has sought to be impleaded as aparty. The matters are pending before the Madras High Court for the final decision.

2.34 BSNL issued a circular dated June 16, 2006 determining that other telecommunications serviceproviders would have to pay infrastructure sharing charges, inter alia, in case of passive linkswithout HDSL modems at the rate of `3,000 per E1 per annum. However, BSNL determined thatminimum infrastructure sharing charges up to five E1’s would be paid at `15,000 per annum. OurCompany filed a petition before the TDSAT, inter alia, challenging BSNL’s circular. The TDSATby its order dated May 11, 2009 has allowed our Company’s petition, inter alia, setting asideBSNL’s proposal to levy a minimum charge for five E1’s as well as its right to charge separatelyfor each service at the same point of interface. BSNL has filed an appeal challenging theTDSAT’s order before the Supreme Court. The aggregate amount involved is approximately `20million per annum. The matter is pending before the Supreme Court.

2.35 Our Company filed a petition in January 2012 before the TDSAT, for setting aside the demandnotices issued by BSNL in connection with the levy of `0.65 per minute as transit carriage chargefor intra-Circle calls, to be paid to BSNL. The intra-Circle transit carriage charge of `0.65 perminute was previously prescribed by the TRAI under the Telecommunication InterconnectionUsage Charges (Sixth Amendment) 2006 Regulations (the “2006 Regulations”) before theTelecommunication Interconnection Usage Charges (Tenth Amendment) 2009 Regulations,brought into force in 2009 (the “2009 Regulations”) set the rate at `0.15 per minute for carriagecharges. The 2009 Regulations were subsequently set aside by the TDSAT. BSNL argued, albeitunsuccessfully, that in the absence of the 2009 Regulations, the erstwhile 2006 Regulationswould revive and consequently the rates prescribed under the earlier regulatory framework wouldbe applicable to existing transactions. BSNL has filed an appeal against the TDSAT’s order. Thematter is pending before the Supreme Court.

2.36 The TRAI issued a direction on July 22, 2003 that where at least one of two telecommunicationsservice providers in the same area desires direct connectivity there should be direct connectivitybetween the two service providers for consumer benefit. This direction was challenged by BSNLbefore the TDSAT, which stated by its order dated May 3, 2005 that (i) the TRAI did not havethe jurisdiction to require service providers to provide direct connectivity and (ii) BSNL must

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refrain from levying transit charges on calls originating from other cellular service provider’snetwork and terminating in BSNL’s Cell One network. Our Company, filed a petition before theTDSAT, inter alia, seeking the benefit of the TDSAT’s order dated May 3, 2005 but this petitionwas disallowed by TDSAT by order dated May 3, 2006. Our Company filed an appeal before theSupreme Court challenging the TDSAT’s order dated May 3, 2006 (in so far as our Company wasnot given the benefit of the TDSAT’s order dated May 3, 2005). BSNL also appealed against theTDSAT order of May 3, 2005 (in so far as it is prohibited from levying transit charges). TheSupreme Court has by its order dated December 6, 2013, stated that the TDSAT does not havethe jurisdiction to entertain challenges to the TRAI’s regulations. The aggregate amount involvedis approximately `240 million. The matter is pending before the Supreme Court.

2.37 BSNL issued a demand of `5,400 million to our Company in relation to access deficit chargesfor fixed wireless phone for the period between November 14, 2004 and August 26, 2005 (the“Demand”). Our Company challenged the Demand before the TDSAT. The TDSAT by an orderdated April 15, 2010 upheld the Demand and also permitted BSNL to raise an invoice for accessdeficit charges levied for the period between August 26, 2005 and February 28, 2006. Aggrievedby the TDSAT’s decision, our Company has filed a civil appeal in the Supreme Court. Theaggregate amount involved is approximately `5,400 million, which has already been paid in fullby our Company. The matter is pending before the Supreme Court.

2.38 Our Company and some of its Subsidiaries filed recovery petitions against the S. Tel PrivateLimited (“S. Tel”) for a claim of approximately `700 million and Etisalat DB Telecom PrivateLimited for approximately `16,000 million. The TDSAT has allowed one of the petitions againstS. Tel for approximately `12 million. The other petitions are pending before the TDSAT. Anexecution petition has been filed against S.Tel seeking execution of the judgment pronounced byTDSAT on May 2, 2014, in Petition No. 93 of 2012, in which RTL’s claim of approximately `12million was upheld along with interest at 10% from the date of filing of the petition.

2.39 Etisalat Mauritius Limited which holds 44.73% of the paid-up equity share capital of Etisalat DBTelecom Private Limited, (“EDB”) (formerly, Swan Telecom Private Limited (“Swan”)) filed awinding up petition before the Bombay High Court for winding up EDB on the grounds that thesubstratum of EDB has been lost and that pursuant to the Supreme Court order dated February2, 2012, the telecommunications licences granted to EDB have been revoked.

Our Company and Reliance Infratel Limited (“Reliance Infratel”) filed before the TDSATproceedings for recovery of unpaid amounts from EDB, for telecommunications services andsharing of passive telecommunications infrastructure, provided by our Company and RelianceInfratel, respectively. Being subject to a winding up proceeding, EDB has sought from theBombay High Court, a stay of the recovery proceedings initiated by our Company and RelianceInfratel; however, no stay has been granted. The matter is pending before the TDSAT.

Our Company and Reliance Infratel have opposed the winding up of EDB on the grounds thattheir dues must be given precedence over the dues arising pursuant to the winding upproceedings. The aggregate amount involved is approximately `16,000 million. The matter ispending before the Bombay High Court.

2.40 RTL and our Company have respectively filed over 23 petitions under Sections 14 and 14A ofthe Telecommunication Regulatory Authority of India Act, 1997 before the TDSAT in relation todemands issued by the DoT imposing penalties on our Company and RTL for, inter alia:

(i) alleged violation by our Company of the terms and conditions of the licence agreement ornorms prescribed by the DoT pertaining to the verification of subscribers by their customeracquisition forms (“CAFs”);

(ii) default or delay in depositing the penalty imposed on our Company and RTL with respectto earlier penalty notices; and

(iii) refusal by the DoT to accept and review CAFs submitted late on account of an injunctionorder restraining our Company and RTL from accessing the CAFs stored in a warehouse.

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The aggregate amount involved is approximately `1,761.2 million.

2.41 Our Company filed a petition before the TDSAT challenging the demand notice issued by theDoT for the payment of `28.82 million for alleged issuance of 700 SIM cards to customers basedon fake identity proofs. The TDSAT issued an interim order dated March 5, 2014 directing theDoT not to take any coercive steps against our Company provided our Company depositedone-third of the said demand. The matter is pending before the TDSAT.

2.42 The COAI, the AUSPI along with others including RTL and our Company (the “Petitioners”)filed a petition before the TDSAT challenging the provisions of the DoT circular dated August9, 2012 pursuant to which telecommunications service providers are required to submit scannedcoloured photographs of each subscriber to the DoT, non-compliance with which would attracta penalty. The Petitioners also challenged the provisions and demands raised thereunderpenalising service providers for, inter alia, accepting CAFs with incomplete information. Thematter is pending before the TDSAT. The aggregate amount involved in the matter isapproximately `12 million.

2.43 Our Company filed a writ petition before the Himachal Pradesh High Court against the Union ofIndia and the Telecom Enforcement, Resource and Monitoring Cell, Shimla (the “TERM”),challenging the penalty levied on our Company by TERM for providing phone connectionswithout proper verification of CAFs which were recovered by the TERM at the office of thedistributor of our Company at Bilaspur, Himachal Pradesh. The Himachal Pradesh High Courthas issued an interim order against the operation of the penalty levied by TERM subject to thedeposit of `2.5 million. The aggregate amount involved is approximately `7.5 million. Thematter is pending before the Himachal Pradesh High Court.

2.44 Reliance Infratel filed a writ petition before the Patna High Court, challenging the notices datedJuly 9, 2010 and June 3, 2011 issued by the Bihar Pollution Control Board (the “BPCB”) toReliance Infratel in connection with the establishment and operation of diesel generator (“DG”)sets at BTS in Bihar. The BPCB issued the notice on the basis that the establishment andoperation of DG sets comes within the definition of ‘industrial plant’ under the Air (Preventionand Control of Pollution) Act, 1981 (the “Air Pollution Act”). As per the Air Pollution Act, priorconsent of the relevant pollution board must be obtained to operate industrial plants in adesignated air pollution control area, a violation of which could lead to closure of the industrialplants. It is alleged that Reliance Infratel has not obtained such consent from the BPCB beforeestablishing DG sets. Reliance Infratel has also challenged the validity of the notification datedSeptember 22, 2009 which specifies the rates for seeking consent of the BPCB under the AirPollution Act. The matter is pending before the Patna High Court.

2.45 The DoT, by various circulars amended the licence agreements of telecommunications serviceproviders requiring a licensee to conduct audit and undertake self certification to demonstrateconformity with the BTS emissions standards. Pursuant to these circulars, the DoT issuedshow-cause notices to various licensees imposing penalties for not submitting self certificates inthe time and manner stipulated by the DoT. The COAI has challenged the circular dated October10, 2012 and the show cause notices on the ground, inter alia, that the penalty imposed by theDoT is retrospective in nature. The aggregate amount involved is approximately `560 million.The TDSAT issued an interim order dated August 30, 2013 directing the DoT to refrain fromtaking any coercive action against the Petitioners for realisation of the demand. The matter ispending before the TDSAT.

2.46 On October 22, 2011, the Special Judge, CBI framed charges against RTL, three executives ofthe Reliance Group and certain non-Reliance Group persons for various offences, inter alia, forcriminal breach of trust, criminal conspiracy, forgery, giving false evidence, abetment ofcorruption of a public servant and abetment of an offence under Sections 109, 120B, 193, 409,420, 468, 471 of the Indian Penal Code, or in the alternative, Sections 11, 12 and 13(2) read with13(1)(d) of the Prevention of Corruption Act, 1988, in relation to award of the UASL to Swan.It is alleged that Swan was ineligible to be granted a UASL as RTL, directly as well as throughits associates, was holding securities in Swan in excess of the prescribed limits. Clause 8 of theUASL agreement stated that no single person could directly or indirectly hold 10% or more ofmore than one licensee in the same service area for the same service. RTL and the other accused

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contended that RTL had held securities within the prescribed limits in Swan when Swan hadapplied for the UASL but had not acquired the UASL and in 2007 RTL sold the securities it heldin Swan. When Swan acquired the UASL, RTL did not hold any securities in Swan. The matteris pending before the Special Judge, CBI. Further, a special leave petition has been filed beforethe Supreme Court for quashing of charges framed on October 22, 2011. The matter is pendingfor hearing before the Supreme Court.

2.47 The Company and its subsidiary RITL has filed two recovery petitions against Tulip TelecomLtd. for claiming of dues amounting to `283.7 million and `42.9 million as at March 1, 2014,payable by Tulip Telecom Ltd. towards services provided by the Company and RITL in terms ofa service level agreement dated April 1, 2010 and an agreement for passive TelecomInfrastructure dated March 11, 2010, respectively. The matters are pending before the TDSAT.

TAX MATTERS

3 Tax claims against our Company and its Subsidiaries

3.1 Our Company and RTL filed an appeal and stay petition before CESTAT, Mumbai, against anorder of the Commissioner, Mumbai disallowing CENVAT credit availed by our Company onmaterial and allied goods, which were used for erection of telecommunications towers. By itsorder dated March 18, 2015, the CESTAT partially allowed the appeal by confirming the demandmade by the Commissioner which fell within the limitation set. Pursuant to the order, ourCompany and RTL will be liable to pay an amount of `97.46 million and `2.73 million,respectively.

3.2 RTL filed an appeal and stay petition before CESTAT, Kolkata, against an order of Commissionerof Service Tax, Kolkata upholding service tax demand on maximum retail price of rechargevouchers (“RCVs”). RTL had paid service tax on discounted value of the RCVs. The CESTAThas granted stay and appeal is pending. The amount involved in the matter is approximately`87.88 million. Additional interest amount may be levied on the tax demand by the courts andthe tribunals in accordance with the provisions of the Finance Act.

3.3 RTL filed an appeal and stay petition before CESTAT, Kolkata, against an order of theCommissioner, Kolkata disallowing CENVAT credit availed by RTL on materials and alliedgoods, used for the erection of telecommunications towers. The CESTAT has granted stay andappeal is pending. The amount involved in the matter is approximately `450.80 million.Additional interest amount may be levied on the tax demand by the courts and the tribunals inaccordance with the provisions of the Finance Act.

3.4 Reliance Infratel filed an appeal and stay petition before CESTAT, Mumbai, against an order ofthe Commissioner, Mumbai categorising advances received from Reliance Infratel, asconsideration for services provided. The CESTAT has, by its order dated March 19, 2015,allowed the appeal and set aside the demand made by the Commissioner, Mumbai.

3.5 RCIL filed an appeal and stay petition before CESTAT, Mumbai, against an order of theCommissioner, Mumbai disallowing CENVAT credit availed by RCIL on materials and alliedgoods, used for the erection of telecommunications towers. The CESTAT has stayed the operationof the order of the Commissioner and the appeal is pending for hearing. The amount involved inthe matter is approximately `187.32 million. Additional interest amount may be levied on the taxdemand by the courts and the tribunals in accordance with the provisions of Finance Act.

3.6 In addition to the above litigation pending against our Company and its subsidiaries, there arefive cases relating to levy of service tax on our Company and some of its Subsidiaries pendingbefore various service tax authorities. The amount involved in the matter is approximately`77.07 million. Additional interest amount may be levied on the tax demands by the courts andthe tribunals in accordance with the provisions of the Finance Act.

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3.7 The Commissioner, Mumbai has confirmed and disallowed the CENVAT Credit claimed onvarious input services including the services related to health clubs on the basis that suchservices cannot be considered input services for providing telecommunications services (i.e. theoutput services).The appeal and stay petition are being filed before the CESTAT, Mumbai. Theamount involved in the matter is approximately. `22.34 million. Additional interest amount maybe levied on the tax demand by the departmental authorities or the courts and the tribunals inaccordance with the provisions of the Finance Act.

3.8 The Commissioner, Mumbai has confirmed the demand of Service Tax on the sale of SIM cards,on the basis that the sale of a SIM card is a part of the “service” rendered by RCIL to thesubscribers. The appeal and stay petition are being filed with the CESTAT, Mumbai. The amountinvolved in the matter is approximately `414.29 million. Additional interest amount may belevied on the tax demand by the departmental authorities or the courts and the tribunals inaccordance with the provisions of the Finance Act.

3.9 The Commissioner, Mumbai issued a SCN to RCIL demanding that RCIL show cause as to whyservice tax should not be levied on amounts received by RCIL pursuant to assignment of itsdebts. The matter is pending before the Commissioner. The amount involved in the matter wasapproximately `674.83 million. By its order dated December 31, 2014, the Commissioner heldthat the SCN is not legally sustainable and the proceeding should be dropped.

3.10 The Commissioner, Mumbai, by its order dated March 9, 2015, confirmed the demand onReliance Infratel for service tax on leasing charges for optical fibre network services providedto our Company. The actual billed amount to our Company as leasing charges differed from theamount indicated by Reliance Infratel in its balance sheet which was calculated on the basis ofstraight line method as prescribed in the applicable accounting standard. Our Company isplanning to file an appeal and pray for a stay before the CESTAT. The amount involved in thematter is approximately `16,372.03 million. Additional interest amount may be levied on the taxdemand by the departmental authorities or the courts and the tribunals in accordance with theprovisions of the Finance Act.

3.11 In addition to above demands raised against our Company and its Subsidiaries, service taxauthorities have issued ten SCNs to our Company and some of its Subsidiaries, in connectionwith availment of CENVAT credit and levy of service tax. The matters are pending before theCommissioner. The aggregate amount involved in the matters is approximately `4,342.55million. Additional interest amount may be levied on the tax demand by the departmentalauthorities or the courts and the tribunals.

3.12 The Commissioner, Mumbai has issued a SCN to RCIL demanding that RCIL show cause as towhy service tax should not be levied on amounts received by RCIL pursuant to assignment of itsdebts. The matter is pending before the Commissioner. The amount involved in the matter isapproximately `45.86 million. Additional interest amount may be levied on the tax demand bythe departmental authorities or the courts and the tribunals.

3.13 The Commissioner, Mumbai has, by its order dated January 29, 2015, confirmed the demand onReliance Infratel disallowing CENVAT credit availed on inputs and inputs service used in theerection of towers. Our Company is planning to file an appeal and pray for a stay before theCESTAT. The amount involved in the matter is approximately `1,396.05 million. Additionalinterest amount may be levied on the tax demand by the departmental authorities or the courtsand the tribunals.

3.14 The DGCEI, Mumbai has issued a SCN to RCIL demanding that RCIL show cause as to whyCENVAT credit availed on set top boxes should not be disallowed. The matter is pending beforethe Commissioner. The amount involved in the matter is approximately `1,665.80 million.Additional interest amount may be levied on the tax demand by the departmental authorities orthe courts and the tribunals.

3.15 The Commissioner of Service Tax, Mumbai has issued a SCN to RCIL demanding service taxeson consideration required on sale of Internet E-vouchers to their distributors. The matter ispending with the Commissioner and the amount involved is approximately `1,454.18 million.

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3.16 RCIL filed an appeal against the order of the sales tax officer, Orissa, levying value-added tax(“VAT”) on RCIL, in connection with the transfer of, inter alia, duct and cable to RTL. Pursuantto the appeal filed by RCIL, the appellate authority has ordered the sales tax officer, Orissa toconduct a re-assessment for the financial year 2001 and the financial year 2002. The matter ispending before the sales tax officer, Orissa. The amount involved in the matter is approximately`97.47 million. Additional interest may be levied on the tax demand by the departmentalauthorities or the courts and the tribunals in accordance with the provisions of the relevant StateVAT legislations.

3.17 RCIL filed an appeal against the order of the sales tax officer, Uttarakhand, levying VAT on datacards and RCVs. The matter is pending before the High Court of Uttarakhand and the JointCommissioner of Commercial Taxes (Appeals), Uttarakhand. The amount involved in the matteris approximately `58.86 million. Additional interest may be levied on the tax demand by thedepartmental authorities or the courts and the tribunals in accordance with the provisions of therelevant State VAT legislations.

3.18 Reliance Infratel filed a writ petition and application for stay of proceedings before the KeralaHigh Court, challenging the levy of VAT by Kerala sales tax authorities on passive infrastructurecharges billed out to our Company and other service providers by Reliance Infratel. By its orderdated January 2, 2012, the High Court has stayed the operation of the order of the sales taxauthorities and the appeal is pending for hearing. The amount involved in the matter isapproximately `134.10 million. Additional interest may be levied on the tax demand by thedepartmental authorities or the courts and the tribunals in accordance with the provisions of theapplicable State VAT legislations.

3.19 In addition to the above litigation, various State tax authorities have initiated proceedings orissued notices of demand against our Company and its Subsidiaries in relation to levy ofVAT/Sales Tax under the relevant State VAT legislations including of the States of Assam, Bihar,Chattisgarh, Himachal Pradesh, Kerala, Madhya Pradesh, Maharashtra, Orissa, Punjab,Rajasthan, Uttar Pradesh, Uttarakhand and West Bengal. There are over 115 cases relating to levyof VAT/Sales Tax pending before various departmental authorities, State tribunals and HighCourts. The aggregate amount involved in the matters is approximately `981.62 million.Additional interest may be levied on the tax demands by the departmental authorities or thecourts and the tribunals in accordance with the provisions of the relevant State VAT legislations.

3.20 RTL filed an appeal before the West Bengal Commercial Taxes Appellate Revision Board (the“Board”) against the action of the Deputy Commissioner of Sales Tax, West Bengal. The DeputyCommissioner of Sales Tax, West Bengal rejected the form “F” filed by RTL in connection withinter-State movement of stock which is not for the purposes of sale. Under the Central sales tax(“CST”) regime in India, such inter-State movement is exempted. The matter is pending beforethe Board. The amount involved in the matter is approximately `53.60 million. Additionalinterest may be levied on the tax demand by the departmental authorities or the courts and thetribunals in accordance with the provisions of Central Sales Tax Act, 1956 (the “CST Act”).

3.21 In addition to the above proceedings, various tax authorities have initiated proceedings or issuednotices of demand, against our Company and some of its Subsidiaries, in relation to payment ofCST. There are over 25 cases relating to levy of CST pending before various departmentalauthorities and the State tax tribunals. The amount involved in the matter is approximately`125.24 million. Additional interest may be levied on the tax demands by the departmentalauthorities or the courts and the tribunals in accordance with the provisions of the CST Act.

3.22 Our Company, RTL, RCIL and Reliance Infratel (together, the “Entry Tax Assessees”) havereceived notices of demands of entry tax from authorities in the States of Assam, Bihar,Chhattisgarh, Madhya Pradesh, Meghalaya, Orissa, Rajasthan and Uttar Pradesh for the paymentof entry tax on plant and machinery (including electrical machinery and optic fibre cables)imported by the Entry Tax Assessees for the telecommunications operations into the relevantState territory. There are over 100 cases relating to levy of entry taxes against the Entry TaxAssessees pending before various departmental authorities, the State tribunals, the High Courts,and the Supreme Court including the following proceedings: (i) proceedings initiated againstReliance Infratel by the Assam State tax authorities. The amount involved in the matter is

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approximately `103.45 million. The matter is pending before the Supreme Court; (ii)proceedings initiated against RCIL by the Madhya Pradesh State tax authorities. The amountinvolved in the matter is approximately `151.77 million. RCIL has filed a special leave petitionto the Supreme Court, appealing against the order passed by the Madhya Pradesh High Court.The matter is pending before the Supreme Court; and (iii) two proceedings (for variousassessment years) initiated by the Rajasthan State tax authorities against our Company. Theamounts involved in the matters are approximately `406.63 million. The matters are pendingbefore the Supreme Court; and (iv) proceedings initiated by the Rajasthan State tax authoritiesagainst Reliance Infratel. The amount involved in the matter is approximately `149.53. Thematter is pending before the Supreme Court. The aggregate amount involved in these matters isapproximately `1332.02 million. Additional interest may be levied on the tax demands by thedepartmental authorities or the courts and the tribunals in accordance with the relevantprovisions of State entry tax legislations.

3.23 Our Company and some of its Subsidiaries (in certain instances) have challenged the legality andconstitutional validity of the levy of entry tax by States, in various High Courts including thePatna High Court, the Himachal Pradesh High Court, the Jammu and Kashmir High Court, theMadhya Pradesh High Court, the Punjab and Haryana High Court and the Rajasthan High Court.Our Company and some of its Subsidiaries have also filed special leave petitions before theSupreme Court in connection with the constitutional validity of the levy of entry taxes by theStates. The Supreme Court has constituted a larger bench to decide the issue.

3.24 Reliance Big TV Limited filed two special leave petitions before the Supreme Court appealingagainst the decisions of the Jharkhand High Court and the Allahabad High Court, which upheldthe levy of entertainment tax on DTH services in the States of Jharkhand and Uttar Pradesh.

3.25 RTL has filed a writ petition before the Madhya Pradesh High Court challenging theconstitutional validity of Madhya Pradesh Vilaisita, Manoranjan, Amod, Evam Vigyapan KarAdhiniyam 2011 (the “MP Entertainment Tax Act”). The challenge was pursuant to levy ofentertainment tax, by the Madhya Pradesh State tax authorities, under the MP Entertainment TaxAct, on the value-added services provided by RTL including ringtones, music, videos, jokes,characterising provision of such services as entertainment. The matter is pending before theMadhya Pradesh High Court. The amount involved in the matter is approximately `266.9 million.

3.26 The Entertainment Tax Officer, Hyderabad has issued a SCN to RBTV demanding RBTV to showcause as to why entertainment tax amounting to `76.67 million should not be levied for the years2001-02 to 2013-14. Additional interest amount may be levied on the tax demand by the taxauthorities or the courts and the tribunals.

3.27 There are 129 appeals pending before the Bombay High Court filed by our Company, RTL, RCILand Reliance BPO Private Limited (together, the “Appellants”) arising out of a common orderpassed by the Income Tax Appellate Tribunal (the “Appellate Tribunal”), Mumbai on September6, 2013 (the “Common Order”). The appeals relate to deduction of tax at source on remittancesmade by the Appellants to various non-resident software vendors, in relation to purchase ofsoftware for the telecommunications business. The Appellants, by way of applications (the“Applications”) filed under section 195 of the IT Act sought permission from the AssessingOfficer (the “AO”) to make payment to the non-resident software vendors without deduction oftax at source, on the basis that such payments were for the purchase of ‘copyrighted goods’. TheAO passed orders under Section 195 directing the Appellants to pay the purchase consideration,in all the transactions, after deducting tax at source, in accordance with Section 195 of the ITAct, on the basis that such payments constitute ‘royalty’. On appeal, the Commissioner ofIncome Tax (Appeals) (the “CIT(A)”) set aside the orders of the AO. The CIT(A)’s orders weresubsequently set aside by the Common Order passed by the Appellate Tribunal. The Company hasalso filed applications before the Appellate Tribunal to recall the Common Order in view ofcertain errors and the application is pending for disposal.

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Pursuant to the Common Order, the AO passed an appeal effect order (with respect to one vendor)against the Appellant demanding principal amount of withholding tax refunded earlier along withinterest under Section 234D of the IT Act on the tax refund already received by our Company.The Appellants have filed an appeal before the CIT(A) against the order passed by the AO. Thematter is pending before the CIT(A). The aggregate amount involved in all these matters isapproximately `1,450 million.

3.28 The AO issued an assessment order dated June 11, 2009 assessing the taxable income of ourCompany for the assessment year 2007-2008 as ‘nil’ (the “Assessment Order”). Pursuant toSection 263 of the IT Act, the Commissioner of Income Tax (the “CIT”) passed an order onMarch 30, 2012 setting aside the Assessment Order on the basis that the AO did not properlyexamine certain transactions entered into by our Company in relation to: (i) the funds raisedthrough foreign currency convertible bonds; (ii) the taxability of interest earned by Reliance InfoInvestment Private Limited (which has been subsequently merged with RCIL); and (iii) thedisallowance of mark-to-market losses as business losses ((i), (ii) and (ii) together referred to asthe “Transactions”), and, therefore the total taxable income of our Company would have beenhigher, if the AO had properly examined the Transactions. Our Company filed an appeal againstthe order passed by the CIT, before the Appellate Tribunal which allowed the appeal and set asidethe order passed by the CIT. The CIT has filed an appeal before the Bombay High Court againstthe order of the Appellate Tribunal. The amount involved in the matter is approximately `22,110million.

3.29 Pursuant to Section 263 of the IT Act, the CIT passed an order on November 22, 2012 settingaside the AO’s assessment order in relation to our Company’s taxable income for the assessmentyear 2008-2009 on the basis that the AO did not properly examine certain transactions enteredinto by our Company in relation to: (i) taxability of interest earned by Reliance Info InvestmentPrivate Limited; and (ii) disallowance of mark-to-market losses incurred by our Company asbusiness losses and, therefore the total taxable income of our Company would have been higher,if the AO had properly examined the transactions mentioned in (i) and (ii) above. Our Companyhad filed an appeal before the Appellate Tribunal, against the order passed by the CIT. TheAppellate Tribunal set aside the order passed by the CIT on November 22, 2012. The Companyis yet to receive any correspondence regarding any appeal filed by the AO against the orderpassed by the Appellate Tribunal. The amount involved in the matter is approximately `1,240million.

3.30 The AO passed an assessment order dated May 3, 2013 making: (a) transfer pricing adjustments;and (b) certain disallowances under Sections 14A and 40(a) of the IT Act, for the assessment year2009-2010 (the “Assessment Order”). Our Company has filed an appeal against the AssessmentOrder before the CIT(A). The matter is pending before the CIT(A). The amount involved in thematter is approximately `2,120 million. Additional interest amount may be levied on the taxdemand by the courts and the tribunals in accordance with the provisions of the IT Act.

3.31 The CIT(A) had passed orders dated February 28, 2011, for assessment years 2007-2008 to2010-2011, partly allowing our Company’s appeals against the orders passed by the AO. Thedisputes arose as a result of the Assessing Officer subjecting certain transactions of our Companyto (i) withholding tax; or (ii) different withholding tax treatment under the IT Act, wherewithholding tax had been paid by our Company. The transactions included (i) payments made byour Company to RCIL for providing billing and collection services to our Company; (ii)discounts provided by our Company to RCIL for distribution and marketing of Company’sservices including pre-paid mobile telephony services. The AO has filed appeals before theAppellate Tribunal against the orders passed by the CIT(A) in respect of the billing andcollection services. The amount involved in the matter is approximately `50 million (being theinterest component of the tax demand). Our Company has already paid taxes due on paymentsreceived.

3.32 The AO has passed an assessment order against our Company making: (a) transfer pricingadjustments; and (b) certain disallowances under Sections 14A, 36(1)(iii) and 40(a)(ia) of the ITAct, for the assessment year 2010-2011. Our Company has filed an appeal before the CIT(A)against the order of the AO. The amount involved in the matter is approximately `1,460 million.Additional interest amount may be levied on the tax demand by the courts and the tribunals inaccordance with the provisions of the IT Act.

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3.33 The Bombay High Court passed an order dated March 15, 2013 dismissing the appeal filed bythe AO challenging the order of the Appellate Tribunal in relation to the determination of RCIL’staxable income for the assessment year 2005-2006. The dispute arose, inter alia, in respect of (i)certain disallowances under Section 14A of the IT Act and (ii) taxability of advances receivedby RCIL in connection with IRU to use the optic fibre cable network provided by RCIL to ourCompany. The AO has filed a special leave petition before the Supreme Court against the orderof the Bombay High Court. The matter is pending before the Supreme Court. The amountinvolved in the matter is approximately `1,670 million. Additional interest amount may be leviedon the tax demand by the courts and the tribunals in accordance with the provisions of the IT Act.

3.34 The CIT(A) by way of its order dated April 2, 2012 allowed RCIL’s appeal against an orderpassed by the AO. The dispute relates, inter alia, to disallowances made under Section 14A andSection 40(a)(ia) of the IT Act for the assessment year 2007-2008. The AO has filed an appealbefore the Appellate Tribunal against the order passed by the CIT(A). The matter is pendingbefore the Appellate Tribunal. The amount involved in the matter is approximately `660 million.Additional interest amount may be levied on the tax demand by the courts and the tribunals inaccordance with the provisions of the IT Act.

3.35 The CIT(A) passed an order dated August 27, 2012 in favour of RCIL in connection withdisallowances made under Section 40(a)(ia) of the IT Act for the assessment year 2008-2009. TheAO has filed an appeal before the Appellate Tribunal against the order passed by the CIT(A). Thematter is pending before the Appellate Tribunal. The amount involved in the matter isapproximately `900 million. Additional interest amount may be levied on the tax demand by thecourts and the tribunals in accordance with the provisions of the IT Act.

3.36 The AO passed an order against RCIL making: (a) transfer pricing adjustments; and (b)disallowances under Sections 14A, 40(a)(ia), 32 and 80IA of the IT Act, for the assessment year2009-2010. RCIL has filed an appeal before the CIT(A) against the order passed by the AO. Theamount involved in the matter is approximately `1,070 million. Additional interest amount maybe levied on the tax demand by the courts and the tribunals in accordance with the provisions ofthe IT Act.

3.37 The AO passed an order against RCIL making: (a) transfer pricing adjustments; and (b)disallowances under Sections 14A, 40(a)(ia), 32 and 80IA of the IT Act, for the assessment year2010-2011. RCIL has filed an appeal before the CIT(A) against the order passed by the AO. Theamount involved in the matter is approximately `1,450 million. Additional interest amount maybe levied on the tax demand by the courts and the tribunals in accordance with the provisions ofthe IT Act.

3.38 The CIT(A) passed an order dated February 28, 2011 partly allowing our Company’s appealsagainst the order passed by the AO in connection with RCIL’s obligation to deduct tax at sourcefor the assessment years 2007-2008 to 2010-2011 for the payment of (i) access charges as perSection 194J of the IT Act and (ii) trade discounts as per Section 194H of the IT Act. The AOhas filed an appeal before the Appellate Tribunal against the order passed by CIT(A) on the issueof access charges payments. The amount involved in the matter is approximately `170 million.

3.39 The AO passed an order against RCIL for its failure to deduct tax at source in relation to thepayment of access charges for the assessment year 2011-2012. RCIL has filed an appeal beforethe CIT(A) against the order passed by the AO. The matter is pending before the CIT(A). Theamount involved in the matter is approximately `110 million.

3.40 The AO passed an order against RCIL for its failure to deduct tax at source in relation to thepayment of access charges for the assessment year 2012-2013. RCIL has filed an appeal beforethe CIT(A) against the order passed by the AO. The amount involved in the matter isapproximately `160 million.

3.41 The Appellate Tribunal passed an order setting aside a revision order passed by CIT inconnection with (i) levy of capital gains tax on transfer of shares by RCIL and (ii) taxability ofadvances received by RCIL for the assessment year 2004-2005, in connection with the IRU touse the optic fibre cable network provided by RCIL to our Company. The AO preferred an appeal

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to the Bombay High Court against the order passed by the Appellate Tribunal, which wasdismissed. The AO has filed a special leave petition before the Supreme Court against the orderof the Bombay High Court. The matter is pending before the Supreme Court. The amountinvolved in the matter is approximately 18,550 million. Additional interest amount may be leviedon the tax demand by the courts and tribunals in accordance with the provisions of the IT Act.

3.42 The Appellate Tribunal by an order dated March 31, 2011 set aside an order passed by CIT(A)in connection with a claim for deducting hedging losses made by Synergy Entrepreneur SolutionsPrivate Limited (which was subsequently merged with RCIL) for the assessment year 2005-2006.Our Company is yet to receive any correspondence regarding any appeal filed by the AO againstthe order of the Appellate Tribunal. The amount involved in the matter is approximately `150million. Additional interest amount may be levied on the tax demand by the courts and thetribunals in accordance with the provisions of the IT Act.

3.43 The AO passed a reassessment order against RTL for the assessment year 2008-2009. There-assessment order ignored the premium paid on the preference shares of Swan (by RTL) whileconsidering the cost of acquisition, for the purpose of calculation of short term capital gains.RTL has filed an appeal before the CIT(A) against the re-assessment order. The amount involvedin the matter is approximately `4,790 million. Additional interest amount may be levied on thetax demand by the courts and the tribunals in accordance with the provisions of the IT Act.

3.44 The CIT(A) passed orders between assessment years 2001-2002 to 2008-2009 in connection witha dispute between Reliance Globalcom Limited, Bermuda (“Reliance Globalcom”) and the AO,on the taxability of revenue generated from Indian customers by way of (i) standby maintenance;and (ii) restoration services in India. Both Reliance Globalcom and the AO have filed crossappeals before the Appellate Tribunal against the order passed by CIT(A). The amount involvedin the matter is approximately `208 million. Additional interest amount may be levied on the taxdemand by the courts and tribunals in accordance with the provisions of the IT Act.

3.45 The AO passed an assessment order, for assessment year 2006-2007, against Reliance Globalcomtreating the credits in the bank accounts of Reliance Globalcom held in countries outside Indiaas cash credits, and income from investments made in such bank accounts, as income sourced outof India and subjected such amounts to taxation in India. Reliance Globalcom has filed an appealbefore the CIT(A). The matter is currently pending before the CIT(A). The amount involved inthe matter is approximately `780 million. Additional interest amount may be levied on the taxdemand by the courts and tribunals in accordance with the provisions of the IT Act.

3.46 In addition to the above proceedings, there are 11 other income tax related proceedings pendingagainst our Company and some of its Subsidiaries at various judicial fora, such as the SupremeCourt, the Appellate Tribunal and the CIT(A). The aggregate amount involved in all the mattersis approximately `140 million.

MISCELLANEOUS MATTERS

4 Miscellaneous matters involving our Company and its Subsidiaries

4.1 There are over 448 civil cases filed against our Company and its Subsidiaries in relation to theirtelecommunications infrastructure such as towers, cable network and other infrastructureequipment, owned, installed or used by it. These relate to, inter alia, illegal construction oftowers or laying of cable networks resulting in radiation, health hazards, nuisance, damage toproperty, the non-payment of taxes or fees or obtaining permissions in relation to such towersand cables, etc.

4.2 The Company and RTL (together, the “Claimants”) have initiated arbitration proceedingsagainst the DoT under the agreements executed with the Government to provide mobiletelecommunications services to designated rural areas, under the ‘universal service obligation’initiative of the Government, to increase telecommunications penetration in India. Thearbitration proceedings initiated by the Claimants relate to: (i) discharge of the Claimants’obligations to provide mobile telephony services in designated rural areas (the “Telephony

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Dispute”). An arbitral award dated December 11, 2013 was passed by the sole arbitrator inconnection with the Telephony Dispute, upholding the claims of the Claimants, which has beenchallenged by the Government before the Delhi High Court. The matter is currently pendingbefore the Delhi High Court.

4.3 The Company is involved in arbitration proceedings with the DoT, under the agreement executedbetween them, to provide fixed telephone lines in designated rural areas, in connection with theimplementation of the ‘universal service obligations’ initiative of the Government. The disputearose, inter alia, on account of a demand raised by the DoT, for refund of alleged excess subsidypayments received by our Company for providing/installing fixed telephone lines in designatedrural areas (the “Subsidy Dispute”). The arbitration proceedings in relation to the SubsidyDispute are ongoing. The aggregate amount involved in the matter is approximately `315.3million (which includes the interest calculated as at October 2012, on the refund sought by theDoT).

4.4 On July 28, 2010, the State Industries Promotion Corporation of Tamil Nadu Limited (the“SIPCOT”) issued an order for our Company to pay rent for using RCC cable duct at a rate of`1.5 million per kilometre per annum in areas where the cable ducts had been installed. In a writpetition filed by our Company before the Madras High Court, the Madras High Court set asidethe SIPCOT’s order. The SIPCOT has filed an appeal before the Madras High Court challengingthe order of the Madras High Court. The aggregate amount involved is approximately `1.5million per kilometre per annum for a total length of 9.48 kilometres. On December 2, 2014, theMadras High Court dismissed the writ appeal filed by SIPCOT. Consequently, the Companycontinues to pay rent for using RCC cable duct at a rate of `9,400 per kilometer per annum.

4.5 On April 1, 2006, the Government of Maharashtra announced its policy to grant the right of wayto all telecommunications service providers’ cables, ducts, conduits, etc. It declared that theDirectorate of Information Technology would be the sole authority to grant such right of way.Pursuant to an agreement between the State Government and Giga Solutions Private Limited(“Giga”) dated November 19, 2005, Giga has been given a right of way for 15 years against thepayment of a one-time charge. However, on September 17, 2009, the Pune Municipal Corporation(the “PMC”) issued a letter to Giga demanding a one-time rental of `200 million for layingcables and a compounding fee of `600 million for alleged unauthorised laying of aerial cables.Giga and our Company, which supplies infrastructure to Giga (together, the “Petitioners”), havechallenged this demand of the PMC by way of a writ petition before the Bombay High Court. Byan interim order dated August 5, 2013, the Bombay High Court has restrained the PMC fromtaking any coercive action against the Petitioners. The matter is pending before the Bombay HighCourt for admission.

4.6 Our Company has filed writ petitions before the Andhra Pradesh High Court against theGovernment of Andhra Pradesh and the Greater Hyderabad Municipal Corporation against ordersissued by the said municipal bodies to telecommunications service providers pursuant to whichservice providers are required to pay `0.1 million for the installation of each tower. OurCompany has challenged the legality of these demands on grounds, inter alia, that these demandsare arbitrary and unjust. The aggregate amount involved is approximately `65 million. Thematters are pending before the Andhra Pradesh High Court. Similar notices have also beenreceived from the Greater Vishakapatnam Municipal Corporation and other municipalcorporations in Andhra Pradesh and the Company has filed similar petitions challenging thesenotices.

4.7 Reliance Infratel has filed a writ petition before the Chhattisgarh High Court against theDepartment of Urban Administration and Development, Chhattisgarh and others challenging thecircular dated November 18, 2009 (the “Circular”) which imposes scrutiny charges and permitfees on Reliance Infratel for installing telecommunications towers in the State of Chhattisgarh.Pursuant to the Circular, the Municipal Corporation of Raipur issued demand notices on RelianceInfratel for payment of compounding and renewal fees for regularisation of towers. UponReliance Infratel’s failure to pay, the Municipal Corporation of Raipur sealed Reliance Infratel’stowers within its jurisdiction. Reliance Infratel sought an interim order for unsealing the towers,pursuant to which the Chattisgarh High Court has directed the Municipal Corporation to unseal

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one of the towers sealed in Raipur. The Circular has since been superseded by a notification datedSeptember 24, 2010 issued by the State of Chhattisgarh under which the Chhattisgarh MunicipalCorporation (Erection of Temporary Towers and Structures for Cellular Mobile Phone) Rules2010 (the “Rules”) have been framed. The Company has challenged the constitutional validityof the Rules before the Chhattisgarh High Court, on the basis that, inter alia, the State ofChhattisgarh does not have the legislative competence to make laws on towers which fall withinthe ambit of “telegraph” which is a subject on which only the Union Parliament can legislate. Thematter is pending before the Chattisgarh High Court.

4.8 There are over 540 consumer disputes filed against our Company and some of its Subsidiaries.These relate to, inter alia, deficiency in products or services, wrong billing, disconnection oftelecommunications connections, etc.

4.9 There are over 102 labour disputes filed against our Company and some of its Subsidiaries. Theserelate to, inter alia, non-payment of wages, employment benefits or wrongful termination ofemployment, etc.

4.10 There are 51 investor complaints against our Company as at January 31, 2015. These were filedin relation to the demerger of our Company from Reliance Industries Limited, where parties haveclaimed to have lost shares pursuant to the said demerger.

4.11 Apart from the above, there are over 184 civil proceedings filed against our Company and someof its Subsidiaries in relation to various miscellaneous issues. These relate to, inter alia, paymentof correct stamp duty on land acquired by it, disputes relating to real estate acquired by ourCompany and its Subsidiaries, suits for recovery of money, etc.

PROMOTER LITIGATION

5 Criminal cases filed against the Promoters

5.1 There are 29 criminal cases filed against Reliance Capital Limited (“Reliance Capital”) by itscustomers in various courts in respect of disbursement of loan amounts. These cases are pendingat various stages of adjudication. A majority of these cases are the appeals/revisions in respectof cases filed against borrowers’ under Section 138 of the Negotiable Instruments Act, 1881.These matters are currently pending.

5.2 There are 12 criminal cases in which Mr. Anil D. Ambani has been impleaded as a party. 10 ofthese cases are included in paragraph 1 of “Legal Proceedings” section. The two other cases arein relation to non-compliance with the Minimum Wages Act, 1948 and non-payment in relationto a franchisee agreement.

6 Civil cases filed against the Promoters

6.1 Bharatiben and others (as legal heirs and representatives of late Manubhai Maneklal) (the“Plaintiffs”) have filed a suit before the Bombay High Court against Reliance Capital forrecovery of equity shares delivered by Manubhai Maneklal and the Plaintiffs to Reliance Capitalas a custodian in relation to transactions undertaken by Reliance Enterprises Limited. Theaggregate amount involved in this matter is `75.7 million. The matter is currently pending.

6.2 Adil Patrawala has filed a civil case before the Company Law Board, Mumbai against QuantCapital Private Limited and Reliance Capital under Sections 397 and 398 of the Companies Act,1956 claiming mismanagement in the affairs of Quant Capital Private Limited and oppression ofthe minority shareholder. Reliance Capital has been made a party to the suit as it is a majorityshareholder having 74% stake in Quant Capital Private Limited. The matter is currently pendingbefore the Company Law Board, Mumbai.

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OFFSHORE COMPANIES LITIGATION

7 Matters concerning Offshore Subsidiaries

7.1 On August 20, 2002, Reliance Globalcom (UK) Limited received a Notice from the UK Officeof Fair Trading (“OFT”) requiring the production of certain documents and the provision ofinformation under Section 26 of the Competition Act 1998, in connection with an enquiryinstituted (and then abandoned) by the OFT, following a formal complaint by Cityhook Limitedand Cityhook (Cornwall) Limited (“Cityhook”).

Having failed to obtain a redressal from the Competition Appeals Tribunal (where the case wasrejected per the CAT judgment published on April 3, 2007), or from the subsequent JudicialReview of the original OFT decision, Cityhook initiated a private action on 20 July 2006 in theChancery Division of the High Court against a number of defendants (from UKCPC andotherwise), including the Group and Reliance Globalcom Limited; such suit alleging aninfringement of Article 81(1) EC Treaty and/or the Chapter I prohibition of the Competition Act1998.

This action was stayed pending the outcome of proceedings before the CAT, and then until theconclusion of Judicial Review proceedings. The stay has not yet been lifted, as Cityhook has tonotify the various parties to the proceedings. On account of passage of time, it is unclear whetherCityhook will actively pursue proceedings before the High Court. Consequently, it is not possibleto provide any reliable estimate of the outcome. It should be noted that that there has been noactivity on the High Court action since the stay was extended either (a) during any of thesubsequent financial years since then, or (b) in particular, during the financial year ended March31, 2015.

7.2 SAIF filed a suit for the recovery of an amount of US$183,672 against Reliance Flag TelecomIreland Limited (“Reliance Flag”) before the First Class Civil Court of Islamabad, in Pakistanon the basis of a letter agreement dated March 2, 2002.

This matter is at evidence stage and SAIF after closing its evidence has submitted a copy ofdocument as secondary evidence which has been allowed by the judge as evidence. Reliance Flagmoved an application to de-exhibit the same accordingly to law. By an order dated October 21,2014, the First Class Civil Court of Islamabad rejected Reliance Flag’s application. RelianceFlag filed an appeal in the Islamabad High Court against this order. The Islamabad High Courtstayed the First Class Civil Court’s order on December 3, 2014. The next hearing date before theIslamabad High Court is fixed for May 20, 2015.

7.3 On 2nd September 2012, Reliance Globalcom (UK) Limited was served with a judicial letterfrom the Malta Resources Authority (‘MRA’), announcing the MRA’s intention to issue a formalclaim in the event the company did not pay an annual ‘licence fee’ for the crossing of the Maltesecontinental shelf by the Hawk cable system. The amount of the claim (covering the fees for a 3year period) is C= 349,500. We believe that the imposition of a licence fee is illegal and contraryto the provisions of UNCLOS (the United Nations Convention on the Law of the Sea), to whichconvention Malta has acceded. The company’s external legal counsel in Malta has filed aresponse to the letter, denying the claim. There have been no further developments on this casesince filing of our response; and Malta has now amended its legislation to rescind the levyingof such fees (but not retrospectively). There have been no developments on this since we filedour objection.

7.4 Reliance FLAG Atlantic France SAS — France Tax Litigation

a. Tax Assessment Order for FY07/08 to FY09/10

Reliance FLAG Atlantic France SAS (“RFAF”), has been subject to a special tax audit by theFrench tax authority (“FTA”) concerning FY07/08, FY08/09 and FY09/10. The total amount ofthe tax assessment issued by the FTA for this three year period is approximately C= 60 million.In relation to this tax audit, we have made provisions on our books of approximately C= 7.65million. An appeal against the tax assessment has been filed by RFAF. Pending the outcome ofthe FY10/11-11/12 tax audit (see below), further legal action may be pursued by RFAF.

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b. Tax Assessment order for Audit FY10/11 to FY11/12

The FTA has also concluded a special tax audit of RFAF for FY10/11 and FY11/12 and issuedan assessment of approximately C= 91 million. We have appealed against this assessment on thegrounds that we believe that RFAF’s accounting records for the FY10/11-11/12 period haveenabled us to demonstrate that the tax records for this period reconcile and are consistent withthe transfer pricing policy in place during this period and that all material documentation,including cost invoices, have been made available to the FTA. Consequently, we have made noprovisions in our books at this stage in relation to this audit.

c. Post-Audit Steps and Anticipated Overall Outcome

The FTA has indicated that they wish to conclude an overall settlement for all open years withRFAF, including the FY07/08-09/10 period of the earlier tax audit. A preliminary meeting hasbeen held with the FTA in this regard. While at this stage it is not possible to anticipate the standthat may be adopted by the FTA, we intend (1) to persuade the FTA to agree that our books,records and transfer pricing arrangements for FY10/11-11/12 are in order, and that no adjustmentis applicable; (2) then to request the FTA to re-examine their findings in relation the earlierFY07/08-09/10 tax audit, with a view to a finding that the conclusions to date were incorrect and,finally (3) to persuade the FTA to reach a reasonable overall settlement for any amount of taxassessed as being due and payable.

In light of the above circumstances, it is believed that the more appropriate amount of theaggregate tax assessment for all the open years at assessment as detailed above is between C= 4-8million, rather than C= 151 million.

7.5 Reliance FLAG Telecom Ireland Limited — Savvis Communications Corporation

This claim relates to termination charges totalling US$9.59 million owed by SavvisCommunications Corporation (“Savvis”) under the terms of a series of orders for provision byReliance FLAG Telecom Ireland Limited (“RFTIL”) of collocation space within its London PoPat London Hosting Centre. Savvis purported to terminate the applicable orders for breach (aswell as the underlying agreement) by notice on January 20, 2012. RFTIL has refuted any basisfor such termination in the ensuing correspondence and in turn instructed its solicitors tocommence proceedings for the total amount payable (being the unpaid monthly charges throughto expiry of the five-year term of the orders). Under the terms of the underlying agreement,however, the parties were first required to submit the matter to mediation at the Centre forEffective Dispute Resolution, but no settlement was achieved at the mediation hearing on April17, 2013 or since. The entire matter was on hold while commercial alternatives were investigatedbut nothing has come of this initiative. The parties are currently discussing arbitrator selection.

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SUBSCRIPTION AND SALE

Each of DBS Bank Ltd. and Standard Chartered Bank (together the “Joint Lead Managers”) has,pursuant to a subscription agreement dated April 27, 2015 (the “Subscription Agreement”) severallyand not jointly agreed to procure subscribers, or, failing which, subscribe, for the Notes in theaggregate principal amount set out opposite its name below:

Name of Joint Lead Managers Amount

DBS Bank Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000,000

Standard Chartered Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000,000

The Issuer will be paying a combined management and underwriting commission to the Joint LeadManagers and will reimburse the Lead Manager in respect of certain of their expenses. The Issuer hasalso agreed to indemnify the Joint Lead Managers against certain liabilities incurred in connectionwith the issue of the Notes. The Subscription Agreement may be terminated in certain circumstancesprior to payment of the issue price to the Issuer.

In addition, certain private banks may be paid a commission in connection with the distribution of theNotes to their clients. This commission may be based on the principal amount of the Notes sodistributed, and may be deducted from the purchase price for the Notes payable by such private banksin respect of such Notes upon settlement.

Other Relationships

Certain of the Joint Lead Managers and some of their affiliates have, from time to time, performed,and may in the future perform certain commercial banking, investment banking and advisory and otherbanking services for the Issuer and its affiliates for which they have received or will receive customaryfees and expenses. The Joint Lead Managers and their respective affiliates are full service financialinstitutions engaged in various activities which may include securities trading, commercial andinvestment banking, financial advice, investment management, principal investment, hedging,financing and brokerage activities. In the ordinary course of their various business activities, the JointLead Managers and their respective affiliates may make or hold a broad array of investments andactively trade debt and equity securities (or related derivative securities) and financial instruments(including bank loans) for their own account and for the accounts of their customers and may at anytime hold long and short positions in such securities and instruments. Such investments and securitiesactivities may involve our securities and other financial instruments, including the Notes. The JointLead Managers and their respective affiliates may make investment recommendations and/or publishor express independent research views (positive or negative) in respect of the Notes or other financialinstruments of the Issuer, and may recommend to their clients that they acquire long and/or shortpositions in the Notes or other financial instruments.

The Notes are a new issue of securities for which there currently is no market. The Joint LeadManagers have advised the Issuer that they intend to make a market in the Notes as permitted byapplicable law. They are not obligated, however, to make a market in the Notes, and anymarket-making may be discontinued at any time at its sole discretion. Accordingly, no assurance canbe given as to the development or liquidity of any market for the Notes.

Certain of the Joint Lead Managers and/or their respective affiliates may purchase the Notes for theirown account and enter into secondary market transactions or derivative transactions relating to theNotes, including, without limitation, sale (or facilitation thereof), stock borrowing or credit orequity-linked derivatives such as asset swaps, repackaging and credit default swaps and/or othersecurities of the Issuer or those of its associates at the same time as the offer and sale of the Notesor in secondary market transactions. Such transactions may be carried out as bilateral trades withselected counterparties and separately from any existing sale or resale of the Notes to which thisOffering Circular relates (notwithstanding that such selected counterparties may also be purchasers ofthe Notes). As a result of such transactions, the Joint Lead Managers or their respective affiliates mayhold long or short positions relating to the Notes.

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The Joint Lead Managers and their respective affiliates may also engage in investment or commercialbanking and other dealings in the ordinary course of business with the Issuer or its affiliates from timeto time and may receive fees and commissions for these transactions. In addition to the transactionsnoted above, the Joint Lead Managers and their respective affiliates may, from time to time aftercompletion of the offering of the Notes, engage in other transactions with, and perform services for,the Issuer or its affiliates in the ordinary course of their business. The Joint Lead Managers or theirrespective affiliates may also purchase Notes for asset management and/or proprietary purposes butnot with a view to distribution or may hold Notes on behalf of clients or in the capacity of investmentadvisors. While the Joint Lead Managers and their respective affiliates have policies and proceduresto deal with conflicts of interests, any such transactions may cause the Joint Lead Managers or theirrespective affiliates or clients or counterparties to have economic interests and incentives which mayconflict with those of an investor in the Notes. The Joint Lead Managers may receive returns on suchtransactions and have no obligation to take, refrain from taking or cease taking any action with respectto any such transactions based on the potential effect on a prospective investor in the Notes.

If a jurisdiction requires that the offering be made by a licensed broker or dealer and the Joint LeadManagers or any of their respective affiliates is a licensed broker or dealer in that jurisdiction, theoffering will be deemed to be made by the Lead Manager or such affiliate on behalf of the Issuer insuch jurisdiction.

Selling Restrictions

General

No action has been taken or will be taken in any jurisdiction by us or the Joint Lead Managers thatwould permit a public offering of the Notes, or the possession, circulation or distribution of thisOffering Circular or any other material relating to the Notes or this offering, in any jurisdiction whereaction for that purpose is required. Accordingly, the Notes may not be offered or sold, directly orindirectly, and neither this Offering Circular nor such other material may be distributed or publishedin or from any country or jurisdiction except in compliance with any applicable rules and regulationsof such country or jurisdiction.

United States of America

The Notes have not been and will not be registered under the Securities Act and may not be offeredor sold within the United States except pursuant to an exemption from, or in a transaction not subjectto, the registration requirements of the Securities Act and applicable state securities laws.

The Issuer has represented, warranted and undertaken that neither it nor any of its affiliates (includingany person acting on behalf of the Issuer, or any of its affiliates) has offered or sold, or will offer orsell, any Notes in any circumstances which would require the registration of any of the Notes underthe Securities Act or the qualification of the Trust Deed as an indenture under the United States TrustIndenture Act of 1939 and, in particular, that:

(a) No directed selling efforts: neither the Issuer, nor any of its affiliates nor any person acting ontheir behalf has engaged or will engage in any directed selling efforts with respect to the Notes;and

(b) No SUSMI: the Issuer reasonably believes that there is no substantial U.S. market interest in itsdebt securities.

Each Joint Lead Manager has represented, warranted and undertaken to the Issuer that it has notoffered or sold, and will not offer or sell, any Notes constituting part of its allotment within the UnitedStates except in accordance with Rule 903 of Regulation S under the Securities Act and, accordingly,that neither it nor any of its affiliates (including any person acting on behalf of the Manager or anyof its affiliates) has engaged or will engage in any directed selling efforts with respect to the Notes.

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United Kingdom

Each Joint Lead Manager has represented, warranted and undertaken that:

(a) Financial promotion: it has only communicated or caused to be communicated, and will onlycommunicate or cause to be communicated, any invitation or inducement to engage in investmentactivity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the“FSMA”)) received by it in connection with the issue or sale of any Notes in circumstances inwhich section 21(1) of the FSMA does not apply to the Issuer; and

(b) General compliance: it has complied and will comply with all applicable provisions of the FSMAwith respect to anything done by it in relation to the Notes in, from or otherwise involving theUnited Kingdom.

Hong Kong

Each Joint Lead Manager has represented, warranted and undertaken that:

(a) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document,any Notes, except for Notes which are a “structured product” as defined in the Securities andFutures Ordinance (Cap. 571) of Hong Kong (the “SFO”), other than (i) to “professionalinvestors” as defined in the SFO and any rules made under the SFO or (ii) in other circumstanceswhich do not result in the document being a “Prospectus” as defined in the Companies (WindingUp and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong (the “CompaniesOrdinance”) or which do not constitute an offer to the public within the meaning of theCompanies Ordinance; and

(b) it has not issued or had in its possession for the purposes of issue, and will not issue or have inits possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement,invitation or document relating to the Notes, which is directed at, or the contents of which arelikely to be accessed or read by, the public of Hong Kong (except if permitted to do so under thesecurities laws of Hong Kong) other than with respect to Notes which are or are intended to bedisposed of only to persons outside Hong Kong or only to “professional investors” as defined inthe SFO and any rules made under the SFO.

Singapore

Each Joint Lead Manager has represented, warranted and agreed that it has not offered or sold and willnot offer or sell to any person in Singapore other than (a) to an institutional investor (as defined inSection 4A of the SFA) pursuant to Section 274 of the Securities and Futures Act, Chapter 289 ofSingapore (the “SFA”), (b) to a relevant person pursuant to Section 275(1) of the SFA, or any personpursuant to an offer referred to in Section 275(1A) of the SFA, and in accordance with the applicableconditions specified in Section 275 of the SFA or (c) otherwise pursuant to, and in accordance withthe conditions of, any other applicable provision of the SFA.

Where the Notes are acquired by persons who are relevant persons specified in Section 276 of the SFA,namely:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the solebusiness of which is to hold investments and the entire share capital of which is owned by oneor more individuals, each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investmentsand each beneficiary of the trust is an individual who is an accredited investor,

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securities (as defined in Section 239(1) of the SFA) or the beneficiaries’ rights and interest (howsoeverdescribed) in that trust shall not be transferred within six months after that corporation or that trusthas acquired the Notes pursuant to an offer made under Section 275 of the SFA except:

(a) to an institutional investor (under Section 274 of the SFA) or to a relevant person as defined inSection 275(2) of the SFA, or any person pursuant to an offer that is made on terms that suchshares, debentures and units of shares and debentures of that corporation or such rights orinterest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalentin a foreign currency) for each transaction, whether such amount is to be paid for in cash or byexchange of securities or other assets and further for corporations, in accordance with theconditions specified in Section 275(1A) of the SFA;

(b) where no consideration is or will be given for the transfer;

(c) where the transfer is by operation of law;

(d) as specified in Section 276(7) of the SFA; or

(e) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares andDebentures) Regulations 2005 of Singapore.

India

Each Joint Lead Manager has represented, warranted and undertaken that (a) the Offering Circular hasnot been and will not be registered, produced or published as an offer document (whether a prospectusin respect of a public offer or information memorandum or other offering material in respect of anyprivate placement under the Companies Act or any other applicable Indian laws with the Registrar ofCompanies or the Securities and Exchange Board of India or any other statutory or regulatory bodyof like nature in India, (b) the Notes will not be offered or sold, and have not been offered or sold,to any person in India by means of any document, other than to persons permitted to acquire the Notesunder Indian law, whether as a principal or agent and (c) the Offering Circular or any other offeringdocument or material relating to the Notes will not be circulated or distributed and have not beencirculated or distributed, directly or indirectly, to any person or the public or any member of the publicin India which would constitute an advertisement, invitation, offer, sale or solicitation of an offer tosubscribe for or purchase any securities in violation of Indian laws. Each Joint Lead Managerrepresents and agrees that the Notes have not been offered or sold and will not be offered or sold inIndia in circumstances which would constitute an offer of securities (whether to the public or by wayof private placement) within the meaning of the Companies Act or any other applicable Indian lawsfor the time being in force.

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TRANSFER RESTRICTIONS

The Notes are subject to restrictions on transfer as summarised below. By purchasing Notes, you willbe deemed to have made the following acknowledgements and representations to, and agreementswith, the Issuer and the Lead Manager:

1. You acknowledge that:

• the Notes have not been and will not be registered under the U.S. Securities Act or any othersecurities laws and are being offered for resale in transactions that do not requireregistration under the U.S. Securities Act or any other securities laws; and

• unless so registered, the Notes may not be offered, sold or otherwise transferred exceptunder an exemption from, or in a transaction not subject to, the registration requirementsof the U.S. Securities Act or any other applicable securities laws, and, in each case, incompliance with the conditions for transfer set forth in paragraph (4) below.

2. You represent that you are not an affiliate (as defined in Rule 144 under the U.S. Securities Act)of the Issuer, that you are not acting on behalf of the Issuer and that you are outside the UnitedStates (within the meaning of Regulation S), and you are purchasing Notes in an offshoretransaction in accordance with Regulation S.

3. You acknowledge that none of the Issuer and the Joint Lead Managers or any person representingthe Issuer or the Joint Lead Managers has made any representation to you with respect to theIssuer or the offering of the Notes, other than the information contained in this Offering Circular.You represent that you are relying only on this Offering Circular in making your investmentdecision with respect to the Notes. You agree that you have had access to such financial and otherinformation concerning the Issuer and the Notes as you have deemed necessary in connectionwith your decision to purchase the Notes, including an opportunity to ask questions of andrequest information from the Issuer.

4. You represent that you are purchasing Notes for your own account, or for one or more investoraccounts for which you are acting as a fiduciary or agent, in each case not with a view to, or foran offer for sale in connection with, any distribution of the Notes in violation of the U.S.Securities Act. You agree on your own behalf and on behalf of any investor account for whichyou are purchasing Notes, and each subsequent holder of the Notes by its acceptance of the Noteswill agree, that until the end of the Resale Restriction Period (as defined below), the Notes maybe offered, sold or otherwise transferred only:

• under a registration statement that has been declared effective under the U.S. SecuritiesAct;

• in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S; or

• under any other available exemption from, or in a transaction subject to, the registrationrequirements of the U.S. Securities Act.

5. You also acknowledge that the Issuer, the Joint Lead Managers, their affiliates and others willrely upon the truth and accuracy at the foregoing acknowledgements, representations andagreements.

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SUMMARY OF CERTAIN PRINCIPAL DIFFERENCES BETWEENINDIAN GAAP AND IFRS

AreaAccountingPrinciple Treatment Under IFRS Treatment Under Indian GAAP

Presentation offinancialstatement

Financialstatements

The following must be presented:

• Statement of financial position

• Statement of profit or loss and othercomprehensive income

• Statement of changes in equity

• Statement of cash flows

• Notes

• Statement of financial position as atthe beginning of the preceding periodwhen an entity restates comparativeinformation, if material, following a:

� change in accounting policy,

� correction of an error, or

� reclassification of items in thefinancial statements

� Comparative information inrespect of the preceding period

The Companies Act, 2013 requires:

• balance sheet

• profit and loss account / income andexpenditure account in case of not forprofit organisations

• Cash flow statement

• Statement of changes in equity

• Explanatory notes

Cash flow statement is mandatory forenterprises except for One personcompany, dormant company or smallcompany.

AS 1 requires disclosure of allsignificant accounting policies.

It is to be noted that the companies Act,2013 prescribes presentation of FS inaccordance with Schedule III. However,Schedule III has not yet been notified.Till the time schedule to the CompaniesAct, 2013 is notified, presentation of FSneed to be in line with Revised scheduleVI of The Companies Act, 1956.

With effect from financial yearscommencing on or after 1 April 2011, therevised schedule VI has becomeapplicable.

• Revised Schedule would apply to allcompanies following Indian GAAP.

• Part IV of the existing Schedule VIdispensed with.

• Format of cash flow statement notprescribed (but illustrative formatsare there in AS 3)


Statement offinancial position

Generally an entity must present itsstatement of financial position classifiedbetween current and non-current. Anunclassified statement of financialposition based on the order of liquidity isacceptable only when it provides reliableand more relevant information. WhileIFRSs require certain items to bepresented on the face of the statement offinancial position there is no prescribedformat.

As per revised schedule VI only verticalformat of the balance sheet is allowed.

All assets and liabilities to be classifiedinto current and non-current.


Disclosure ofexpenses by natureor by function

While IFRSs require certain items to bepresented on the face of the Statement ofprofit or loss and other comprehensiveincome there is no prescribed format. Ananalysis of expenses is required, eitherby nature or by function, on the face ofthe Statement of profit or loss and othercomprehensive income or in the notes.

For banking and insurance entities,formats are prescribed by the relevantActs governing these entities.

For other entities the format of statementof profit and loss has been prescribed inthe revised schedule VI.

Classification of expenses to be done bynature.

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Basis of accounting IFRSs require financial statements to beprepared on a modified historical costbasis, with a growing emphasis on fairvalue. The carrying amounts of thefollowing assets and liabilities are basedon fair value subsequent to initialrecognition:

• All derivatives, all financial assetsand financial liabilities held fortrading or designated at fair valuethrough profit or loss, and allfinancial assets classified asavailable-for-sale, are measured atfair value. (IFRS 9 released inOctober 2010 by the IASB. which istentatively decided by the IASB to beapplicable from annual periodsbeginning on or after 1 January2018). The standard eliminates theexisting IAS 39 categories of held tomaturity, available for sale and loansand receivables.

• Biological assets are measured at fairvalue less costs to sell.

• Provisions are measured at fair value,which is derived by discountingestimated future cash flows.

• Whole classes of property, plant andequipment may be revalued to fairvalue, subject to certain conditions.

• Certain intangible assets may berevalued to fair value.

• Investment property may bemeasured at fair value.

• Cash-settled share-based paymentawards are revalued to fair valueuntil settlement.

Additionally, discounting andvalue-based measurements are anintegral part of financial reporting under

IFRSs in some areas, includingimpairment testing. IFRS 13 applicablefor annual periods beginning on or after1 January 2013 replaces most of the fairvalue measurement guidance containedin individual IFRS’s with a singledefinition of fair value, provides fairvalue application guidance andestablishes a comprehensive disclosureframework for fair value measurement.

Indian GAAP requires financialstatements to be prepared on historicalcost but fixed assets, other thanintangibles, may be revalued.Discounting and value-basedmeasurements are required inimpairment testing.


Substance overform

Transactions should be accounted for inaccordance with their substance, ratherthan only their legal form.

Like IFRSs, transactions should beaccounted for in accordance with theirsubstance, rather than only their legalform.

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Fair presentation When compliance with a standard orinterpretation would be misleading, anentity departs from the requiredtreatment in order to give a fairpresentation, if the relevant regulatordoes not prohibit the override. If anoverride cannot be used because it isprohibited by the regulator, thenadditional disclosure is required in thenotes to the financial statements. In suchcases extensive disclosures are required,including details of the departure, thereasons for the departure and its effect.

As per ICAI, any material departurefrom accounting requirements wouldresult in an audit qualification, implyingthat no departure from accountingrequirements of a mandatory standard ispermitted.

Where there is a conflict between anaccounting standard and the CompaniesAct or other regulatory requirements, theAct / regulatory requirements prevail.


Comparativeinformation

Comparative information is mandatoryfor the preceding period, except whenIFRSs permit or require otherwise.

Additional periods and information (e.g.,more than 1 year comparative) may bepresented provided such information isaccompanied by related notes and shouldbe in accordance with IFRS. However,the additional comparative informationneed not be in the form of a complete setof financial statements.

Like IFRS, one year comparativeinformation is required as per scheduleIII of The Companies Act, 2013.

SEBI vide circular dated 5 October 2011has amended the Equity ListingAgreement:-

• In addition to the existingrequirements, listed entities are alsorequired to disclose figures in respectof immediately preceding quarter.

• Further, listed entities shall alsosubmit the last quarter results alongwith the audited annual results.


Fair presentation The overriding requirement of IFRSs isfor the financial statements to give a fairpresentation (true and fair view).Compliance with IFRSs, with additionaldisclosure when necessary, is presumedto result in a fair presentation. The use ofa true and fair override is very rare underIFRSs.

The Companies Act, 2013 requiresfinancial statements give to true and fairview of the state of affairs and its profitor loss. The Act also requires compliancewith accounting standards.

Cash flow Cash equivalents Bank overdrafts repayable on demandare included in cash and cash equivalentsto the extent they form an integral part ofthe entity’s cash management.

AS 3 is silent on the issue. Byimplication, therefore, bank overdraftare in most cases a part of cash flowsattributable to financing activities sincein India, bank overdrafts are similar tocash-credits/advances againstinventories/books debts.

Cash flow Direct or indirectmethod

Cash flows from operating activities maybe presented either by the direct methodor the indirect method.

Same as IFRS. However, listedcompanies are required by SEBIguidelines to present CFS only underindirect method.

Cash flow Classification The classification of cash flows frominterest and dividends received and paidis not specified, and an entity chooses itsown policy for classifying each ofinterest and dividends paid as operatingor financing activities, and interest anddividends received as operating orinvesting activities.

For a non-financial entity, cash flowsarising from interest paid should beclassified as cash from financingactivities whereas interest and dividendsreceived should be classified as cashflows from investing activities. Afinancial institution should classify theseas operating cash flows. Dividends paidshould be classified as cash flows fromfinancing activities in the case of allentities.

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Events after thereporting period

Disclosure For significant non-adjusting events,disclosure is made in the financialstatements of the nature of the event andan estimate of its financial effect or astatement that such an estimate cannotbe made.

No such disclosure in financialstatements is required. However, suchevents are disclosed in the report of theapproving authority e.g., BOD.

Events after thereporting period

Recognition Dividends declared after the balancesheet dates are not recognised as aliability in the financial statements.

Dividends pertaining to the reportingperiod proposed or declared after thebalance sheet date are recognised as aliability.

Property, plant andequipment

Useful life Estimates of useful life and residualvalue, and the method of depreciation,are reviewed at least at each annualreporting date. Any changes areaccounted for prospectively as a changein estimate.

The useful lives of major depreciableassets or classes of depreciable assetsmay be reviewed periodically. Anychanges are accounted for prospectivelyas a change in accounting estimate. Noperiodic review for depreciation methodor residual value.

Schedule II of the Companies Act, 2013,prescribes ‘useful life’ instead of‘standard mandated rates’ as perschedule XIV of the Companies Act1956. Companies need to justify in case,‘useful life’ is different from theprescribed useful life under ‘ScheduleII’.


Cost component Cost of an item of PPE includes theestimated cost of dismantling andremoving the asset and restoring the site.

If an agreement or law requiresincurrence of such costs, these will haveto be provided for under AS 29 andwould be capitalised.


Borrowing cost Entity should capitalize borrowing costsdirectly attributable to the acquisition,construction or production of aqualifying asset.

It is mandatory to include interest andother borrowing costs directlyattributable to a qualifying asset as partof cost of the asset.


Depreciation When an item of PPE comprisesindividual components for whichdifferent depreciation methods or ratesare appropriate, each component isdepreciated separately.

AS 10 does not mandate componentaccounting, it states that the accountingfor an item of fixed asset may beimproved if the total expenditure thereonis allocated to its component parts,provided they are in practice separable,and estimates are made of the usefullives of these components. However, theCompanies Act, 2013, mandatescomponent accounting. It states that ‘ifcost of part of asset is significant and hasuseful life different from the remainingasset, useful life for that part should bedetermined separately for depreciation’.


Recognition Property, plant and equipment arerecognised initially at cost. IFRSs permitrevaluation of property, plant andequipment to fair value if fair value canbe measured reliably. All items in thesame class are revalued at the same timeand the revaluations are kept up to date.

Like IFRSs, property, plant andequipment is recognised initially at cost.Like IFRSs, Indian GAAP permitsrevaluation of property, plant andequipment to fair value if fair value canbe measured reliably. Unlike IFRSs,revaluation of the entire class of assets isnot required. There is no currentrestriction on frequency of valuation.

Inventories Decommissioningand restoration

Decommissioning and restoration costsincurred through the production ofinventory are included in the cost of thatinventory.

No explicit requirement.

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Inventories Valuation The same cost formula is applied to allinventories having a similar nature anduse to the entity.

There is no explicit requirement for useof same formula as in IFRS.

Provisions Discounting Provisions are discounted if the effect ofdiscounting is material.

Discounting is prohibited exceptlong-term provisions relating toemployee benefits.

Revenuerecognition

Guiding standard Under IFRSs, revenue recognition isbased mainly on a single standard thatcontains general principles that areapplied to different types of transactions.There is limited supplementalindustry-specific guidance on revenuerecognition.

Like IFRSs, revenue recognition is basedmainly on a single standard that containsgeneral principles that are applied todifferent types of transactions. There islimited supplemental industry-specificguidance on revenue recognition.

Revenuerecognition

Agency relationship Revenue includes amounts received byan entity for its own account. In anagency relationship, amounts collectedon behalf of the principal are notrecognised as revenue by the agent.

The standard explicitly states thatamounts collected on behalf of thirdparties such as sales tax, goods andservices taxes and value added taxes arenot revenues.

Same as IFRSs. The prescribed standardAS 9 requires disclosure of sales gross ofexcise duty as well as net of excise dutyon the face of the profit and loss account.In the case of sales tax and value addedtax, ICAI requires their inclusion in /exclusion from sales depending on themethod of accounting followed by theenterprise.

Revenuerecognition

Recognition forsale of goods

Revenue from the sale of goods isrecognised when the entity hastransferred the significant risks andrewards of ownership to the buyer and itno longer retains control or managerialinvolvement in the goods.

Unlike IFRSs, the Indian standard doesnot list lack of continuing managerialinvolvement and measurability of costamong the criteria for revenuerecognition. Additionally, IndianAccounting Standards also permitrevenue recognition when the seller hastransferred to the buyer the property inthe goods.

Revenuerecognition

Recognition forsale of service

Revenue from service contracts isrecognised in the period that the serviceis rendered, generally using thepercentage-of-completion method. Thecompleted contract method is notpermitted.

Revenue from rendering of services isrecognised using percentage ofcompletion method or completedcontract method, whichever relates therevenue to work accomplished. Theselection of the revenue recognitionmethod is based on the nature of servicesrather than on degree of reliability of theoutcome.

Revenuerecognition

Barter transaction Revenue is recognised for bartertransactions unless the transaction isincidental to the entity’s mainrevenue-generating activities or theitems are exchanged for items that aresimilar in nature and value.

Unlike IFRSs, Indian GAAP does notdeal with exchange of goods or services.

Lease Scope of thestandard

Scope of the standard includes the rightto use any asset, including intangibles(IFRIC 4), with certain exceptions.

Land and buildings elements of a leaseof land and buildings need to beconsidered separately.

In determining whether the lease of landis a finance lease or an operating lease,an important consideration is that landnormally has an indefinite economic life.

Does not deal with lease agreements touse lands. (However, leasehold lands arein any case shown under fixed assets).

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Lease Disclosure A lessee may classify a property interestheld under an operating lease as aninvestment property if investmentproperty is accounted for using the fairvalue model. In such case the interest isaccounted for as if it were a financelease.

Under Indian GAAP, investmentproperty is classified as long-terminvestment.

Lease Operating lease Lessors and lessees recognise incentivesgranted to a lessee under an operatinglease as a reduction in lease rentalincome / expense over the lease term.

No guidance.

Lease Sale and leaseback In case of sale & leaseback, IAS 17requires excess of sale proceeds over thecarrying amount to be deferred andamortised over lease term when a saleand leaseback results in a finance lease.

Requires such excess as well as any suchdeficiency to be deferred and amortisedover the lease term in proportion to thedepreciation of the leased asset.

Lease Disclosure Requires initial direct costs incurred bylessor (not being a manufacturer ordealer lessor) to be included in leasereceivable amount in case of financelease and in the carrying amount of theasset in case of operating lease. Noaccounting policy disclosure in thisregard is required.

Requires initial direct cost incurred bylessor (not being a manufacturer ordealer lessor) to be either charged off atthe time of incurrence or to be amortisedover the lease period. Disclosure ofaccounting policy relating thereto in thefinancial statements of lessor is required.

Lease Disclosure Requires assets given on operatingleases to be presented in the statement offinancial position according to the natureof the asset.

Requires assets given on operating leaseto be presented in Balance Sheet underFixed Assets.

Lease A series of linked transactions in thelegal form of a lease is accounted forbased on the substance of thearrangement; the substance may be thatthe series of transactions is not a lease.

Future developments: The IASB andFASB are working on a joint project todevelop a comprehensive set ofprinciples for lease accounting. On 16May 2013, IASB and FASB havepublished a revised ED on leases. TheED proposes that a dual model wouldapply, based on a new leaseclassification test, which would impactthe profile of lease income or expenserecognised over the lease term.

Not specifically discussed.

Investment property Definition Investment property is property held toearn rental income or for capitalappreciation or both.

There is no detailed standard availableunder the Indian GAAP. However,limited guidance is available under thestandard on investments under whichinvestment properties are accounted foras long-term investments.

Investment property Property held by alessee under anoperating lease

Property held by a lessee under anoperating lease may be classified asinvestment property if the definition ofinvestment property otherwise is met andthe lessee measures investment propertyat fair value.

No guidance.

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Investment property Recognition andMeasurement

Investment property is recognisedinitially at cost. Subsequent to initialrecognition, all investment propertyshould be measured either by using thefair value model (subject to limitedexceptions) or by using the cost model.When the fair value model is chosen,changes in fair value are recognised inprofit or loss.

Investment properties are recognised atcost. Subsequent to initial recognition,investment properties are carried in thefinancial statements at cost. However,provision for diminution is made torecognize a decline, other thantemporary, in the value of the investmentproperties, such reduction beingdetermined and made for eachinvestment property individually.

Deferred tax Recognition andMeasurement

Basis for deferred tax assets andliabilities is the difference betweencarrying amount and tax base of assetsand liabilities.

The approach to deferred taxation underIndian GAAP is different from thatunderlying IFRS. Under Indian GAAP,deferred taxes are tax consequences oftiming differences. Timing differences isa term narrower than temporarydifferences.


A deferred tax liability is not recognisedif it arises from the initial recognition ofgoodwill. However, any temporarydifference is recognised subsequently ifthe goodwill is tax deductible.

Not applicable.


A deferred tax liability (asset) is notrecognised if it arises from the initialrecognition of an asset or liability in atransaction that is not a businesscombination, and at the time of thetransaction affects neither accountingprofit nor taxable profit.

It is accounted as a permanentdifference.

Deferred tax Tax expense inconsolidatedfinancial statements

In determining tax expense inconsolidated financial statements,temporary differences arising fromelimination of unrealised profits andlosses resulting from intra-grouptransactions should be considered.

Tax expense as appearing in the separatefinancial statements of parent andsubsidiaries are just added together forthe purpose of consolidated financialstatements.

Deferred tax Deferred tax assetson tax losses and/or unabsorbeddepreciation

Deferred tax assets on tax losses and/ orunabsorbed depreciation is recognisedwhen convincing evidence is available.Other deferred tax assets are recognisedto the extent it is probable that taxableprofits would be available.

More stringent criteria for recognition ofdeferred tax assets e.g., virtual certaintywhere tax losses and/or unabsorbeddepreciation.


Deferred tax is measured based on ratesand tax laws that are enacted orsubstantively enacted at the reportingdate.

Like IFRSs, deferred tax is measuredbased on rates and tax laws that areenacted or substantively enacted at thereporting date.


Changes in tax rates recorded in P&L,unless originally recorded in equity

Changes in tax rates are recognisedthrough P&L.


Deferred tax is not recognized in respectof investments in subsidiaries, associatesand joint ventures if certain conditionsare met.

Not applicable.

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BusinessCombination

Definition Definition of business combination has awider scope. All business combinationsare accounted for using acquisitionmethod, with specific exemptions. Abusiness is an integrated set of activitiesand assets that is capable of beingconducted and managed to provide areturn to investors (or other owners,members or participants) by way ofdividends, lower costs or other economicbenefits. An entity in its developmentstage can meet the definition of abusiness.

Unlike IFRSs, the Indian GAAP dealsonly with amalgamations. There isliberal use of pooling of interestsmethod.

Under the Companies Act, 2013, theNational Company Law Tribunal ispermitted to approve Mergers ofprescribed set of companies in place ofthe High Court process.

Amalgamation andMergers

Recognition ofassets andliabilities

Under acquisition method, the acquiredidentifiable assets, liabilities andcontingent liabilities are recognised atfair value.

Under purchase method, the acquiredassets and liabilities are recognised attheir existing book values or at fairvalues.


Purchaseconsideration

Consideration transferred is the sum ofthe fair values of the assets transferred,liabilities incurred to the previousowners of the acquiree, equity interestissued and contingent considerationtransferred. Consideration transferreddoes not include acquisition-relatedcosts.

Consideration for the amalgamationmeans the aggregate of the shares andother securities issued and the paymentmade in the form of cash or other assetsby the acquirer to the shareholders of theacquiree. While it is required thatnon-cash elements of considerationshould be included at fair value, it is alsostated that the value of any securities(forming part of consideration) fixed bystatutory authorities may be taken to betheir fair value. However, under theCompanies Act, 2013, for cross bordermergers, consideration is only in cash orDepositary Receipts.


Re-measurement Contingent consideration is recognisedinitially at fair value. Contingentconsideration classified as a liabilitygenerally is remeasured to fair valueeach period until settlement, withchanges recognised in profit or loss.Contingent consideration classified asequity is not remeasured.

No guidance.

Fair valuemeasurement

Assets andliabilities

The assets acquired and liabilities andcontingent liabilities assumed generallyare recognised at fair value. While thereis general guidance on measuring fairvalues, there is no detailed guidance onvaluation methodologies.

• IFRS 13 applicable for annualperiods beginning on or after 1January 2013 sets out the generalprinciples to be applied whenmeasuring fair value.

Under the purchase method, the acquiredassets and liabilities are recognised attheir existing carrying amounts oralternatively the consideration isallocated to assets and liabilities on thebasis of fair values at the date of theamalgamation.

Fair valuemeasurement

Restructuringprovision

A restructuring provision is recognisedonly when it is an existing liability of theacquiree at the acquisition date.

No guidance.

Consolidatedfinancialstatements

Non-controllinginterests

Non-controlling interests (NCI) arestated at fair value or at its proportionateinterest in the fair value of theidentifiable assets and liabilitiesassumed in the acquisition accounting.This choice can be made by the acquireron a transaction by transaction basis.

NCI is the amount of equity attributableto minorities at the time of acquisitionbased on book values and presentedoutside shareholders’ equity.

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Common controltransactions.

There is no guidance on accounting forcommon control transactions.

This aspect is not specifically addressedby the Indian GAAP. However, theaccounting is specified in the scheme ofamalgamation approved by the Tribunal.Also as per the Companies Act, 2013, noscheme of merger shall be sanctionedunless the company’s auditor certifiesthat the accounting treatment is in linewith the accounting standards.


Goodwill Negative goodwill, or gain on bargainpurchase is recognised in profit or lossimmediately after reassessing the valuesused in the acquisition accounting.

Reassessment is not required under theIndian GAAP. The excess is treated ascapital reserve and is not amortised.


Presentation An entity having a subsidiary mustpresent consolidated financialstatements unless specific criteria aremet. Consolidation is based on a singlecontrol model. Separate financialstatements of a parent that presentsconsolidated financial statements are notrequired. Even where these arepresented, they need not mandatorily beappended to, or accompany, consolidatedfinancial statements.

Accounting standards do not mandate anentity to present consolidated financialstatements. However, the CompaniesAct, 2013 mandates for all companies toprepare Consolidated FinancialStatements (CFS) in respect of thefollowing entities:

• Subsidiary; or

• Associate; or

• Joint Venture company.

CFS will have to be done in addition tostandalone financial statements.

Schedule III to the Companies Act, 2013,contain general instructions for thepreparation of CFS. Also, someadditional mandatory disclosures arerequired such as percentage share intotal net assets, and consolidated profitor loss by each subsidiary, associate, JVincluding the parent.


Control Consolidation is based on a singlecontrol model which is applied todetermine whether an investee should beconsolidated. An investor controls aninvestee if and only if the investor hasall the following:

a. power over the investee(consideration of substantive rights)

b. exposure, or rights, to variablereturns from its involvement with theand

c. the ability to use its power over theinvestee to affect the amount of theinvestor’s returns.

Control is generally assessed at the legalentity level, however, in some cases, aninvestor has power only over specifiedassets and liabilities of an entity andtreats that portion of an entity as deemedseparate entity (silo).

As per Indian Accounting Standards (AS21), consolidation is basically based onownership, directly or indirectly throughsubsidiaries, of more than one-half of thevoting power or control of thecomposition of the Board of Directors. Itis, however, important to note that thedefinition of subsidiary under the 2013Act is different from what is prescribedunder AS 21 or under IFRS. It means acompany where holding companycontrols the composition of the BOD orowns/control >50% of TOTAL sharecapital .

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Special PurposeEntities

IFRS 10 Consolidated FinancialStatements supersedes SIC 12Consolidation- Special Purpose Entitiesand provides a single control mode todetermine which structured entitiesshould be consolidated.

No specific guidance is available underIndian GAAP.


Reporting date A parent and its subsidiaries generallyuse the same reporting date whenconsolidated financial statements areprepared. If this is not practicable, thenthe difference between the reporting dateof a parent and its subsidiary cannot bemore than three months. Adjustments aremade for the effects of significanttransactions and events between the twodates.

The difference between reporting datesof a subsidiary and the parent should notexceed six months. However, theCompanies Act, 2013 requires all Indiancompanies to follow a uniform financialyear end 31 March.


Carrying amount ofassets andliabilities

For the purposes of consolidatedfinancial statements, the carryingamount of assets and liabilities ofsubsidiaries is fair value at acquisitionand movements as per normal accountingthereafter.

Unlike IFRS, the carrying amount ofassets and liabilities of subsidiaries isthe book value at acquisition andmovements as per normal accountingthereafter.


Non-controllinginterests

Non-controlling interests (NCI) in thenet assets consist of:

(i) the amount of those non-controllinginterests at the date of the originalcombination calculated in accordancewith IFRS 3; and

(ii) the non-controlling interests’ shareof changes in equity since the date ofthe combination.

Unlike IFRS, NCI in a subsidiary arerecognized initially based on thecarrying amounts of the assets andliabilities in the subsidiary’s financialstatements.

Investment inassociates andjoint ventures

Accounting ofassociates

Under IFRSs, associates are generallyaccounted for using the equity method.

Like IFRSs, associates generally areaccounted for using the equity method.

Exception from using equity method iswhen the investment is acquired and heldexclusively with a view to its subsequentdisposal in the near future or theassociate operates under severelong-term restrictions that significantlyimpair its ability to transfer funds to theinvestor.


Joint arrangement A joint arrangement is an arrangementover which two or more parties havejoint control, being the contractuallyagreed sharing of control. Jointarrangements may be either joint ventureor joint operation. Joint venturersaccount for their interest in jointventures as per equity method whilejoint operators account for their interestin joint operations as per proportionateconsolidation method.

Jointly-controlled entities are accountedfor only by using proportionateconsolidation except when interest in ajointly controlled entity is acquired andheld exclusively with a view to itssubsequent disposal in the near future orwhen a jointly controlled entity operatesunder severe long-term restrictions thatsignificantly impair its ability to transferfunds to the venturer.

However, the Companies Act, 2013,seems to permit equity method for JVsalso as mentioned in disclosurerequirements contained in schedule III ofthe Act.


Accounting policies An associate’s or joint arrangement’saccounting policies must be consistentwith those of its investor.

Same as IFRSs. However, if notpracticable then fact is disclosed with abrief description of the differences.

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Equity method /fair value method

Venture capital investors and similarentities may elect not to apply the equitymethod for investments in associates andjoint ventures and instead account forthese investments as financialinstruments at fair value through profitor loss.

No guidance.

Employee benefits Recognition ofLiability ofemployee benefit

Liabilities for employee benefits arerecognised on the basis of a legal orconstructive obligation.

Same as IFRS. However, unlike IFRSs,read with AS 29, it also does not seem toallow recognition of termination benefitsbased on constructive obligation.

Employee benefits Actuarial gains andlosses

Actuarial gains and losses of definedbenefit plans are recognised immediatelyin other comprehensive income.Amounts recognised directly in othercomprehensive income are not recycledto profit or loss.

Unlike IFRSs, the Indian standard doesnot allow recognising actuarial gains andlosses directly in equity. These should berecognised immediately in the profit andloss account.

Employee benefits Recognition All past service costs, including theunvested amount, is recognised in profit& loss.

Like IFRSs, liabilities and expenses forvested past service costs under a definedbenefit plan are recognised immediatelyin profit or loss. Liabilities and expensesfor unvested past service costs under adefined benefit plan are recognised overthe vesting period in the profit or loss.

Assets held for sale Definition Non-current assets, and some groups ofassets and liabilities known as disposalgroups, are classified as held for salewhen their carrying amounts will berecovered principally through sale.

There is no guidance on non-currentassets held for sale (except the limitedrequirements of AS 10 para 24) or onaccounting for discontinued operations(though some disclosures for suchoperations are mandated by AS 24 para28).

Assets held for sale Measurement Non-current assets (disposal groups)held for sale generally are measured atthe lower of carrying amount and fairvalue less costs to sell, and are presentedseparately on the face of the statement offinancial position.

Fixed assets retired and held for sale arestated at the lower of their net bookvalue and net realisable value and shownseparately in the FS.

Assets held for sale Disclosure The comparative statement of financialposition is not re-presented when anon-current asset (disposal group) isclassified as held for sale.

No guidance.

Effects of Changesin ForeignExchange Rates

Functional currency An entity measures its assets, liabilities,revenues and expenses in its functionalcurrency, which is the currency that bestreflects the economic substance of theunderlying events and circumstancesrelevant to the entity, i.e. the currency ofthe primary economic environment inwhich the entity operates. Functionalcurrency of an entity may be differentfrom the local currency.

There is no concept of functionalcurrency under Indian GAAP.Enterprises in India have to prepare theirgeneral purpose financial statements inIndian rupees.


Presentationcurrency

An entity may present its financialstatements in a currency other than itsfunctional currency (presentationcurrency).

Enterprises in India have to prepare theirgeneral purpose financial statements inIndian rupees.


Presentationcurrency

An entity may have more than onepresentation currency.

Under Indian GAAP, reporting has to bein Indian currency.

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Foreign currencytransactions

All transactions that are not denominatedin an entity’s functional currency areforeign currency transactions; exchangedifferences arising from foreigncurrency transactions generally arerecognised in profit or loss.

Same as IFRSs. Due to a steep fall inrupee, significant relaxations have beenmade by MCA in December 2011 withregard to the option in accounting forexchange differences arising onreporting of long-term foreign currencymonetary items. Such exchangedifferences (except those on netinvestment in a non-integral foreignoperation) can now be indefinitely

• adjusted to cost of the asset, wherethe monetary item relates toacquisition of a depreciable capitalasset.

• in other cases, accumulated in‘Foreign currency monetary itemtranslation difference account’(FCMITDA) and amortised overbalance period of long-term monetaryasset/liability [Para 46A of AS 11][Note: Incase the company opts forpara 46A of AS 11, para 4(e) of AS16, Borrowing costs, will not beapplicable.] FCMITDA shall bedisclosed under Reserves andSurplus.

The financial statements of foreignoperations are translated as follows:assets and liabilities at the closing rate,revenues and expenses at actual rates orappropriate averages, and equitycomponents at historic rates.

There is a distinction between integraland non-integral foreign operations.

The reporting currency of even anintegral foreign operation will bedifferent from the reporting currency ofthe reporting entity, therebynecessitating translation.


When financial statements are translatedinto a presentation currency other thanthe entity’s functional currency, theentity uses the same method as fortranslating the financial statements of aforeign operation.

Under Indian GAAP reporting has to bein Indian currency.


Supplementaryfinancialinformation

An entity may present supplementaryfinancial information in a currency otherthan its presentation currency(currencies) if certain disclosures aremade.

No guidance.

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Presentation offinancialstatements


As per revised IAS 1,

Statement of financial position as at thebeginning of the preceding period needsto be presented, when an entity restatescomparative information, if material,following:

• change in accounting policy,

• correction of an error, or

• reclassification of items in thefinancial statements

The overall impact of Indian GAAPrequirements and practice is thataccounting policy changes are givenprospective effect only (except that achange in depreciation method isspecifically required to be effectedretrospectively with consequentadjustment in the profit and loss accountof the year of change).

The impact on measurement of a balancesheet item as per the revised policy tillthe date of the balance sheet is accountedfor in the profit and loss account of theyear of change except in cases where anaccounting standard specifically permitsan adjustment against reserves.

Error corrections (prior period items)have to be recognised in the currentprofit and loss account.

However, Exposure Draft to AS 5 issuedby the ICAI has proposed to account forchanges in accounting policies andcorrection of errors retrospectively.

Indian GAAP do not have the concept ofrestatement of comparatives except inspecial-purpose financial statementsprepared for public offers. As perCompanies Act 2013, a company canre-open accounts in following cases:

• Fraudulent financial reporting

• Mismanaged affairs casting doubt onfinancial statements

• Non-compliance with sections 129 or134

Window open only for three financialyears for voluntary restatement.Court/Tribunal may approve followingapplications:

- Regulatory intervention:

Central Government; or; TaxAuthorities; or SEBI; or any otherRegulatory Authority

Voluntary application:

- Directors

Changes inaccountingpolicy andaccountingestimates


As per revised IAS 1,

Statement of financial position as at thebeginning of the preceding period needsto be presented, when an entity restatescomparative information, if material,following a:

• change in accounting policy,

• correction of an error, or

• reclassification of items in thefinancial statements

Comparatives are not restated except infinancial statements prepared for publicoffers and in the case of quarterly resultsrequired to be published by listedcompanies.

266


Changes inaccountingpolicy andaccountingestimates

Change in themethod ofdepreciation andaccounting estimate

Change in the method of depreciation isa change in accounting estimate.

Change in the method of depreciation ontangible fixed assets is regarded as achange in accounting policy and itseffect is quantified and disclosed.

As per Exposure Draft on AS 5 issued bythe ICAI, change in the useful life of theasset is taken as change in accountingestimate.

Intangible Assets Recognition Intangible assets generally arerecognised initially at cost, which is thefair value of the consideration given.Intangible assets may be revalued to fairvalue only if there is an active market.

IFRS 13 applicable for annual periodsbeginning on or after 1 January 2013replaces most of the fair valuemeasurement guidance in individualIFRS’s with a single definition of fairvalue. IFRS 13 deletes the definition ofan active market in IAS 38.

Like IFRSs, intangible assets generallyare recognised initially at cost, which isthe fair value of the consideration given.However, Indian GAAP do not permitrevaluation of intangible assets.

Intangible Assets Useful lives Acquired goodwill, intangible assetswith indefinite useful lives andintangible assets not yet available foruse are not amortised, but instead aresubject to impairment testing at leastannually.

Goodwill acquired in an amalgamation isamortised over a period not longer thanfive years. There is no specificrequirement for amortisation of goodwillacquired on purchase of abusiness/goodwill arising onconsolidation but it should be tested forimpairment.

Impairment ofassets

Impairment testing Annual impairment testing is requiredfor goodwill, and intangible assets thateither are not yet available for use orhave an indefinite useful life. Thisimpairment test may be performed at anytime during an annual reporting periodprovided that it is performed at the sametime each year.

Annual impairment is required for anintangible asset that is not yet availablefor use and an intangible asset that isamortised over a period exceeding 10years from the date when the asset isavailable for use.

Annual impairment testing for goodwillis not required. Impairment testing isrequired at each reporting date for anyasset when there is an indication of apossible impairment (a triggering event).

Impairment ofassets

Cash-generatingunits

Goodwill (GW) is allocated tocash-generating units (CGUs) or groupsof CGUs that are expected to benefitfrom the synergies of the businesscombination from which it arose.

GW to be allocated to CGUs only whenthe allocation can be done on areasonable and consistent basis. If thatrequirement is not met for a specificCGU under review, the smallest CGU towhich the carrying amount of GW can beallocated on a reasonable and consistentbasis must be identified and theimpairment test carried out at this level.Thus, when all or a portion of, GWcannot be allocated reasonably andconsistently to the CGU being tested forimpairment, two levels of impairmenttests are carried out — bottom-up testand top-down test.

Impairment ofassets

The carrying amount of goodwill isgrossed up for impairment testing ifnon-controlling interests were initiallymeasured based on their proportionateshare of identifiable net assets.

No guidance.

267


Impairment ofassets

Reversals ofimpairment

Reversals of impairment are recognised,other than in respect of goodwill.

Reversal of impairment of goodwill isallowed when certain conditions are met.

Offsetting Financial assets anda financialliabilities

A financial asset and a financial liabilityare offset and reported net only when theentity has a legally enforceable right tothe offset and it intends either to settleon a net basis or to settle both amountssimultaneously.

Specific offsetting rules exist fordeferred tax assets and liabilities anddefined benefit plan assets andobligations (which is rare).

Non-financial assets and liabilitiescannot be offset under IFRSs.

No guidance is available under theIndian GAAP, though AS 22 uses thisconcept in the context of offsetting ofdeferred tax assets and tax liabilities.

Extraordinary items Extraordinary items The presentation or disclosure of itemsof income and expense characterised as“extraordinary items” is prohibited.

The presentation or disclosure of itemsof income and expense characterised as“extraordinary items” is required.

Financialinstrumentrecognition,measurement andpresentation

Guidance onrecognition,measurement andpresentation offinancialinstruments

IFRS have detailed guidance onrecognition, measurement andpresentation of financial instruments.

Under Indian GAAP, two accountingstandards have been issued AS 30 and31. On 11 February 2011, the ICAIreconsidered the status of thesestandards and accordingly, AS 30, 31 and32 would not have the status ofrecommendatory standards. ICAI alsoannounced that companies may followAS 30 to the extent that the adoption didnot conflict with existing accountingstandards and other authoritativepronouncements of the Company lawand other regulatory requirements. Someguidance on forward exchange contractsand equity index/ stock futures andoptions is available.

Equity and liabilityclassification

Definition A financial instrument is a financialliability if the issuer can be obliged tosettle in:

• cash or

• by delivering another financialinstrument or

• by delivering variable number of theentity’s own equity instruments.

Unlike IFRSs, framework and ‘guidancenote on terms used in financialstatements’ lays down basic principles ofequity and liability.

Equity and liabilityclassification

Accounting The components of compound financialinstruments, which have both liabilityand equity characteristics, are accountedfor separately.

Unlike IFRSs, framework and ‘guidancenote on terms used in financialstatements’ lays down basic principles ofequity and liability.

268

LEGAL MATTERS

Certain legal matters in connection with this Offering and the Notes as to India law will be passedupon for us by Talwar Thakore & Associates. Certain legal matters in connection with the Notes asto U.S. and English law will be passed upon for us by Jones Day, Singapore. Certain legal mattersrelating to U.S. and English law will be passed upon for the Joint Lead Managers by Clifford ChancePte Ltd and as to Indian law by J. Sagar Associates.

INDEPENDENT ACCOUNTANTS

Chaturvedi & Shah, Chartered Accountants and BSR & Co. LLP, Chartered Accountants, (which hasbeen converted from BSR & Co. into BSR & Co. LLP (a limited liability partnership) with effect fromOctober 14, 2013), the joint statutory auditors of our Company (the “Auditors”), have audited theFinancial Statements as at and for the financial years 2012, 2013 and 2014. See “Financial Statements— Independent Auditors’ Report”.

269

GENERAL INFORMATION

1. The issue of the Notes has been authorized by resolutions of the Company’s board of directors,dated August 14, 2014, the resolution of the shareholders, dated September 16, 2014, and thecommittee of Directors, dated April 27, 2015.

2. An application in Form 83 under the automatic route will be made by the Company for allotmentof an LRN to the RBI prior to the issue of the Notes, as required under the ECB Guidelines. See“Overview of the Regulatory Regime in India — Foreign Exchange Laws — Filing and regulatoryrequirements in relation to issuance of Notes”.

3. Standard Chartered Bank has given its consent to act as the Trustee and for its name to beincluded in all subsequent periodical communication to be sent to the holders of Notes.

4. Save as disclosed in this Offering Circular, there are no, nor have there been any, litigation orarbitration proceedings, including those which are pending or threatened, of which the Group isaware, which may have, or have had during the 12 months prior to the date of this OfferingCircular, a material adverse effect on the Group’s financial position.

5. Save as disclosed in this Offering Circular, there has been no material change in the Group’sfinancial or trading position since December 31, 2014 and, since such date, save as disclosed inthis Offering Circular, there has been no material adverse change in the Group’s financialposition or prospects

6. Copies of the following documents, all of which are published in English, may be inspectedduring normal business hours at the offices of the Paying Agent after the date of this OfferingCircular for so long as any of the Notes remains outstanding:

(a) the Company’s Memorandum and Articles of Association

(b) the Trust Deed; and

(c) the Agency Agreement.

7. The International Securities Identification Number (ISIN) in respect of the Notes isXS1216623022. The Common Code in respect of the Notes is 121662302.

8. Listing of the Notes:

Approval in-principle has been received for the listing and quotation of the Notes on the OfficialList of the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any statementsmade, opinions expressed or reports contained herein. Admission of the Notes to the Official Listof the SGX-ST is not to be taken as an indication of the merits of the offering, the Company, theGroup or associated companies or the Notes. The Notes will be traded on the SGX-ST in aminimum board lot size of US$200,000 for so long as the Notes are listed on the SGX-ST andthe rules of the SGX-ST so require.

For so long as the Notes are listed on the SGX-ST and the rules of the SGX-ST so require, theCompany will appoint and maintain a paying agent in Singapore, where the Notes may bepresented or surrendered for payment or redemption, in the event that a global note representingsuch Notes is exchanged for Notes in definitive form. In addition, in the event that a global noteis exchange for Notes in definitive form, an announcement of such exchange shall be made byor on behalf of the Company through the SGX-ST and such announcement will include allmaterial information with respect to the delivery of the Notes in definitive form, includingdetails of the paying agent in Singapore.

270

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Review Report on and unaudited condensed interim consolidated financial statementsas at and for the three months ending June 30, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2

Audit report on and consolidated financial statement as at and for the financialyear ended March 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-15



F-1

B S R & Co. LLP Chaturvedi & ShahChartered Accountants Chartered Accountants Lodha Excelus, 1st Floor, 714-715, Tulsiani Chambers,Apollo Mills Compound, N.M.Joshi Marg, Mahalakshmi, Mumbai 400 011.

212, Nariman Point, Mumbai 400 021.

Telephone + 91 (22) 3989 6000 Telephone + 91 (22) 3021 8500Fax + 91 (22) 3090 2511 Fax + 91 (22) 3021 8595

B S R & Co. (a partnership firm with registration no. BA61223) converted into B S R & Co. LLP (a Limited Liability Partnership with LLP Registration No. AAB-8181), with effect from October 14, 2013.

Independent Auditors’ Review Report on Unaudited Condensed Interim Consolidated Financial Statement

To the Board of Directors of Reliance Communications Limited Introduction

1 We have reviewed the accompanying unaudited condensed interim consolidated balance sheet of Reliance Communications Limited (‘the Company’) and its subsidiaries and associates as of June 30, 2014 and the related unaudited condensed interim consolidated statement of profit and loss and the unaudited condensed interim consolidated cash flow statement and notes for three months ended June 30, 2014 (collectively referred to as ‘the Unaudited Condensed Interim Consolidated Financial Statement’) prepared by the management.

Management’s Responsibility for the Consolidated Financial Statement

2 Management is responsible for the preparation and presentation of these unaudited condensed interim consolidated financial statement in accordance with the requirements of Accounting Standards referred to in section 133 of the Companies Act, 2013. Management’s responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation of the unaudited condensed interim consolidated financial statement that are free from material misstatement due to fraud or error. Our responsibility is to express our conclusion on these unaudited condensed interim consolidated financial statement based on our review.

Scope of review

3 We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, issued by the Institute of Chartered Accountants of India (‘ICAI’). This standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statement are free of material misstatement. A review of unaudited condensed interim consolidated financial statement consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. We have not performed an audit and accordingly, we do not express an audit opinion.

Conclusion

4 Based on our review as aforesaid, and on consideration of reports of other auditors on the separate financial statements, nothing has come to our attention that causes us to believe that the accompanying unaudited condensed interim consolidated financial statement are not

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B S R & Co. LLP Chaturvedi & Shah


prepared, in all material respects, in accordance with the requirements of the accounting standards generally accepted in India.

Emphasis of Matter

5 Without qualifying our report, we draw your attention to: (i) Note 7 (ii) of the unaudited condensed interim consolidated financial statement, regarding

the Scheme of Arrangement (‘the Scheme’) sanctioned on 03 July 2009 by the Hon'ble High Court of Judicature at Mumbai, the Company is permitted to adjust additional depreciation, expenses and/or losses, which have been or are required to be debited to the statement of profit and loss by a corresponding withdrawal or credit from/to General Reserve, as determined by the Board of Directors. During the three months ended 30 June 2014, the Company has withdrawn Rs 294 crore to offset additional depreciation on account of fair valuation of certain assets.

(ii) Note 7 (i) of the unaudited condensed interim consolidated financial statement, regarding the Schemes of Arrangement (‘the Schemes’) sanctioned by the Hon’ble High Court of Judicature at Mumbai, the Schemes permit the Company and two of its subsidiaries, namely, Reliance Communications Infrastructure Limited and Reliance Infratel Limited to adjust expenses and/or losses identified by the respective Board of the Company and that of its two subsidiaries, which are required to be debited/ credited to the statement of profit and loss by a corresponding withdrawal or credit from/to General Reserve, which is considered to be an override to the relevant provisions of Accounting Standard 5 (AS 5) ‘Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies’. The Company and its two subsidiaries have identified exchange variations incurred during the three months ended 30 June 2014 of Rs 7 crore, depreciation on exchange losses capitalised of Rs 96 crore and amortization of Foreign Currency Monetary Items Translation Difference Account (FCMITDA) of Rs 88 crore, as in the opinion of the respective Boards, such exchange loss and costs are considered to be of an exceptional nature and accordingly, these expenses have been disclosed as having been adjusted against a corresponding withdrawal from General Reserve for the purpose of these unaudited condensed interim consolidated financial statement.

(iii) Had the depreciation (referred to in paragraph (i) above amounting to Rs 294 crore and write off of expenses and losses (referred to in paragraph (ii) above) amounting to Rs 191 crore, not been adjusted by withdrawal from General Reserve, the unaudited condensed interim consolidated financial statement would have reflected a loss after tax of Rs 353 crore and the consequential effect of this on the consolidated profit after tax would have been of Rs 485 crore.

(iv) Note 6 (iv) of the unaudited condensed interim consolidated financial statement, regarding investigations by an investigating agency and framing of preliminary charges by a Trial Court in October, 2011 against a subsidiary company and one of its directors. The subsidiary company has filed a writ petition in October, 2013 against the said order in Hon’ble Supreme Court of India, which is pending for hearing as set out in the aforesaid note.

Other matters

6 The Company has computed goodwill on consolidation by comparing the cost of investments with the equity of subsidiaries as on date on which investments were made by Reliance Industries Limited (‘the transferor company’) prior to demerger instead of considering the date of demerger as the date of investment.

7 We did not review the financial statements and other financial information of certain subsidiaries. The financial statements of these subsidiaries for the three months ended

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B S R & Co. LLP Chaturvedi & Shah


June 30, 2014 have been reviewed by other auditors whose reports have been furnished to us and our report, in so far as it relates to the amounts included in respect of subsidiaries, is based solely on these review reports. The attached unaudited condensed interim consolidated financial statements include assets of Rs 10,256 crore as at June 30, 2014, revenues of Rs 961 crore and cash inflows amounting to Rs 30 crore in respect of the aforementioned subsidiaries for the three months then ended.

8 The financial statements of certain subsidiaries for the three months ended June 30, 2014 have been reviewed by one of the joint auditors, Chaturvedi & Shah, Chartered Accountants. The attached unaudited condensed interim consolidated financial statement include assets of Rs 28,712 crore as at June 30, 2014, revenues of Rs 2,050 crore and cash inflows amounting to Rs 88 crore in respect of the aforementioned subsidiaries for the three months then ended.

9 We have relied on the unaudited financial statements of the subsidiaries and associates whose financial statements reflect total assets of Rs 1,773 crore as at June 30, 2014, total revenue of Rs 170 crore and cash inflows amounting to Rs 4 crore for the three months ended June 30, 2014. These unaudited financial statements have been certified by the management of these subsidiaries, and our report in so far as it relates to the amounts included in respect of the subsidiaries and associates is based solely on such management certified financial statements.

For B S R & Co. LLP For Chaturvedi & ShahChartered Accountants Chartered AccountantsFirm’s Registration No: 101248W/W-100022 Firm Registration No: 101720W

Rajesh Mehra Partner Membership No: 103145

Lalit MhalsekarPartner

Membership No: 103418

MumbaiNovember 23, 2014

Mumbai November 23, 2014

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Reliance Communications Limited

Unaudited Condensed Interim Consolidated Balance Sheet as at June 30, 2014( ` in Crore)

As atJune 30, 2014


Shareholders' Funds�� 32,099 � ��

Minority Interest 783 ��

Non Current Liabilities�� !��"�#��$� � �� %��&�'��!�(��%�� )��*�� !��"��%�� +�� !��"�,�� 28,114 �� --��

Current Liabilities��!��"�#��$� �� +�+�� %��!��,�.�%�� +�� + -��)��*��%�� +-��!��"�,�� +�� 29,491 ��+�� +�+��

TOTAL 90,487 90,352

ASSETSNon Current Assets��/(��0��!�� %��0�� 1�� %��0�� +�� 2��3��,��

-+��-�� --��%��4��$�� +�� +��)��5��1��"�� &�'��!�(�0�� !��"��0��)�� +��'��*��5��0�� -�� 76,236 �� -��+��

Current Assets��1��"�� -�� -�+��%��1�� +��)��!��)��%�� #��3�#��)�� - -�� +��!��"��0��)�� +�� +��'��*��0�� 14,251 �� -��

TOTAL 90,487 90,352

As at March 31, 2014

Unaudited Audited

F-5


Unaudited Condensed Interim Consolidated Statement of Profit and Loss for the quarter ended June 30, 2014( ` in Crore)

UnauditedINCOME

��'��"�*�� +��+��*��1�)�"� -��Total Revenue 5,523

EXPENDITURE

0))�� )��/��5��$��3�6(��

��

6"��.��#��'��6(�� +��/��)�� -��&��)��1"��"��0"�� +��Depreciation adjusted by/transfer from :4�� 4��0�"��6(�� -��

Total Expenses 5,358

Profit before Exceptional Items, Adjustments and Tax 165Exceptional Items &��)��))��'�)�� ()�� -��67��"��$��$��'��"�4�� -��/�� ).�6()�� /��)�� +��67��"��$��$��'��"�4�� +��Profit Before Tax (before adjustment of Minority Interest/ Associates) 165,��'��8��9��!�( ��

Profit After Tax (before adjustment of Minority Interest/ Associates) 164��8��'�,��'��'��:��. ��8��'��;��,��'��'�0��)�� Profit After Tax (after adjustment of Minority Interest/ Associates) 132Earnings per Share of `̀ 5 each fully paid up (before and after Exceptional Items) 9�#��)��<� �<-��9�&��<� �<-��

For the quarter ended June 30, 2014

F-6

RELIANCE COMMUNICATIONS LIMITED

Unaudited Condensed Interim Consolidated Cash Flow Statement for the quarter ended June 30,2014( ` in Crore)

=��

0< ��/��$�/��"�*�� 0)�� -��

#< ��/��$��1�� 0)�� -�+��

�< ��/��$��/��)� �0)�� -��5��1�)��;��&�)��67��0�>�#�>��

��67��%� �� '�7�� +��

6''�)��'�6()�� 4��;��67��

��67��'�7�� - -��

For the Quarter ended June 30,2014

��67��)��)��)��7��"��)��9��9��%��3�%��)��)�� /(��&��$��#��3�<

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1. Background

2. Basis of Preparation

a.

b.

3. Significant Accounting policies

Notes to Unaudited Condensed Interim Consolidated Financial Statements for the quarter ended June 30, 2014

Reliance Communications Limited (the Company) is registered as a Telecom Company. The Company along with itsSubsidiaries and associates (the Group) is broadly engaged in Wireless, Wire line, Telecom Network, Broadbandand DTH Business.

The Unaudited Condensed Interim Consolidated Financial Statement is prepared under historical cost convention inaccordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 2013 (tothe extent notified) read with the Companies (Accounting Standards) Rules, 2006, the applicable pronouncements ofthe Institute of Chartered Accountants of India (ICAI) and the accounting treatment prescribed under the schemesapproved by the High Court. The figures for the year ended 31 March, 2014 are in compliance with the provisions ofCompanies Act, 1956, to the extent applicable.

These Unaudited Condensed Interim Consolidated Financial Statement does not disclose comparative Statementof Profit and Loss, Balance Sheet and Cashflow for the preceding quarter ended June 30, 2013, as this is the firstoccasion of presentation of reviewed Unaudited Condensed Interim Consolidated Financial Statements.

The preparation and presentation of Consolidated Financial Statements requires estimates and assumptions to bemade that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date ofthe financial statements and the reported amount of revenues and expenses during the reporting period. Differencebetween the actual results and estimates is recognised in the period in which the results are known / materialised.

The Company has prepared and presented the Unaudited Condensed Interim Consolidated Financial Statement forthe proposed offering of the Senior Notes of the Company, as mentioned in Note b below.

The group has followed the same set of accounting policies as similar to those followed in the prepartion of the annual accounts for the year ended March 31, 2014

These Unaudited Condensed Interim Consolidated Financial Statement is prepared for inclusion in the OfferCircular (hereinafter referred to as the “Offer Circular”) to be prepared in connection with the proposed offering of the Senior Notes of the Company for the listing on the Singapore Exchange Securities Trading Limited.

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4. Consolidated Segment Information:

Primary Segment Information ( ` in crore )Particulars India Operaions Global Operations Unallocable Eliminations Total

Segment RevenueExternal Revenue 4,583 940 - - 5,523

Inter Segment Revenue 135 133 - (268) -

Total Revenue 4,718 1,073 - (268) 5,523

Segment Result before Exceptional and non recurring items, interest & taxes 883 49 - - 932

Less: Finance Expense - - 767 - 767

Segment Result before Exceptional and non recurring items, taxes 883 49 (767) - 165

Less: Provision for Taxation - - 1 - 1

Segment Result after Tax 883 49 (768) - 164 Other InformationSegment Assets 76,779 10,673 3,987 (952) 90,487

Segment Liabilities 10,874 3,589 43,807 (665) 57,605

Capital Expenditure 456 19 - - 475

Depreciation 810 121 - - 931

(c) The reportable Segments are further described below:

-

-

Notes to Unaudited Condensed Interim Consolidated Financial Statement for the quarter ended June 30, 2014

The Company has identified geographic segments as primary segments and disclosed segment information, for the period, as“India Operations” and “Global Operations”. The segment has been identified and reported taking into account its internal financialreporting, performance evaluation and organisational structure by geographical locations of its operations, where its servicerendering activities are based. The accounting policies adopted for segment reporting are in line with the accounting policies ofthe Company with following additional policies for segment reporting.

( a ) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment.Revenue and expenses which relate to the enterprise as a whole and are not allocable to a segment on reasonable basis havebeen disclosed as "Unallocable".

( b ) Segment assets and liabilities represent the assets and liabilities in respective segments. Tax related assets and otherassets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocable".

The India Operations includes operations of the Company and its subsidiaries in India, Reliance Communications InfrastructureLimited, Reliance Telecom Limited, Reliance Infratel Limited, Reliance Webstore Limited, Reliance Big TV Limited, RelianceInfocomm Infrastructure Private Limited , Reliance Tech Services Private Limited and Reliance IDC Limited.

The Global Operations includes the retail operations outside India of Reliance Communications (UK) Limited, RelianceCommunications International Inc., Reliance Communications Canada Inc., Reliance Communications (Australia) Pty. Limited,Reliance Communications (New Zealand) Pte. Limited and wholesale operations outside India of its subsidiary viz. RelianceGlobalcom BV and its subsidiaries.

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5. Basic and diluted earnings per share :The Computation of earnings per share is set out below:

( ` in crore )

ParticularsFor the Quarter

ended June 30,2014

(a) 132

(b) 2,064,026,881

(c) 132

(d) 2,064,026,881

(e) Basic Earnings per Share of ` 5 each (`) 0.64 (f) Diluted Earnings per Share of ` 5 each (`) 0.64

6. Contingent Liabilities and Capital Commitment (As Certified by the Mangement)( ` in crore )

Contingent Liabilities As at June 30, 2014

As at March 31, 2014

(i) Estimated amount of contracts remaining to be executed on capital accounts (net of advances) and not provided for

635 708

(ii) Disputed Liabilities not provided for Sales Tax, VAT, Custom, Excise, Service Tax , Entry Tax, Octroi , Income Tax and Other Litigations including Regulatory

7,971 6,410

(iii) Guarantees given including on behalf of other companies for business purpose

130 132

(iv)


Profit attributable to Equity Shareholders (` in crore) (used as numerator for calculating EPS)

Weighted average number of Equity Shares (used as denominator for calculating Basic EPS)

Profit attributable to Equity Shareholders (` in crore) (used as numerator for calculating Diluted EPS)

Weighted average number of Equity Shares (used as denominator for calculating Diluted EPS)

Consequent to the investigations by an investigative agency (CBI) in relation to the entire telecomsector in India, certain preliminary charges have been framed by a Trial Court in October, 2011against Reliance Telecom Limited (RTL), a Wholly Owned Subsidiary of the Company, and three ofthe executives of the Group. The charges so framed are preliminary in nature based oninvestigations only, and the persons named are presumed to be innocent, till their alleged guilt isestablished after a fair trial.As legally advised, the persons so named deny all charges, and a writ petition is filed in October,2013 in the Hon’ble Supreme Court against charges framed by the Trial Court, which is pending forhearing. These preliminary charges have no impact on the business, operations, and/ or licenses ofRTL and of the Company and, even more so, are not connected in any manner to any other listedgroup companies.

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(v)

7 (i)

(ii)

8

9

10

Pursuant to the Schemes of Arrangement ("the Schemes") sanctioned by the Hon'ble High Court ofJudicature at Bombay, exchange variation on account of changes in exchange rates includingamortisation of the balance in “Foreign Currency Monetary Item Translation Difference Account(FCMITDA)” and depreciation consequent to addition of exchange differences to the cost ofcapitalised assets aggregating to Rs. 191 crore for the quarter ended June 30, 2014, arewithdrawable from General Reserve. In earlier years, such differences withdrawable from GeneralReserve were withdrawn as at year end. The Company continues to follow the same practice ofwithdrawal at the year end during the current financial year. However, for the purpose ofpresentation of this condensed interim consolidated financial statement as at June 30, 2014, theaforesaid amount aggregating to Rs. 191 crore has been depicted as withdrawal from GeneralReserve so as to represent the result as it would be declared at the year end.

During the quarter, the Company undertook Qualified Institutional Placement (QIP), as authorised bythe Board of Directors, at its meeting held on June 24, 2014, for issuance of 33,82,86,197 EquityShares of face value of ` 5/- each to Qualified Institutional Buyers at a price of ` 142.14 per EquityShare, including share premium of ` 137.14 per Equity Share, aggregating to ` 4,808.40 crore inaccordance with the Securities and Exchange Board of India (Issue of Capital and DisclosureRequirement) Regulations, 2009 (SEBI ICDR Regulations) and Section 42 of the Companies Act,2013 and the Rules made thereunder. The QIP issue was closed on June 27, 2014 andconsequently, the said Equity Shares were allotted on July 2, 2014.

Pursuant to the provision of Schedule II of the Companies Act, 2013 (the Act), the Company and asubsidiary have considered useful life of 20 years for certain Telecom equipments instead of 18years and a subsidiary company has considered useful life of 35 years for optic fiber cables insteadof 20 years, applied hitherto.

The Scheme of Arrangement for merger of Reliance Infratel Limited (“RITL”), a subsidiary ofReliance Communications Infrastructure Limited (RCIL) into RCIL, wholly owned subsidiary of theCompany is pending for approval of Shareholders and/ or the Hon’ble High Court of Judicature atMumbai. The Scheme will be given effect to upon receipt of all approvals. Pending approval of thesaid Scheme, no tax provision has been made in the financial statements as at June 30, 2014 ofaforesaid subsidiaries.

Demand already raised by Department of Telecommunications (DoT) for License fee on non telecomincome has been challenged, which is pending for hearing before Hon’ble Telecom DisputesSettlement and Appellate Tribunal (TDSAT) and accordingly, no additional provision is required inthis regard.

The Company has, as permitted under one of above mentioned Schemes, adjusted additionaldepreciation of Rs. 294 crore arising on fair value of the assets for the quarter ended June 30, 2014,by withdrawing an equivalent amount from General Reserve, which is in line with the practiceconsistently followed in earlier periods.

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Further, as approved at the Extraordinary General Meeting (EGM) of the members of the Companyheld on July 24, 2014, the Committee of Directors has, on August 7, 2014, allotted 8,66,66,667Warrants entitling for subscription of equivalent number of Equity Shares of Rs.5/- each at a price ofRs.150/- per Warrant (including share premium of Rs 145 per Equity Share) (up to ` 1,300 crore)under preferential allotment, to the Promoter Group entity, as per the applicable provisions of theSEBI ICDR Regulations. 50% of the issue price has been received on the date of allotment of thesaid Warrants and the balance 50% will be receivable on or before March 31, 2015.

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1 June 30, 2014 100.00%2 June 30, 2014 100.00%3 June 30, 2014 100.00%4 June 30, 2014 100.00%5 June 30, 2014 100.00%6 June 30, 2014 100.00%7 June 30, 2014 100.00%8 June 30, 2014 100.00%9 June 30, 2014 100.00%

10 June 30, 2014 100.00%11 June 30, 2014 90.45%12 June 30, 2014 100.00%13 June 30, 2014 100.00%14 June 30, 2014 99.95%15 June 30, 2014 100.00%16 June 30, 2014 100.00%17 June 30, 2014 100.00%18 June 30, 2014 100.00%19 June 30, 2014 100.00%20 June 30, 2014 100.00%21 June 30, 2014 90.00%22 June 30, 2014 100.00%23 June 30, 2014 99.95%24 June 30, 2014 99.95%25 June 30, 2014 99.95%26 June 30, 2014 99.95%27 June 30, 2014 59.97%28 June 30, 2014 100.00%29 June 30, 2014 100.00%30 June 30, 2014 99.95%31 June 30, 2014 99.95%32 June 30, 2014 99.95%33 June 30, 2014 99.95%34 June 30, 2014 99.95%35 June 30, 2014 100.00%36 June 30, 2014 100.00%37 June 30, 2014 100.00%38 June 30, 2014 100.00%39 June 30, 2014 100.00%40 June 30, 2014 100.00%41 June 30, 2014 100.00%42 June 30, 2014 100.00%43 June 30, 2014 99.95%44 June 30, 2014 99.95%45 June 30, 2014 99.95%46 June 30, 2014 99.95%47 June 30, 2014 99.95%48 June 30, 2014 99.95%49 June 30, 2014 99.95%50 June 30, 2014 99.95%51 June 30, 2014 100.00%52 June 30, 2014 100.00%53 June 30, 2014 100.00%54 June 30, 2014 100.00%55 June 30, 2014 100.00%56 June 30, 2014 100.00%57 June 30, 2014 100.00%58 June 30, 2014 100.00%59 June 30, 2014 100.00%60 June 30, 2014 100.00%61 June 30, 2014 100.00%62 June 30, 2014 100.00%

Period Ending

Proportion of ownership (interest)

Reliance WiMax Limited India

Reliance IDC Limited India

Campion Properties Limited India Reliance Big TV Limited India Reliance Tech Services Private Limited India

Sr. No. List of Subsidiaries Country of

Incorporation

Reliance Telecom Limited India Reliance Communications Infrastructure Limited India

Reliance Digital Home Services Limited India Reliance Webstore Limited India Reliance Infocomm Infrastructure Private Limited India

Gateway Net Trading Pte Limited Singapore

Reliance Infratel Limited India Reliance Mobile Commerce Limited India Reliance BPO Private Limited India Reliance Globalcom Limited India Reliance Globalcom B.V. The Netherlands Reliance Communications (UK) Limited United Kingdom Reliance Communications (Hong Kong) Limited Hong Kong Reliance Communications (Singapore) Pte. Limited Singapore Reliance Communications (New Zealand) Pte Limited New Zealand Reliance Communications (Australia) Pty Limited Australia Anupam Global Soft (U) Limited Uganda

Reliance Globalcom (UK) Limited United Kingdom

Reliance Globalcom Limited Bermuda FLAG Telecom Singapore Pte. Limited Singapore FLAG Atlantic UK Limited United Kingdom Reliance FLAG Atlantic France SAS France FLAG Telecom Taiwan Limited Taiwan Reliance FLAG Pacific Holdings Limited Bermuda FLAG Telecom Group Services Limited Bermuda FLAG Telecom Deutschland GmbH Germany FLAG Telecom Hellas AE Greece FLAG Telecom Asia Limited Hong Kong FLAG Telecom Nederland B.V. The Netherlands

Reliance FLAG Telecom Ireland Limited Ireland

Yipes Holdings Inc. USA Reliance Globalcom Services Inc. USA YTV Inc. USA Reliance Infocom Inc. USA Reliance Communications Inc. USA Reliance Communications International Inc. USA Reliance Communications Canada Inc. USA Bonn Investment Inc. USA FLAG Telecom Development Limited Bermuda FLAG Telecom Development Services Company LLC Egypt FLAG Telecom Network Services Limited Ireland

Vanco Gmbh Germany

FLAG Telecom Japan Limited Japan FLAG Telecom Ireland Network Limited Ireland FLAG Telecom Network USA Limited USA FLAG Telecom Espana Network SAU Spain Reliance Vanco Group Limited United Kingdom Euronet Spain SA Spain Net Direct SA (Properietary) Ltd. (Under liquidation) South Africa Vanco (Shanghai) Co Ltd. China Vanco (Asia Pacific) Pte. Limited Singapore Vanco Australasia Pty. Ltd. Australia Vanco Sp Zoo Poland

Vanco Japan KK Japan Vanco NV Belgium Vanco SAS France Vanco South America Ltda Brazil

11. The Subsidiaries/ Associates Companies considered in the condesed consolidation financial statement with the proportion of ownershipare as under:

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63 June 30, 2014 100.00%64 June 30, 2014 100.00%65 June 30, 2014 100.00%66 June 30, 2014 100.00%67 June 30, 2014 100.00%68 June 30, 2014 100.00%69 June 30, 2014 100.00%70 June 30, 2014 100.00%71 June 30, 2014 100.00%72 June 30, 2014 100.00%73 June 30, 2014 100.00%74 June 30, 2014 100.00%75 June 30, 2014 100.00%76 June 30, 2014 48.98%77 June 30, 2014 49.97%78 June 30, 2014 0.00%79 June 30, 2014 0.00%80 June 30, 2014 90.45%81 June 30, 2014 100.00%82 June 30, 2014 100.00%

* - Board Control

1 June 30, 2014 20.00%2 June 30, 2014 26.00%

Sr. No.

List of Subsidiaries Country of Incorporation

Period Ending

Proportion of ownership

Vanco International Ltd United Kingdom

Vanco Srl Italy Vanco Sweden AB Sweden Vanco Switzerland AG Switzerland Vanco Deutschland GmbH Germany Vanco BV The Netherlands Vanco Benelux BV The Netherlands Vanco UK Ltd United Kingdom

Global Cloud Xchange Limited Bermuda

FLAG Holdings (Taiwan) Limited TaiwanReliance Telecom Infrastructure (Cyprus) Holdings Limited * CyprusLagerwood Investments Limited * CyprusReliance Communications Tamilnadu Private Limited India

GCX Limited Bermuda

Mumbai Metro Transport Private Limied India

Sr. No. List of Associates Country of

Incorporation Period Ending

Proportion of ownership

interest

Warf Telecom International Private Limited Maldives

Vanco Solutions Inc USA Seoul Telenet Inc. Korea

Vanco Row Limited United Kingdom Vanco Global Ltd United Kingdom VNO Direct Ltd United Kingdom Vanco US LLC USA

F-14


Independent Auditors’ Report on Consolidated Financial Statements

To

the Board of Directors of Reliance Communications Limited

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial

statements of Reliance Communications Limited (“the Company’)

and its subsidiaries and associates (collectively referred to as “the

Group”), which comprise of the consolidated balance sheet as at

31 March 2014, the consolidated statement of profit and loss

and consolidated cash flow statement for the year then ended,

and a summary of significant accounting policies and other

explanatory information.

Management’s Responsibility for the Consolidated Financial

Statements

Management is responsible for the preparation of these

consolidated financial statements that give a true and fair view

of the consolidated financial position, consolidated financial

performance and consolidated cash flows of the Company in

accordance with the accounting principles generally accepted in

India; this includes the design, implementation and maintenance

of internal control relevant to the preparation and presentation

of the consolidated financial statements that give a true and fair

view and are free from material misstatement, whether due to

fraud or error.

The consolidated financial statements have been prepared by the

Company in accordance with the requirements of Accounting

Standard (AS 21) on Consolidated Financial Statements and

Accounting Standard (AS 23)- Accounting for Investment in

Associates in Consolidated Financial Statements as prescribed by

the Companies (Accounting Standards’) Rules, 2006.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated

financial statements based on our audit. We conducted our audit

in accordance with Standards on Auditing issued by the Institute

of Chartered Accountants of India. Those standards require that

we comply with ethical requirements and plan and perform the

audit to obtain reasonable assurance about whether the financial

results are free from material misstatement.

An audit includes performing procedures to obtain audit evidence

about the amounts and disclosures in the consolidated financial

statements. The procedures selected depend on the auditor’s

judgment, including the assessment of the risks of material

misstatement of the consolidated financial statements, whether

due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the Company’s preparation

and presentation of the consolidated financial statements that

give a true and fair view in order to design audit procedures that

are appropriate in the circumstances but not for the purpose of

expressing an opinion on the effectiveness of the entity’s internal

control. An audit also includes evaluating the appropriateness

of accounting policies used and the reasonableness of the

accounting estimates made by the management, as well as

evaluating the overall presentation of the consolidated financial

statements.

We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according

to the explanations given to us and based on the consideration

of the reports of the other auditors on the financial statements

of the subsidiaries as noted below, the consolidated financial

statements give a true and fair view in conformity with the

accounting principles generally accepted in India:

(i) in the case of the consolidated balance sheet, of the state

of affairs of the Group as at 31 March 2014;

(ii) in the case of consolidated statement of profit and loss, of

the profit of the Group for the year ended on that date; and

(iii) in the case of consolidated cash flow statement, of the

cash flows of the Group for the year ended on that date.

Emphasis of Matter

1. We draw your attention to Note 2.38 of the consolidated

financial statements regarding the Schemes of Arrangement

(‘the Schemes’) sanctioned by the Hon’ble High Court of

Judicature at Mumbai, permit the Company and three of its

subsidiaries, namely, Reliance Communication Infrastructure

Limited, Reliance Infratel Limited and Reliance Telecom

Limited to adjust expenses and/or losses identified by

the respective Board of the Company and its three

subsidiaries, which are required to be debited/ credited

to the Statement of profit and loss by a corresponding

withdrawal or credit from/ to General Reserve, which is

considered to be an override to the relevant provisions

of Accounting Standard 5 (AS 5) ‘Net Profit or Loss for

the Period, Prior Period Items and Changes in Accounting

Policies’. The Company and its three subsidiaries have

identified exchange variations incurred during the year

of ` 155 crore (previous year ` 203 crore), fuel cost of

` Nil (previous year ` 62 crore), depreciation on

exchange losses capitalised of ` 385 crore (previous year

` 275crore), capital work in progress written off of `Nil (previous year ` 325 crore), amortization of Foreign

Currency Monetary Items Translation Difference Account

(FCMITDA) of ` 440 crore (previous year ` 638 crore),

as in the opinion of the respective Boards, such exchange

loss, provisions and costs are considered to be of an

exceptional nature and accordingly, these expenses and

deferred tax charge of ` Nil (previous year ` 354 crore)

of one of its subsidiaries have been met by corresponding

withdrawal from General Reserve. Pending clarification from

the Institute of Chartered Accountants of India (ICAI), the

Company has credited such withdrawal to the Statement

of profit and loss. Had such write off of expenses, losses

and deferred tax charge not been met from General

Reserve, the consolidated financial statements would have

reflected a profit after tax of ` 67 crore (previous year

loss ` 1,185 crore) and the consequential effect of this

on the consolidated profit after tax would have been of

` 980 crore (previous year ` 1,857 crore). We have not

qualified our opinion on this matter.

2. We draw your attention to Note 2.34 (v) of the

consolidated financial statements regarding investigations

by an investigating agency (CBI) and framing of certain

preliminary charges by a Trial Court in October, 2011 against

a director of a subsidiary Company and the subsidiary

F-15


Independent Auditor’s Report on Consolidated Financial Statements

Company, against which the subsidiary Company has filed

a writ petition in October, 2013 in Hon’ble Supreme Court

of India, which is pending for hearing as set out in the

aforesaid note. We have not qualified our opinion on this

matter.

Other matters

1. The Company has computed goodwill on consolidation

by comparing the cost of investments with the equity of

subsidiaries as on date on which investments were made by

Reliance Industries Limited (‘the transferor company’) prior

to demerger instead of considering the date of demerger as

the date of investment.

2. We did not audit the financial statements and other

financial information of certain subsidiaries. The financial

statements of these subsidiaries for the year ended 31

March 2014 have been audited by other auditors whose

reports have been furnished to us and our opinion, in so

far as it relates to the amounts included in respect of

subsidiaries, is based solely on these reports. The attached

consolidated financial statements include assets of

` 8,408 crore as at 31 March 2014, revenues of ` 4,617

crore and cash outflows amounting to ` 54 crore in respect

of the aforementioned subsidiaries for the year then ended.

3. The financial statements of certain subsidiaries for the year

ended 31 March 2014 have been audited by one of the joint

auditors, Chaturvedi & Shah, Chartered Accountants. The

attached consolidated financial statements include assets of

` 17,896 crore as at 31 March 2014, revenues of ` 6,037

crore and cash outflows amounting to ` 18 crore in respect

of the aforementioned subsidiaries for the year then ended.

4. We have relied on the unaudited financial statements of

the subsidiaries and associates whose financial statements

reflect total assets of ` 3,762 crore as at 31 March 2014,

total revenue of ` 58 crore and cash outflows amounting

to ` 47 crore for the year ending 31 March 2014.

These unaudited financial statements as approved by the

respective Board of Directors of these companies have

been furnished to us by the management, and our report

in so far as it relates to the amounts included in respect of

the subsidiaries is based solely on such approved financial

statements.

For Chaturvedi & Shah For B S R & Co. LLPChartered Accountants Chartered AccountantsFirm’s Reg. No: 101720W Firm’s Reg. No: 101248W

C. D. Lala Bhavesh DhupeliaPartner PartnerMembership No: 35671 Membership No: 042070

MumbaiMay 2, 2014

F-16


Consolidated Balance Sheet as at March 31, 2014

(` in Crore)

Notes As at

March 31, 2014

As at

March 31, 2013


Shareholders' Funds

Share Capital 2.01 1,021 1,032

Reserves and Surplus 2.02 31,388 32,409 32,818 33,850

Minority Interest 743 725


(a) Long Term Borrowings 2.03 27,913 28,678

(b) Deferred Tax Liabilities (Net) 2.04 1,803 1,372

(c) Other Long Term Liabilities 2.05 915 1,233

(d) Long Term Provisions 2.06 1,031 31,662 885 32,168

Current Liabilities

(a) Short Term Borrowings 2.07 8,909 8,800

(b) Trade Payables 2.08 3,516 2,364

(c) Other Current Liabilities 2.09 11,856 10,401

(d) Short Term Provisions 2.10 1,257 25,538 1,874 23,439

TOTAL 90,352 90,182

ASSETS

Non Current Assets

(a) Fixed Assets 2.11

(i) Tangible Assets 43,934 44,339

(ii) Intangible Assets 19,319 21,049

(iii) Capital Work in Progress 3,190 3,864

66,443 69,252

(b) Goodwill 5,300 5,125

(c) Non Current Investments 2.12 118 111

(d) Deferred Tax Assets (Net) 2.04 1,488 -

(e) Long Term Loans and Advances 2.13 3,542 3,210

(f) Other Non Current Assets 2.14 84 76,975 223 77,921

Current Assets

(a) Current Investments 2.15 605 551

(b) Inventories 2.16 415 497

(c) Trade Receivables 2.17 3,919 3,911

(d) Cash and Bank Balances 2.18 504 731

(e) Short Term Loans and Advances 2.19 5,828 4,581

(f) Other Current Assets 2.20 2,106 13,377 1,990 12,261

TOTAL 90,352 90,182

Significant Accounting Policies 1

Notes on Accounts 2

The Notes referred to above form an integral part of the Consolidated Financial Statements.

As per our report of even date For and on behalf of the Board

For Chaturvedi & Shah

Chartered Accountants

Firm Reg. No.: 101720W

For B S R & Co. LLP



Chairman Anil D. Ambani

Directors

J. Ramachandran

A. K. Purwar

C.D. Lala

Partner


Bhavesh Dhupelia

Partner


R. N. Bhardwaj

Company Secretary and Manager Prakash Shenoy

Mumbai

May 2, 2014

F-17


Consolidated Statement of Profit and Loss for the year ended March 31, 2014

(` in Crore)

Notes For the year ended

March 31, 2014

For the year ended

March 31, 2013

INCOME

Revenue from Operations 2.21 21,238 20,561

Other Income 2.22 1,083 1,217

Total Income 22,321 21,778

EXPENDITURE

Access Charges, License Fees and Network Expenses 2.23 10,550 10,368

Employee Benefits Expenses 2.24 1,025 1,189

Finance Costs 2.25 3,019 2,499

Depreciation, Impairment and Amortisation 2.11 5,939 5,331

Depreciation and Amortisation adjusted by/transfer from :

Provision for Business Restructuring (Refer Note 2.30 (iii)) (47) (99)

General Reserve (Refer Note 2.30 (vi) (132) (123)

General Reserve (Refer Note 2.30 (iii)) (1,225) 4,535 (1,264) 3,845

Sales and General Administration Expenses 2.26 3,020 3,062

Total Expenses 22,149 20,963

Profit before Exceptional Items, Adjustments and Tax 172 815

Exceptional Items 2.38

Capital Work in Progress written off - 325

Equivalent amount withdrawn from General Reserve - (325)

Depreciation on account of Change in exchange rate 385 275

Equivalent amount withdrawn from General Reserve (385) (275)

Foreign Currency Exchange Fluctuation Loss (net) 595 841


Fuel Expenses - 62

Equivalent amount withdrawn from General Reserve - (62)

Prior Period Adjustments (Refer Note 2.31) 56 -

Profit Before Tax 116 815

Provision for:

- Current Tax 46 71

Less: MAT Credit Entitlement (10) -

36 71

- Deferred Tax (net) 2.04 (1,057) 354

- Equivalent amount withdrawn from General Reserve 2.38 - (1,021) (354) 71

Profit After Tax (before adjustment of Minority Interest/ Associates) 1,137 744

Less: Share of Profit transferred to Minority 92 73

Less: Share of Loss/ (Profit) of Associates (2) (1)

Profit After Tax (after adjustment of Minority Interest/ Associates) 1,047 672

Earnings per Share of ` 5 each fully paid up (before and after

Exceptional Items)

2.37

- Basic (`) 5.07 3.26

- Diluted (`) 5.07 3.26


Notes on Accounts 2






For B S R & Co. LLP




Directors

J. Ramachandran

A. K. Purwar

C.D. Lala

Partner


Bhavesh Dhupelia

Partner


R. N. Bhardwaj


Mumbai

May 2, 2014

F-18


Consolidated Cash Flow Statement for the year ended March 31, 2014

(` in Crore)

For the year ended

March 31, 2014

For the year ended

March 31, 2013

A CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before tax as per Statement of Profit and Loss 116 815

Adjusted for:

Provision for Doubtful Debts, Loans and Advances 289 108

Depreciation/Impairment and Amortisation 4,535 3,845

Prior Period Adjustment 56 -

Effect of changes in Foreign Exchange Rate (net) (38) (12)

(Profit) /Loss on Sale of Assets and Capital Work in Progress (net) 20 28

Net gain on Sale of Investments (9) (35)

Finance Costs 3,019 2,499

Writeback of Provision towards Business Restructuring (441) (550)

Writeback of Provision towards Liabilities no longer required (450) (192)

Interest Income (47) (11)

6,934 5,680

Operating Profit before Working Capital Changes 7,050 6,495

Adjusted for:

Receivables and other Advances (581) (553)

Inventories 82 70

Trade Payables and other Liabilities 559 (2,391)

60 (2,874)

Cash Generated from Operations 7,110 3,621

Income Tax Refund 250 477

Income Tax Paid (521) (271) (273) 204

Net Cash from Operating Activities 6,839 3,825

B CASH FLOW FROM INVESTING ACTIVITIES

Additions of Fixed Assets and Capital Work in Progress

(including Realised exchange variation Capitalised)

(2,165) (2,114)

Purchase of Investments (11,588) (12,876)

Sale of Investments 11,604 12,911

Interest Income 49 10

Net Cash Used in Investing Activities (2,100) (2,069)

C CASH FLOW FROM FINANCING ACTIVITIES

Net Proceeds from / (Repayment of) Short term Borrowings (Net) 132 3,268

Realised foreign exchange loss (524) (1,266)

Proceeds from Long Term Borrowings 2,499 1,476

Repayment of Long Term Borrowings (3,995) (2,529)

Dividend Paid (Including tax on dividend) (61) (60)

Finance Costs (3,018) (2,465)

Net Cash used in Financing Activities (4,967) (1,576)

Net Increase/ (Decrease) in Cash and Cash Equivalents (228) 180

Opening Balance of Cash and Cash Equivalents 731 550

Effect of Exchange Gain/ (Loss) on Cash and Cash Equivalents 1 1

Closing Balance of Cash and Cash Equivalents (Refer Note 2.18) 504 731

Note: Cash and Cash Equivalents include cash on hand, cheques on hand, remittances- in-transit and bank balance including






For B S R & Co. LLP




Directors

J. Ramachandran

A. K. Purwar

C.D. Lala

Partner


Bhavesh Dhupelia

Partner


R. N. Bhardwaj


Mumbai

May 2, 2014

F-19


Note : 1

1.1 Principles of Consolidation

The Consolidated Financial Statements relate to Reliance Communications Limited (‘the Company’) and all of its subsidiary companies and the companies controlled, that is, the companies over which the Company exercises control/ joint control over ownership and voting power and the associates and joint venture (hereinafter collectively referred to as the “Group”). The Consolidated Financial Statements have been prepared on the following bases.

(a) The financial statements of the Company and its subsidiaries are consolidated on a line-by-line basis, by adding together the book values of like items of assets, liabilities, incomes and expenses after fully eliminating intra group balances and intra group transactions resulting in unrealized profits or losses in accordance with the Accounting Standard (“AS”) 21 “Consolidated Financial Statements” as referred to in the Companies Accounting Standard Rules, 2006 (Accounting Standards Rules).

(b) In case of the foreign subsidiaries and companies controlled by the Company, revenue is consolidated at the average exchange rate prevailing during the year. All monetary assets and liabilities are converted at the exchange rate prevailing at the end of the year. While, non monetary assets and liabilities are recorded at the exchange rate prevailing on the date of the transaction or closing rate, as applicable. Any exchange difference arising on consolidation of integral foreign operation and non integral foreign operation is recognised in the Statement of Profit and Loss and Exchange Fluctuation Reserve respectively.

(c) Investments in subsidiaries are eliminated and differences between the cost of investment over the net assets on the date of investment or on the date of the financial statements immediately preceeding the date of investment in subsidiaries are recognised as Goodwill or Capital Reserve, as the case may be.

(d) The difference between the proceeds from disposal of investment in a subsidiary or in a company controlled by the Company and the proportionate carrying amount of its assets less liabilities as on the date of disposal, is recognised in the Consolidated Statement of Profit and Loss as profit or loss on disposal of investment in subsidiaries.

(e) Minority Interest’s share of net profit or loss of consolidated subsidiaries for the year is identified and adjusted against the income of the Group in order to arrive at the net income attributable to the Equity Shareholders of the Company.

(f) Minority Interest’s share of net assets of consolidated subsidiaries is identified and presented in the consolidated Balance Sheet as a separate item from liabilities and the Shareholders’ Equity.

(g) In case of associates, where the Company directly or indirectly through subsidiaries holds 20% or more of Equity Shares, investments in associates are accounted for using equity method in accordance with Accounting Standard (“AS”) 23 “Accounting for Investments in Associates in Consolidated Financial Statements” as referred to in the Accounting Standard Rules. The Company accounts for its share in the change in the net assets of the associates, post acquisition, after eliminating unrealised profits and losses resulting from transactions between the Company and its associates to the extent of its share, through its Statement of Profit and Loss, to the extent such change is attributable to the associates’ Statement of Profit and Loss, based on available information.

(h) Interest in a jointly controlled entity is reported using proportionate consolidation in accordance with the Accounting Standard (“AS”) 27 “Financial Reporting of Interests in Joint Ventures” as referred to in Accounting Standards Rules.

(i) As far as possible, the Consolidated Financial Statements are prepared using uniform Accounting Policies for like transactions and other events in similar circumstances and are presented in the same manner as the standalone financial statements of the Company.

1.2 Investments other than in subsidiaries, associates and joint ventures are accounted as per Accounting Standard (“AS”) 13 “Accounting for Investments” as referred to in the Accounting Standard Rules.

1.3 Other Significant Accounting Policies

(a) Basis of Preparation of Consolidated Financial Statements

The financial statements are prepared under historical cost convention/ fair valuation under a Scheme approved by the High Court, in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 2013 (to the extent notified) and the provisions of the Companies Act, 1956 (to the extent applicable) read with the Companies Accounting Standard Rules as well as applicable pronouncements of the Institute of Chartered Accountants of India (ICAI).

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in Schedule VI to the Companies Act, 1956. Based on the nature of the services and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or non-current classification of assets and liabilities.

(b) Use of Estimates

The preparation and presentation of Consolidated Financial Statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates is recognised in the period in which the results are known / materialised.

(c) Fixed Assets

Fixed Assets are divided into Tangible Assets and Intangible Assets

(i) Fixed Assets are stated at cost/ fair value net of Modvat/ Cenvat, Value Added Tax and include amount added on revaluation less accumulated depreciation, amortisation and impairment loss, if any.

(ii) All costs including financing cost of qualifying assets till commencement of commercial operations, net charges of foreign exchange contracts and adjustments arising upto March 31, 2007 from exchange rate variations relating to borrowings attributable to fixed asset are capatalised.

(iii) Expenses incurred relating to project, prior to commencement of commercial operation, are considered as project development expenditure and shown under Capital Work-in-Progress.

(iv) Telecom Licenses are stated at fair value or at cost as applicable less accumulated amortisation.

Significant Accounting Policies to the Consolidated Balance Sheet and Consolidated Statement of Profit and Loss

F-20


(v) Indefeasable Right of Connectivity (IRC) are stated at cost less accumulated amortisation.

(vi) In respect of accounting period commencing on or after April 1, 2011, consequent to the insertion of para 46A of AS 11 ‘The Effects of Changes in Foreign Exchange Rates‘, related to acquisition of depreciable assets pursuant to notifications dated December 29, 2011 and August 9, 2012 issued by Ministry of Corporate Affairs (MCA), under the Companies (Accounting Standard) (Second Amendment) Rules 2011, the cost of depreciable capital assets includes foreign exchange differences arising on translation of long term foreign currency monetary items as at the balance sheet date in so far as they relate to the acquisition of such assets.

(d) Lease

(i) In respect of Operating Leases, lease rentals are expensed on straight line basis with reference to the term of lease, except for lease rentals pertaining to the period up to the date of commencement of commercial operations, which are capitalised.

Where the lessor effectively retains substantially all risk and benefits of ownership of the leased assets they are classified as operating lease.Operating lease payments are recognised as an expense in the Statement of Profit and Loss.

(ii) Finance leases prior to April 1, 2001: Rentals are expensed with reference to the term of lease and other considerations.

(iii) Finance Leases on or after April 1, 2001: The lower of the fair value of the assets and present value of the minimum lease rentals is capitalised as Fixed Assets with corresponding amount shown as liabilities for leased assets. The principal component in lease rental in respect of the above is adjusted against liabilities for leased assets and the interest component is recognised as an expense in the year in which the same is incurred except in case of assets used for capital projects where it is capitalised.

(e) Depreciation / Amortisation

(i) Depreciation on Fixed Assets is provided on Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 except in case of the following assets which are depreciated at the rates as given below.

(a) Telecom Electronic Equipments - 18 years

(b) Telecom Towers - 35 years

(c) Furniture, Fixtures and Office Equipments - 5, 10 years

(d) Customer Premises Equipments - 3 years

(e) Vehicles - 5 years

(f) Leasehold improvements - Shorter of the remaining lease term or useful life

(g) Sub Marine Cable Network - Shorter of 25 years or remaining useful life

(h) Terrestrial Network - Shorter of 15 years or remaining useful life

(ii) Depreciation on assets, taken on finance lease on or after April 1, 2001, is provided over the remaining period of lease from commencement of commercial operations.

(iii) Expenditure of capital nature incurred on assets taken on operating lease is depreciated over the remaining period of the lease term.

(iv) Leasehold Land is depreciated over the period of the lease term.

(v) Intangible assets, namely entry fees/ fees for Telecom Licenses and Brand Licenses are amortised over the balance period of Licenses. IRC and Software are amortized from the date of acquisition or commencement of commercial services, whichever is later. The life of amortisation of the intangible assets are as follows.

(a) Telecom Licenses - 12.50 to 20 years

(b) Brand License - 10 years

(c) DTH License - 10 years

(d) Indefeasible Right of Connectivity - In the year of purchase, 15/ 20 years

(e) Software - 5 years

(f) Trade Names and Trademarks - 5 to 10 years

(g) Intellectual Property - 7 years

(h) Building access Rights - 5 years

(vi) Depreciation on foreign exchange differences including attributable to interest capitalised pursuant to para 46A of AS 11 ‘The Effects of Changes in Foreign Exchange Rates‘ vide notifications dated December 29, 2011 and August 9, 2012 by Ministry of Corporate Affairs (MCA), under the Companies (Accounting Standards) (Second amendment) Rules, 2011, is provided over the balance useful life of depreciable capital assets.

(vii) Depreciation on additions is calculated pro rata from the following month of addition.

(f) Asset Retirement Obligation (ARO)

Asset Retirement Obligation (ARO) relates to the removal of cable systems and equipments when they will be retired from its active use. Provision is recognised based on the best estimate, of the management, of the eventual costs (net of recovery) that relates to such obligation and is adjusted to the cost of such assets.

(g) Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is increased / reversed where there is change in the estimate of recoverable value. The recoverable value is higher of net selling price and value in use.

(h) Investments

Current Investments are carried at lower of cost and market value computed Investment wise. Long Term Investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than


F-21


temporary in the opinion of the management.

(i) Inventories of Stores, Spares and Communication Devices

Inventories of stores, spares and communication devices are accounted for at costs, determined on weighted average basis or net realisable value, whichever is less, except in case of certain subsidiaries, where cost is determined on First In First Out basis.

(j) Employee Benefits

Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized as an expense during the period.

Long term employee benefits

(i) Defined contribution plan

The Company’s contribution towards Employees’ Superannuation Plan is recognized as an expense during the period in which it accrues.

(ii) Defined benefit plans

Provident Fund

Provident Fund contributions are made to a Trust administered by the Trustees. Interest payable to the Provident Fund members, shall not be at a rate lower than the statutory rate. Liability is recognized for any shortfall in the Income of the fund vis-à-vis liability of the Interest to the members as per statutory rates.

Gratuity Plan

The Company’s gratuity benefit scheme is a defined benefit plan. The Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date.

Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.

(iii) Other Long term employment benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the Balance Sheet date, determined based on actuarial valuation using Projected Unit Credit Method. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date.

(k) Borrowing Cost Borrowing costs, that are attributable to the acquisition or construction of qualifying assets, are capitalised as part of the

cost of such assets upto the commencement of commercial operations. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Other borrowing costs are recognised as expense in the year in which they are incurred.

(l) Foreign Currency Transactions

(i) Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at the time of the transaction.

(ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts is recognised over the life of the contract.

(iii) Non monetary foreign currency items are carried at cost.

(iv) Any income or expense on account of exchange difference in case of monetary items other than mentioned above, either on settlement or on translation, is recognised in the Statement of Profit and Loss.

(v) Any loss arising out of marking a class derivative contracts to market price is recognised in the Statement of Profit and Loss. Income, if any, arising out of marking a class of derivative contracts to market price is not recognised in the Statement of Profit and Loss.

(vi) All long term foreign currency monetary items consisting of loans which relate to acquisition of depreciable capital assets at the end of the period/ year have been restated at the rate prevailing at the Balance Sheet date. The exchange difference including attributable to interest arising as a result has been added to or deducted from the cost of the assets as per the notification issued by the Ministry of Company Affairs (MCA) dated December 29, 2011 and August 9, 2012 and depreciated over balance life of capital asset. Exchange difference on other long term foreign currency loans is accumulated in “Foreign Currency Monetary Item Translation Difference Account (FCMITDA)” which will be amortized over the balance period of monetory assets or liabilities.

(m) Revenue Recognition

(i) Revenue is recognised as and when the services are provided on the basis of actual usage of the Company’s network. Revenue on upfront charges for services with lifetime validity and fixed validity periods of one year or more are


F-22


recognised over the estimated useful life of subscribers and specified fixed validity period, as appropriate. The estimated useful life is consistent with estimated churn of the subscribers.

(ii) The Company sells Right of Use (ROUs) that provide customers with network capacity, typically over a 10- to 15-year period without transferring the legal title or giving an option to purchase the network capacity. Capacity services revenues are accounted as operating lease and recognised in the Company’s income statement over the life of the contract. Bills raised on customers/ payments received from customers for long term contracts and for which revenue is not recognised are included in deferred revenue. Revenue on non cancellable ROUs are recognised upfront as licencing income on activation of services.

(iii) Standby maintenance charges are invoiced separately from capacity sales. Revenues relating to standby maintenance are recognised over the period in which the service is provided. Any amounts billed prior to providing of service are included in deferred revenue.

(iv) Network services include Capacity lease services, IP transit, IPLC (private lines leased to customers), backup service for other network operators and all other services. The customer typically pays the charges for network services periodically over the life of the contract, which may be up to three years. Network revenue is recognised in the Company’s income statement over the term of the contract.

(v) Sale of Handsets and accessories are recognised when goods are supplied and are recorded net of trade discounts, rebates, commissions to distributors and dealers and sales taxes. It does not include inter company transfers.

(vi) Interest income on investment is recognised on time proportion basis. Dividend is considered when right to receive is established. The Group recognises income from the units in the Fixed Income Schemes of Mutual Funds where income accrued is held, till the declaration or payment thereof, for the benefit of the unit holders.

(vii) Revenue is recognised net of taxes when the Base Transceiver Station (BTS) Tower is Ready For Installation of customer equipments and as per the terms of the agreements.

(viii) Activation fees in resepct of DTH is recognised on upfront basis at the time of activation of services in customers’ premises. Subscription revenue towards initial customers are recognised upfront as and when it is realised and the monthly subscription is recognised on accrual basis, net of service tax, entertainment tax and trade discount.

(n) Provision for Doubtful Debts and Loans and Advances

Provision is made in the accounts for doubtful debts and Loans and Advances in cases where the management considers the debts, loans and advances, to be doubtful of recovery.

(o) Miscellaneous Expenditure

Miscellaneous Expenditure is charged to the Statement of Profit and Loss as and when it is incurred.

(p) Taxes on Income and Deferred Tax

Provision for income tax is made on the basis of taxable income for the year at current rates. Tax expense comprises of Current Tax and Deferred Tax at the applicable enacted or substantively enacted rates. Current tax represents the amount of Income Tax payable / recoverable in respect of the taxable income/loss for the reporting period. Deferred tax represents the effect of timing difference between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future. However, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of assets. MAT credit is recognised as an asset only if there is convincing evidence that the Company will pay normal income tax during the specified period.

(q) Government Grants

Subsidies granted by the Government for providing telecom services in rural areas are recognised as Other Operating Income in accordance with the relevant terms and conditions of the scheme and agreement.

(r) Provisions and Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent Assets are neither recognised nor disclosed in the financial statements.

(s) Earning per Share

In determining Earning per Share, the Group considers the net profit after tax and includes the post tax effect of any extra-ordinary / exceptional item. The number of shares used in computing Basic Earnings per Share is the weighted average number of shares, including owned by the Trust, outstanding during the period. The number of shares used in computing Diluted Earnings per Share comprises the weighted average shares considered for deriving Basic Earnings per Share, and also the weighted average number of shares that could have been issued on the conversion of all dilutive potential Equity Shares where the results would be anti - dilutive. Dilutive potential Equity Shares are deemed converted as of the beginning of the period, unless issued at a later date.

(t) Employee Stock Option Scheme

In respect of stock options granted pursuant to the Company’s Employee Stock Options Scheme, the intrinsic value of the options (excess of market price of the share over the exercise price of the option) is treated as discount and accounted as employee compensation cost over the vesting period. Employee compensation cost recognised earlier on grant of options is reversed in the period when the options are surrendered by any employee.


F-23


(` in Crore)

As at

March 31, 2014

As at

March 31, 2013

Note : 2.01

Share Capital

Authorised:

5,00,00,00,000 Equity Shares of ` 5 each

(5,00,00,00,000) 2,500 2,500

2,500 2,500

Issued, Subscribed and Paid up

2,06,40,26,881 Equity Shares of ` 5 each fully paid up

(2,06,40,26,881)1,032 1,032

Less: 2,12,79,000 Equity Shares of ` 5 each fully paid up held by 11 -

RCOM ESOS Trust (Refer Note 5 below)

1,021 1,032

(1) Shares held by Holding/ Ultimate Holding Company and/ or their subsidiaries/ associates

No of Shares No of Shares

(a) Reliance Innoventures Private Limited, Holding Company 1,23,79,001 1,23,79,001

(b) AAA Communication Private Limited, Subsidiary of Holding

Company

72,31,10,172 72,31,10,172

(c) AAA Industries Private Limited, Subsidiary of Holding Company 30,00,00,000 30,00,00,000

(d) ADA Enterprises and Ventures Private Limited, Subsidiary of

Holding Company

30,00,00,000 30,00,00,000

(e) Reliance Capital Limited, Subsidiary of Holding Company 2,96,95,295 3,10,95,295

(2) Details of Shareholders holding more then 5% shares in the Company

No of Shares % No of Shares %

(a) AAA Communication Private Limited 72,31,10,172 35.03 72,31,10,172 35.03

(b) AAA Industries Private Limited 30,00,00,000 14.53 30,00,00,000 14.53

(c) ADA Enterprises and Ventures Private Limited 30,00,00,000 14.53 30,00,00,000 14.53

(d) Life Insurance Corporation of India 16,46,90,275 7.98 14,96,03,497 7.25

(3) The Company has only one class of equity shares having a par value of ` 5 per share. Each holder of equity share is entitiled to one vote per

share. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company. The

distribution will be in proportion to the number of equity shares held by the shareholder.

During the previous year ended March 31, 2013, the amount of per share dividend recognised as distributable to equity shareholders was

` 0.25.

(4) Reconciliation of shares outstanding at the beginning and at the end of the reporting period,

March 31, 2014 March 31, 2013

Number (` in Crore) Number (` in Crore)

Equity Shares

At the beginning of the year 2,06,40,26,881 1,032 2,06,40,26,881 1,032

Add/ (Less) : Changes during the year - - - -

At the end of the year 2,06,40,26,881 1,032 2,06,40,26,881 1,032

(5) Consolidation of RCOM ESOS TRUST (Trust)

The Company has consolidated financial statements of RCOM ESOS Trust as at March 31, 2014 with Standalone Financial Statements of the

Company in terms of SEBI (ESOS and ESPS) Guidelines, 1999 and recent opinion of the Expert Advisory Committee (EAC) of The Institute of

Chartered Accountants of India (the ICAI).

The said Trust is holding 2,12,79,000 no. of equity shares of ` 5 each of the Company. `11 crore being the face value of such equity shares

is presented as deduction from the paid up share capital.

Notes on Accounts to the Consolidated Balance Sheet and Consolidated Statement of Profit and Loss

F-24


(` in Crore)

As at

March 31, 2014

As at

March 31, 2013

Note : 2.02

Reserves and Surplus

Statutory Reserve Fund

As per last Balance Sheet ` 6,13,000 (Previous year ` 6,13,000) - -

Capital Reserve

As per last Balance Sheet ` 5,00,000 (Previous year ` 5,00,000) - -

Debenture Redemption Reserve

As per last Balance Sheet 441 173

Add: Transferred from Surplus in Statement of Profit and Loss 179 620 268 441

Exchange Fluctuation Reserve 901 377

Securities Premium Account

As per last Balance Sheet 8,047 8,047

Less: Premium on Equity Shares held by RCOM ESOS Trust (Refer Note 2.41) 380 7,667 - 8,047

General Reserve


Add : Amount credited on reversal of withdrawal in previous year on account of

foreign exchange variance attributable to interest (Refer Note 2.29) - 992

Less; As per the Scheme of Amalgamation and Arrangement

(Refer Note 2.30 (vii))

- 470

Transferred to Statement of Profit and Loss (Refer Note 2.38) - 325

Transferred to Statement of Profit and Loss (Refer Note 2.04 & 2.38) - 354

Transferred to Statement of Profit and Loss (Refer Note 2.38) 980 1,116

Transferred to Statement of Profit and Loss (Refer Note 2.30(vi)) 132 123

Transferred to Statement of Profit and Loss (Refer Note 2.38) - 62

Transferred to Statement of Profit and Loss (Refer Note 2.30(iii)) 1,225 1,264

Add : Minority Interest 10 8,461 92 10,788

Reserve for Business Restructuring 1,287 1,287

Foreign Currency Monetary Items Translation Difference Account (984) (686)

Surplus in the Statement of Profit and Loss


Add: Profit during the year 1,047 672

Add: Effect of Consolidation of RCOM ESOS Trust (Refer Note 2.41) 4 -

Less : Transferred to Debenture Redemption Reserve 179 268

: Proposed Dividend on Equity Shares - 52

: Tax on Proposed Dividend - 13,436 9 12,564

31,388 32,818


F-25


(` in Crore)

As at

March 31, 2014

As at

March 31, 2013

Note : 2.03

Long Term Borrowings

Debentures

Secured

3,000 (3,000), 11.20 % Redeemable, Non Convertible Debentures of ` 1 crore each 3,000 3,000

5,000 (5,000), 11.60 % Redeemable, Non Convertible Debentures of ` 10 lac each 500 500

1,500 (1,500) , 11.25 % Redeemable, Non Convertible Debentures of ` 1 crore each 1,500 1,500

Term Loans

Secured

Foreign Currency Loans from Banks 21,745 23,658

Rupee Term Loans from Banks 520 20

Rupee Loans from Others 300 22,565 - 23,678

Unsecured

Rupee Term Loans 348 -

27,913 28,678

2.03.1 Debentures and Term Loans

During the earlier year, the Company, on March 2, 2009, allotted, 3,000, 11.20% Secured Redeemable, Non Convertible

Debentures (“NCDs”) of the face value of ` 1,00,00,000 each, aggregating to ` 3,000 crore to be redeemed at the end

of 10th year from the date of allotment thereof. On February 7, 2012, the Company also allotted, 1,500, 11.25% and

5,000, 11.60% Secured Redeemable, Non Convertible Debentures (“NCDs”) of the face value of ` 1,00,00,000 each and

` 10,00,000 each respectively, aggregating to ` 2,000 crore. Redemption of NCDs of ` 1,500 crore shall be in four annual

equal installments starting at the end of fourth year from the date of allotment thereof and NCDs of ` 500 crore shall be

redeemed at the end of 5th year from the date of allotment thereof.

NCDs along with foreign currency loans and rupee term loans (“the said secured loans”) have been secured by first pari passu

charge on the whole of the movable plant and machinery, of the Company including (without limitations) tower assets and

optic fiber cables, if any (whether attached or otherwise), Capital Work in Progress (pertaining to movable fixed assets) both

present and future including all the rights, title, interest, benefits, claims and demands in respect of all insurance contracts

relating thereto of the RCOM Group (“the Borrower Group”); comprising of the Company and its subsidiary companies namely;

Reliance Telecom Limited (RTL), Reliance Infratel Limited (RITL) and Reliance Communications Infrastructure Limited (RCIL)

in favour of the Security Trustee for the benefit of the NCD Holders and the Lenders of the said Secured Loans. The said loans

also include ` 8,896 crore (Previous year ` 9,195 crore) which are guaranteed. The Company, for the benefit of the Lenders

of foreign currency loans, rupee term loans of ` 20 crore and 5,000, 11.60%, NCDs aggregating to ` 500 crore had, apart

from the above, also assigned 20 telecom licenses for services under Unified Access Services (UAS), National Long Distance

(NLD) and International Long Distance (ILD) by execution of Tripartite Agreements with Department of Telecommunications

(DoT) and IDBI Bank, being the agent acting on their behalf. Similarly, RTL, a subsidiary of the Company has apart from the

above also for the benefit of its lenders of foreign currency loans and rupee term loan assigned 8 Telecom Licenses for services

under UAS.

Assignment of Telecom Licenses of the Company for 1,500, 11.25% NCDs aggregating to ̀ 1,500 crore and rupee loan from

others of ` 300 crore are pending to be executed. The Company, for the benefit of the Lenders of foreign currency loans,

rupee term loans of ` 20 crore, 3000, 11.20%, NCDs of the face value of ` 1,00,00,000 each aggregating to ` 3,000

crore and 5,000, 11.60%, NCDs aggregating to ` 500 crore, has, apart from the above, also pledged equity shares held by

the Company and Reliance Infocomm Infrastructure Private Limited (RIIPL) in RCIL and RTL respectively by execution of the

Share Pledge Agreement with the Share Pledge Security Trustee.

Reliance Globalcom B.V. (RGBV), the Netherlands, a Subsidiary of the Company, during the previous year, availed facility of

USD 200 million in addition to USD 500 million, against pledge of shares of material subsidiaries of RGBV. RGBV has repaid

USD 233 million during the year.


F-26


2.03.2 Repayment Schedule of Long Term Loans

(a) Debentures

(` in Crore)

Rate of Interest Repayment Schedule

2015-16 2016-17 2017-18 2018-19

11.20% - - - 3,000

11.60% - 500 - -

11.25% 375 375 375 375

(b) Foreign Currency Loans

(` in Crore)

Rate of

Interest

Repayment Schedule

2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22

0.50% 65 65 65 69 74 25 7

2.10% 38 19 - - - - -

2.15% 1,078 1,078 629 315 - - -

2.44% 107 107 334 364 288 212 -

2.75% 509 509 - - - - -

3.11% 1,497 - - - - - -

3.19% 600 - - - - - -

3.34% 218 - - - - - -

3.35% 414 - - - - - -

3.49% 637 717 1,434 1,434 1,434 1,515 -

4.95% 1,397 - - - - - -

5.08% 333 998 1,386 1,774 - - -

(c) Rupee Term Loans

(` in Crore)


2015-16 2016-17 2017-18 2018-19

11.50% 63 - - -

11.75% 244 41 - -

12.25% - 83 83 84

12.50% - 83 83 84

12.75% 20 - - -

13.70% 25 100 100 75

(` in Crore)

As at As at

March 31, 2014 March 31, 2013

Note : 2.04

Deferred Tax Assets and Liabilities

The Deferred Tax Liabilities relating to RITL, a subsidiary of the

Company comprise of the following.

(i) Deferred Tax Liabilities

Lease Rent Equalisation 2,097 1,839

Related to timing difference on depreciation on fixed assets 350 2,447 372 2,211

(ii) Deferred Tax Assets

Related to carried forward loss 644 839

644 839

Net Deferred Tax Liabilities 1,803 1,372


F-27


(` in Crore)

As at As at

March 31, 2014 March 31, 2013

The Deferred Tax Assets of the Company and

its subsidiaries comprise of the following.

(i) Deferred Tax Assets

Related to carried forward loss 2,236 2,175

Related to timing difference on depreciation / amortisation 547 675

Disallowances, if any, under the Income Tax Act, 1961 855 778

Lease Rent Equalisation 2,097 5,735 1,839 5,467

(ii) Deferred Tax Liabilities

Related to timing difference on depreciation on fixed assets 2,298 1,706

Net Deferred Tax Assets * 3,437 3,761

* In view of the confirmed profitable orders pursuant to agreement with the customer for sharing of infrastructure, which shall result

into additional revenue and savings of cost, the Company has recognised Deferred Tax Assets of ` 1,488 crore as at March 31, 2014.

This will get further supported by decision of structuring of its business through various measures including schemes of merger and/

or demerger etc. so as to bring revenue and profit earned by the respective subsidiaries into the Company, subject to approvals, under

applicable rules and regulations.

* During the Previous year, in absence of virtual certainity of realisability of deferred tax assets, the company on a conservative basis had restricted

deferred tax asset to Nil.

Deferred Tax Liability of ` 431 crore has been provided by Reliance Infratel Limited (RITL), During the previous year Deferred Tax

Liability of ` 354 crore was provided by RITL and adjusted by withdrawing an equivalent amount from General Reserve pursuant to

the Scheme of Amalgamation between RITL and erstwhile Reliance Global IDC Limited (RGIDCL), a Wholly Owned Subsidiary of RITL

into RITL sanctioned by the Hon’ble High Court of Bombay vide order dated May 6, 2011, leaving no impact on profit for the year.

(` in Crore)

As at As at

March 31, 2014 March 31, 2013

Note : 2.05

Other Long Term Liabilities

Liability for leased assets 271 294

Security Deposits 51 50

Unearned Income 397 746

Capital Creditors 194 143

Others 2 -

915 1,233

Note : 2.06

Long Term Provisions

Provision for Income Tax 82 20

Provision for Employee Benefits 53 53

Others

Asset Retirement Obligations (Refer Note 2.33(i)) 896 812

1,031 885


F-28


(` in Crore)

As at

March 31, 2014

As at

March 31, 2013

Note : 2.07

Short Term Borrowings (Unsecured unless stated otherwise)

From Banks

Cash Credit (Secured) 1,000 1,251

Foreign Currency Loans 656 1,407

Rupee Loans (Secured) 5,480 5,205

Rupee Loans 1,500 500

Commercial Papers - 100

Non Convertible Debentures (Secured) - 87

From Others (Secured) - 250

From Others 273 8,909 - 8,800

8,909 8,800

2.07.01 Cash Credit and Rupee Loans from Banks

Cash Credit from Banks as above are secured by first pari passu charge over current assets comprising of Stock and receivables of the

Company (“Current Assets”). Apart from this, Cash Credit from Banks is secured by second pari passu charge on whole of the movable

plant and machinery, including (without limitation) the tower assets and optic fibre cables, if any (whether attached or otherwise),

Capital Work in Progress (pertaining to movable fixed assets) both present and future including all the rights, title, interest, benefits

relating thereto of the Borrower Group (“Movable Fixed Assets of the Borrower Group”).

The Company and its subsidiary have been sanctioned rupee loans of ` 6,750 crore (Term Loan Facility) under consortium banking

arrangement on the terms and conditions as set out in sanction letters. Certain Lenders have, pursuant to the sanction letters for

Term Loan Facility, agreed to grant ` 5,155 crore as interim disbursement/ short term loan (Interim Facility) of the Term Loan

Facility, pending the finalization and execution, of definitive documents for converting in regular Term Loan facility. The said interim

facility shall be converted in Long Term Loan within its tenure with availment of the Term Loan Facility upon execution of definitive

documents and accordingly, has been classified as part of Short Term Borrowings. Interim Facility includes loans of ` 4,830 crore

secured by first pari passu charge on Movable Fixed Assets of the Borrower Group. The Term Loan Facility is, inter alia, secured by

first pari passu charge on Movable Fixed Assets of the Borrower Group, including claims and demands in respect of all insurance

contracts relating thereto. Apart from the above, the Term Loan Facility has also been secured by assignment of telecom licenses

of the Company and its subsidiary and pledge of equity shares held by the Company and Reliance Infocomm Infrastructure Private

Limited in RCIL and RTL respectively. The Company has created first pari pasu charge on Movable Fixed Assets of the Borrower Group

for the said Interim Loans. The balance ` 650 crore of Interim/ Short Tem Loan is secured by second pari pasu charge on Movable

Fixed Assets of Borrower Group.

(` in Crore)

As at As at

March 31, 2014 March 31, 2013

Note : 2.08

Trade Payables

Due to Micro and Small Enterprises 105 157

Others 3,411 3,516 2,207 2,364

3,516 2,364

Disclosure under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED)

Under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) which came into force from 2nd October, 2006,

certain disclosures are required to be made relating to MSME. On the basis of the information and records available with the Company,

the following disclosures are made for the amounts due to the Micro and Small Enterprises.


F-29


(` in Crore)

As at As at

March 31, 2014 March 31, 2013

(i) Principal amount due to any supplier as at the year end 103 141

(ii) Interest due on the principal amount unpaid at the year end

to any supplier

38 56

(iii) Amount of Interest paid by the Company in terms of Section

16 of the MSMED, alongwith the amount of the payment

made to the supplier beyond the appointed day during the

accounting year

- -

(iv) Payment made to the enterprises beyond appointed date under

Section 16 of MSMED

182 208

(v) Amount of Interest due and payable for the period of delay

in making payment, which has been paid but beyond the

appointed day during the year but without adding the interest

specified under MSMED

26 21

(vi) Amount of interest accrued and remaining unpaid at the end

of each accounting year

64 77

(vii) Amount of further interest remaining due and payable even in

the succeeding years, until such date when the interest dues

as above are actually paid to the small enterprises for the

purpose of disallowance as a deductible expenditure under

Section 23 of MSMED

35 45

Note : 2.09

Other Current liabilities (Unsecured unless stated otherwise)

Current Maturities of Long Term Debts

Foreign Currency Loan from Banks (Secured) (Refer Note 2.03.1) 4,634 4,069

Rupee Term Loan 402 -

Non Convertible Debentures (Secured)* 120 -

Others

Interest accrued but not due on loans 162 153

Unclaimed Dividend 10 9

Employees Stock Option 3 3

Capital Creditors 854 1,146

Other Payables 4,704 4,059

Advance from Customers and Income Received in Advance 967 6,700 962 6,332

11,856 10,401

*Non Convertible Debentures are secured by second pari-pasu charge over the movable fixed assets (Plant and Machinery and

Capital Work in Progress) of Borrowers Group.

Note : 2.10

Short Term Provisions

(a) Provision for Employee Benefits

Retirement Benefits 34 29

(b) Others

Disputed and Other Claims (Refer Note 2.33 (i)) 1,215 1,215

Business Restructuring (Refer Note 2.33 (ii)) - 488

Income Tax (net of advance tax) 6 79

Fringe Benefit Tax (net of taxes paid) 1 1

Wealth Tax (net of taxes paid) 1 1

Proposed Dividend on Equity Shares - 52

Tax on Proposed Dividend - 1,223 9 1,845

1,257 1,874


F-30

Reliance Communications Limited N

ote

2.1

1 F

ixed A

ssets

(`

in C

rore

)

Gro

ss B

lock

D

epre

ciat

ion

/ A

mor

tisa

tion

Net

Blo

ck

Desc

ripti

on

As

at

Apr

il 1, 2013

Add

itio

ns /

Adj

ustm

ents

(

Ded

ucti

ons)

/

Adj

ustm

ent

Incu

ding

on

Acc

ount

of

CTR

As

at M

arch

31, 2014

As

at

Apr

il 1, 2013

Dep

reci

atio

n fo

r th

e ye

ar

(Ded

ucti

ons)

/

Adj

ustm

ent

Incu

ding

on

Acc

ount

of

CTR

As

at M

arch

31, 2014

As

at M

arch

31, 2014

As

at M

arch

31, 2013

Tangib

le A

ssets

Lease

hold

Land

25

-

-

25

2

1 -

3

22

23

Lease

hold

Im

pro

vem

ent

175

-

10

185

150

9

9

168

17

25

Fre

eehold

Land

486

- -

4

86

6

-

(6)

-486

480

Build

ings

2,4

04

7 4

2

,415

793

84

(105)

772

1,6

43

1,6

11

Pla

nt

and M

achin

ery

7

0,1

94

3,5

48

1,2

02

74,9

44

28,0

79

4,0

04

1,1

36

33,2

19

41,7

25

42,1

15

Offi

ce E

quip

ment

121

1

- 1

22

87

12

16

115

7 3

4

Furn

iture

and F

ixtu

res

188

3

1 1

92

142

10

10

162

30

46

Vehic

les

74

-(1

)73

69

1

(1)

69

4 5

Sub T

ota

l 7

3,6

67

3,5

59

1,2

16

78,4

42

29,3

28

4,1

21

1,0

59

34,5

08

43,9

34

44,3

39

Pre

vio

us

year

68,8

32

4,2

60

575

73,6

67

25,2

81

3,6

69

378

29,3

28

44,3

39

43,5

51

Inta

ngib

le A

ssets

Entr

y fee for Te

lecom

Lic

ence

28,0

47

- -

2

8,0

47

7,3

73

1,9

73

-

9,3

46

18,7

01

20,6

74

Indefe

asible

Rig

ht

of

Connectivity

1,8

09

67

157

2,0

33

1,7

88

97

(186)

1,6

99

334

21

Soft

ware

4

79

44

22

545

332

74

12

418

127

147

Bra

nd L

icence

354

- -

3

54

192

31

-

223

131

162

Lic

ence a

nd K

now

how

2

37

-

24

261

192

28

15

235

26

45

Sub T

ota

l 3

0,9

26

111

203

31,2

40

9,8

77

2,2

03

(159)

11,9

21

19,3

19

21,0

49

Pre

vio

us

year

30,7

30

125

71

30,9

26

7,8

29

1,9

37

111

9,8

77

21,0

49

22,9

01

Gra

nd T

ota

l 1,0

4,5

93

3,6

70

1,4

19

1,0

9,6

82

39,2

05

6,3

24

900

46,4

29

63,2

53

65,3

88

Pre

vio

us

year

99,5

62

4,3

85

646

1,0

4,5

93

33,1

10

5,6

06

489

39,2

05

65,3

88

66,4

52

Capit

al W

ork

in P

rogre

ss

3,1

90

3,8

64

Note

s:2.1

1.1

(a

) Fr

eehold

Land inclu

des `

55,8

08 (

Pre

vio

us

year `

55,8

08)

acquired f

rom

Karn

ata

ka Indust

rial Are

a D

evelo

pm

ent

Board

(a G

overn

ment

of

Karn

ata

ka U

ndert

aki

ng). T

ransf

er of

ow

ners

hip

is

under pro

cess

.

(b)

Freehold

Land inclu

des `

1 c

rore

(Pre

vio

us

year `

1 c

rore

) to

ward

s la

nd a

cquired, th

e t

ransf

er of

ow

ners

hip

is

under pro

cess

.2.1

1.2

Build

ings

inclu

de:

(a

) `

250 (

Pre

vio

us

year `

250)

tow

ard

s cost

of

Share

s in

Co-opera

tive S

ocie

ty (

held

by R

elia

nce T

ele

com

Lim

ited).

(b

) `

2,0

0,0

00 (

Pre

vio

us

year `

2,0

0,0

00)

tow

ard

s cost

of

Share

s acquired in a

com

pany (

held

by R

elia

nce C

om

munic

ations

Infrast

ructu

re L

imited).

2.1

1.3

Pla

nt

and M

achin

ery

inclu

des

Ele

ctr

ical equip

ments

of `

3 c

rore

(Pre

vio

us

year `

3 c

rore

), w

hic

h a

re u

nder cust

ody a

nd c

ontr

ol of

Mahara

shtra S

tate

Ele

ctr

icity D

istr

ibution C

om

pany L

imited.

2.1

1.4

Pla

nt and M

achin

ery

inclu

des

Ass

et Retire

ment O

blig

ations

(ARO

) G

ross

Blo

ck `

896 c

rore

(Pre

vio

us

year `

812 c

rore

), A

ccum

ula

ted D

epre

cia

tion `

317 c

rore

(Pre

vio

us

year `

248 c

rore

) and N

et Blo

ck `

579 c

rore

(Pre

vio

us

year `

564 c

rore

).2.1

1.5

(a

) G

ross

Blo

ck

inclu

des `

3,5

85 c

rore

bein

g t

he a

mount

added o

n reva

luation a

s on January

1, 2006.

(b

) G

ross

Blo

ck

for th

e p

revio

us

years

inclu

des `

1,9

63 c

rore

, bein

g a

n a

mount

added o

n fair v

alu

ation a

s on A

pril 10, 2007.

2.1

1.6

D

uring t

he y

ear, a

dditio

n t

o P

lant

and M

achin

ery

inclu

des `

1,7

00 c

rore

(Pre

vio

us

year `

1,7

89 c

rore

) on a

ccount

of

fore

ign e

xchange v

ariation.

2.1

1.7

Ass

ets

take

n o

n fi

nance lease

:

(a)

Pla

nt

and M

achin

ery

inclu

des

Gro

ss B

lock `

453 c

rore

(Pre

vio

us

year `

436 c

rore

), A

ccum

ula

ted D

epre

cia

tion `

145 c

rore

(Pre

vio

us

year `

114 c

rore

) and N

et

Blo

ck `

308 c

rore

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F-31



(` in Crore)

As at

March 31, 2014

As at

March 31, 2013

Note:2.12

Non Current Investments

Trade Investment (Valued at cost unless stated otherwise)

In Equity Shares of Companies

Quoted, fully paidup

39,342 Groupon INC-Class A Common Stock of USD 0.0001 14 13

(39,342) each

5,95,074 Sequans Communications SA of Euro 0.02 each 22 20

(5,95,074)

86,879 Bank of Cyprus Limited of Euro 1 each 1 -

(Nil) 37 33

Other Investments

Unquoted, fully Paidup

6,50,25,000 Warf Telecom International Private Limited of ` 1 each 22 22

(6,50,25,000) Less : Share of Loss of Associates (9) (11)

13 11

13,000 Mumbai Metro Transport Private Limited of ` 10 each - -

(13,000) ` 1,22,807 (Previous year ` 1,22,807)

1,600 Macronet Private Limited of ` 10 each - -

(1,600) ` 16,000 (Previous year ` 16,000)

1,600 Macronet Mercantile Private Limited of ` 10 each - -

(1,600) ` 16,000 (Previous year ` 16,000)

(Nil) Reliance Composite Insurance Broking Limited of ` 10 each - -

(1,00,000) Nil (Previous year ` 10,00,000)

(Nil) Noida Global SEZ Private Limited of ` 10 each - 13 - 11

(100) Nil (Previous year ` 1,000)

In Preference Shares of Companies


20,45,455 Series D Preferred Stock of Stoke Inc. of USD 2.2 each 26 25

(20,45,455)

5,85,993 Series A Preferred Stock of Scalable Display Technologies 6 5

(5,85,993) Inc. of USD 1.62 each

14,63,415 Series C Preferred Stock of Stoke Inc. of USD 2.05 18 16

(14,63,415) each

84,74,576 Series B Preferred Stock of E Band Communications 18 68 16 62

(84,74,576) Corporation of USD 0.354 each

In Partnership Firm

Unquoted, fully paid up

Tip Top Typography - 5

Less: Share of Loss in the Partnership Firm - -

(Previous year ` 19,47,920)

- 5

Other Investments

In Government Bonds

Unquoted fully paid up

6 Year National Savings Certificates - -

(Lodged with Sales Tax Department)

` 2,49,500 (Previous year ` 2,49,500)

5 1/2 years Kisan Vikas Patra - - - -

(Lodged with Chennai Metropolitan Development Authority)

` 5,000 (Previous year ` 5,000)

118 111

Aggregate Book Value of Investments

Unquoted 81 78

Quoted 37 33

118 111

F-32



(` in Crore)

As at As at

March 31, 2014 March 31, 2013

Note : 2.13

Long Term Loans and Advances

(Unsecured,Considered good - unless stated otherwise)

Capital Advances 1,944 1,577


MAT Credit Entitlement 97 87

Advance Income Tax 937 714

Unamortised Arranger's Fees 228 257

Other Loans and Advances - 387

Prepaid Expenses 112 123

3,542 3,210

Note : 2.14

Other Non Current Assets


Deposit with Bank (Margin Money Deposits) 5 -

Deposits 79 223

Bank Deposits with Maturity for more than 12 months

` 19,84,878 (Previous year ` 47,87,148)

-

-

84 223

Note:2.15

Current Investment (valued at lower of cost and market value)

In Units of Mutual Funds

Quoted

34,000 6.83% GOI Bonds - 2039 of ` 100 each fully paid up - -

(34,000) ` 26,02,283 (Previous year ` 29,07,000)

Unquoted

121 Reliance Liquidity Fund - Growth of ` 10 each - -

(113) ` 1,84,707 (Previous year ` 1,72,652)

2,67,343

(6,88,192)

BlackRock US Dollar Liquidity First Fund - Institutional Share

Class of USD 1 each

2 4

15,721 BlackRock US Dollar Liquid Investment Fund of USD 1 each 603 547

(15,721) 605 551


Unquoted 605 551

Quoted ` 30,52,000 (Previous year ` 30,52,000) - -

605 551

Note : 2.16

Inventories

Stores and Spares 335 371

Stock in Trade (Communication Devices and Accessories) 80 126

415 497

F-33



(` in Crore)

As at As at

March 31, 2014 March 31, 2013

Note : 2.17

Trade Receivables (Unsecured)

Due for more than six months from the date they are due

for payment

Considered Good 1,127 1,574

Considered Doubtful 1,509 1,253

2,636 2,827

Less: Provision for doubtful receivables 1,509 1,253

1,127 1,574

Others


Considered Doubtful 89 54

2,881 2,391

Less: Provision for doubtful receivables 89 54

2,792 2,337

3,919 3,911

Note : 2.18

Cash and Bank Balances

Cash on hand ` 2,89,315 (Previous year ` 2,87,295) - -

Cheques on hand 82 79

Balance with Banks 398 637

Earmarked Balances - Unpaid Dividend 10 9

Balances held due to Repatriation Restrictions 10 3

Bank deposits with less than 3 months' maturity 4 3

504 731

Note : 2.19

Short Term Loans and Advances


Other Loans and Advances

Considered good 5,579 4,293

Considered doubtful 124 123

5,703 4,416

Less: Provision for doubtful advances 124 5,579 123 4,293

Balance with Customs, Central Excise Authorities etc. 249 288

5,828 4,581

Note : 2.20

Other Current Assets

Deposits * 1,683 1,709

Interest accrued on Investments ` 31,88,402 - 1

Unbilled Revenue 406 245

Others 17 35

2,106 1,990

* Deposits include ` 1,582 crore (Previous year ` 1,574 crore) paid against disputed claims.

F-34



(` in Crore)

For the year ended

March 31, 2014

For the year ended

March 31, 2013

Note : 2.21

Revenue from Operations

Sale of Services 23,964 22,319

Less: Service Tax 3,024 3,025

20,940 19,294

Other Operating Income* 298 1,267

(*includes realisation from telecom terminals and accessories etc.)

21,238 20,561

Note : 2.22

Other Income

Net Gain on Sale of Investments 9 35


Miscellaneous Income (Refer Note 2.33 (ii)) 1,027 1,017

1,083 1,217

Note : 2.23

Access Charges, Licence Fees and Network Expenses

Access Charges 2,791 2,676

License Fees 1,203 1,115

Rent, Rates and Taxes 900 965

Network Repairs and Maintenance 1,660 1,595

Stores and Spares Consumed 45 106

Power, Fuel and Utilities 1,856 1,697

Cost of Service Contents and Applications 302 370

Other Network Operating Expenses 1,793 1,844

10,550 10,368

Note : 2.24

Employee Benefits Expenses

Salaries (Including Managerial Remuneration) 875 1,057

Contribution to Provident, Gratuity and Superannuation Fund 56 53

Employee Welfare and Other Amenities 95 81

Write back of compensation under Employee Stock Option

Scheme (1) (2)

1,025 1,189

Note : 2.25

Finance Costs

Interest and Other charges on Term Loans 1,540 1,132

Interest on other loans 1.250 2,790 1,133 2,265

Other Financial Cost 229 234

3,019 2,499

F-35



(` in Crore)

For the year ended

March 31, 2014

For the year ended

March 31, 2013

Note : 2.26

Sales and General Administration Expenses

Selling Expenses

Commission 569 592

Selling and Marketing 456 528

Advertisement 164 163

Customer Acquisition and Customer Care 94 149

Cost of Sale of Telecom Terminals and Accessories 260 1,543 422 1,854


General Administration Expenses

Insurance 17 17


Repairs and Maintenance

- Machinery 48 81

- Others 34 37

Travelling 62 56

Professional Fees 187 161

Foreign Exchange (Gain) / Loss (Net) 63 (1)

Loss on Sale/Discarding of Assets/Capital work in progress 20 30

Hire Charges 225 364

Other General and Administrative Expenses 332 139

Wealth Tax ` 40,00,000 (Previous year ` 5,50,000) - 1,179 - 1,091

Payment to Auditors 9 9

3,020 3,062

Note : 2.27

Previous Year

The financial statements has been prepared as per Revised Schedule VI under the Companies Act, 1956. Figures of the previous year have been

regrouped and reclassified, wherever required. Amount in financial statements are presented in Rupee in crore, except as otherwise stated.

Note : 2.28

Consolidation

(a) The following subsidiary companies are included in the Consolidated Financial Statements.

Sr.

No.

Name of the Subsidiary Company Country of

Incorporation

Proportion of

ownership interest

1 Reliance WiMax Limited India 100.00%

2 Reliance Digital Home Services Limited India 100.00%

3 Reliance Webstore Limited India 100.00%

4 Reliance Infocomm Infrastructure Private Limited India 100.00%

5 Campion Properties Limited India 100.00%

6 Reliance Big TV Limited India 100.00%

7 Reliance Tech Services Private Limited India 100.00%

F-36



Sr.

No.


Incorporation

Proportion of

ownership interest

8 Reliance Telecom Limited India 100.00%

9 Reliance Communications Infrastructure Limited India 100.00%

10 Reliance IDC Limited (formerly Reliance Communications Investment and

Leasing Limited)

India 100.00%

11 Reliance Infratel Limited India 90.45%

12 Reliance Mobile Commerce Limited India 100.00%

13 Reliance BPO Private Limited India 100.00%

14 Reliance Globalcom Limited India 99.95%

15 Reliance Globalcom B.V. The Netherlands 100.00%

16 Reliance Communications (UK) Limited United Kingdom 100.00%

17 Reliance Communications (Hong Kong) Limited Hong Kong 100.00%

18 Reliance Communications (Singapore) Pte. Limited Singapore 100.00%

19 Reliance Communications (New Zealand) Pte Limited New Zealand 100.00%

20 Reliance Communications (Australia) Pty Limited Australia 100.00%

21 Anupam Global Soft (U) Limited Uganda 90.00%

22 Gateway Net Trading Pte Limited Singapore 100.00%

23 Reliance Globalcom Limited Bermuda 99.95%

24 FLAG Telecom Singapore Pte. Limited Singapore 99.95%

25 FLAG Atlantic UK Limited United Kingdom 99.95%

26 Reliance FLAG Atlantic France SAS France 99.95%

27 FLAG Telecom Taiwan Limited Taiwan 59.97%

28 Reliance FLAG Pacific Holdings Limited Bermuda 100.00%

29 FLAG Telecom Group Services Limited Bermuda 100.00%

30 FLAG Telecom Deutschland GmbH Germany 99.95%

31 FLAG Telecom Hellas AE Greece 99.95%

32 FLAG Telecom Asia Limited Hong Kong 99.95%

33 FLAG Telecom Nederland B.V. The Netherlands 99.95%

34 Reliance Globalcom (UK) Limited United Kingdom 99.95%

35 Yipes Holdings Inc. USA 100.00%

36 Reliance Globalcom Services Inc. USA 100.00%

37 YTV Inc. USA 100.00%

38 Reliance Infocom Inc. USA 100.00%

39 Reliance Communications Inc. USA 100.00%

40 Reliance Communications International Inc. USA 100.00%

41 Reliance Communications Canada Inc. USA 100.00%

42 Bonn Investment Inc. USA 100.00%

43 FLAG Telecom Development Limited Bermuda 99.95%

44 FLAG Telecom Development Services Company LLC Egypt 99.95%

45 FLAG Telecom Network Services Limited Ireland 99.95%

46 Reliance FLAG Telecom Ireland Limited Ireland 99.95%

47 FLAG Telecom Japan Limited Japan 99.95%

48 FLAG Telecom Ireland Network Limited Ireland 99.95%

F-37



Sr.

No.


Incorporation

Proportion of

ownership interest

49 FLAG Telecom Network USA Limited USA 99.95%

50 FLAG Telecom Espana Network SAU Spain 99.95%

51 Reliance Vanco Group Limited United Kingdom 100.00%

52 Euronet Spain SA Spain 100.00%

53 Net Direct SA (Properietary) Ltd. (Under liquidation) South Africa 100.00%

54 Vanco (Shanghai) Co Ltd. China 100.00%

55 Vanco (Asia Pacific) Pte. Limited Singapore 100.00%

56 Vanco Australasia Pty. Ltd. Australia 100.00%

57 Vanco Sp Zoo Poland 100.00%

58 Vanco Gmbh Germany 100.00%

59 Vanco Japan KK Japan 100.00%

60 Vanco NV Belgium 100.00%

61 Vanco SAS France 100.00%

62 Vanco South America Ltda Brazil 100.00%

63 Vanco Srl Italy 100.00%

64 Vanco Sweden AB Sweden 100.00%

65 Vanco Switzerland AG Switzerland 100.00%

66 Vanco Deutschland GmbH Germany 100.00%

67 Vanco BV The Netherlands 100.00%

68 Vanco Benelux BV The Netherlands 100.00%

69 Vanco UK Ltd United Kingdom 100.00%

70 Vanco International Ltd United Kingdom 100.00%

71 Vanco Row Limited United Kingdom 100.00%

72 Vanco Global Ltd United Kingdom 100.00%

73 VNO Direct Ltd United Kingdom 100.00%

74 Vanco US LLC USA 100.00%

75 Vanco Solutions Inc USA 100.00%

(b) The Company also consolidates the following companies as it exercises control over ownership and / or composition of Board of

Directors.

Sr.

No.

Name of the Company Country of

Incorporation

Proportion of

ownership interest

1 Seoul Telenet Inc. Korea 48.98%

2 FLAG Holdings (Taiwan) Limited Taiwan 49.97%

3 Reliance Telecom Infrastructure (Cyprus) Holdings Limited Cyprus 0.00%

4 Lagerwood Investments Limited Cyprus 0.00%

(c) The associate companies considered in the Consolidated Financial Statements are :

Sr.

No.


Incorporation

Proportion of

ownership interest

1 Warf Telecom International Private Limited Maldives 20.00%

2 Mumbai Metro Transport Private Limied India 26.00%

F-38



(d) The following subsidiary companies/ associates acquired during the year also form part of Consolidated Financial Statements

Sr.

No.


Incorporation

Proportion of

ownership interest

1 Reliance Communications Tamilnadu Private Limited - w.e.f. November 15, 2013 India 90.45%

2 Global Cloud Xchange Limited - w.e.f. March 26, 2014 Bermuda 100.00%

3 GCX Limited - w.e.f. March 26, 2014 Bermuda 100.00%

(e) The following subsidiary companies/ companies controlled/ companies consolidated/ joint venture ceased to remain subsidiaries/

controlled/ joint venture/ consolidated during the year.

Sr.

No.

Name of the Company

1 Vanco EpE w.e.f. April 1, 2013 Greece 100.00%

2 Kerala Communication Network Private Limited - w.e.f. February 10, 2014 India 100.00%

3 MP Network Private Limited - w.e.f. February 10, 2014 India 100.00%

Note 2.29

Foreign Currency Monetary Items; Long Term

In view of the Option allowed pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs (MCA), Government

of India, for the year ended on March 31, 2014, the Company has added ` 1,700 crore (Previous year ` 1,084 crore), of exchange differences on

long term borrowing relating to acquisition of depreciable capital assets to the cost of capitalised assets. Further, the Company has accumulated

foreign currency variations of ` 738 crore (Previous year ` 615 crore) arising on other long term foreign currency monetary items in FCMITDA,

and ` 440 crore (Previous year ` 638 crore) has been amortised during the year, leaving balance to be amortised over the balance period of loans.

In accordance with the notification issued by the MCA on August 9, 2012, the Company had, during the previous year, added ` 705 crore to the

cost of capitalised assets and ` 287 crore to the FCMITDA by reversing the exchange difference regarded as an adjustment to interest cost on

account of restating long term monetary items expressed in foreign currency at year end prevailing rates in accordance with para 4(e) of Accounting

Standard 16 “Borrowing Costs”. The said interest was adjusted by withdrawal of an equivalent amount from General Reserve during the earlier year

ended March 31, 2012 and hence, it had been credited to General Reserve.

Note 2.30

Schemes of Amalgamation and Arrangement of earlier years

The Company, during the past years, undertook various Schemes including restructuring of ownership structure of telecom business so as to align

the interest of the shareholders. Accordingly, pursuant to the Schemes of Amalgamation and Arrangement (“the Schemes”) under Sections 391 to

394 of the Companies Act, 1956 approved by Hon’ble High Court of respective judicature, the Company, during the respective years, recorded all

necessary accounting effects, along with requisite disclosure in the notes to the accounts, in accordance with the provisions of the said Schemes.

Reserves, pursuant to the said Schemes, include;

(i) ` 8,047 crore being Securities Premium Account, which was part of the Securities Premium of erstwhile Reliance Infocomm Limited (RIC),

the transferor company.

(ii) ` 12,345 crore, being part of General Reserve, on fair valuation of assets and liabilities of the Company in accordance with the Scheme of

Amalgamation, amalgamating Reliance Gateway Net Limited (RGNL) into the Company.

(iii) Additional depreciation arising on fair value of the assets has been adjusted from General Reserve and from Provision for Business Restructuring.

(iv) ` 1,287 crore, being the balance was transferred to Reserve for Business Restructuring in accordance with the Scheme of Arrangement for

demerger of passive infrastructure assets to RITL.

(v) ` 7 crore being Goodwill arising on consolidation pursuant to the Scheme of Amalgamation between subsidiaries has been debited during the

previous year to General Reserve.

(vi) Additional depreciation of subsidiaries consequent upon revaluation of assets carried out has been adjusted to General Reserve.

(vii) ` 470 crore being excess of liabilities over assets has been adjusted from General Reserve pursuant to demerger of BPO division to RCIL during

the previous year.

(viii) Pursuant to the said Scheme of Amalgamation (Refer Note (ii) above), on account of the fair valuation during the year ended on 31st March,

2009, additions/ adjustments to the fixed assets included increase in Freehold Land by ` 225 crore, Buildings by ` 130 crore and Telecom

Licenses by ` 14,145 crore.

(ix) Pursuant to the demerger, the Company computed goodwill of ` 2,659 crore arising on consolidation using the step up method based on

date of original investment by Reliance Industries Limited (RIL) prior to demerger instead of considering the date of demerger as the date of

investment in absence of specific guidance in Accounting Standard (AS) 21 “Consolidated Financial Statements” in a demerged scenario.

(x) Also refer note 2.38 “Exceptional Items” below.

F-39



Note 2.31

Prior Period Adjustments

Accounting effect arising upon audit of earlier years of its certain subsidiaries Reliance Communications (Hongkong) Limited and Gateway Net Trading

Pte. Limited of ` 56 crore is considered as Prior Period adjustments in the Statement of Profit and Loss.

Note 2.32

Project Development Expenditure

(i) Details of Project Development Expenditure (Included under Capital Work-in-Progress) : (`. in Crore)

For the year ended

March 31, 2014

For the year ended

March 31, 2013

Opening Balance 296 361

Add:

Expenditure incurred during the year 66 100

362 461

Less:

Capitalized during the year 312 165

Closing Balance 50 296

Note 2.33

Provisions

(i) Provisions include, provision for disputed claims for verification of customer ` 9 crore (Previous year ` 9 crore) and others of ` 1,206 crore

(Previous year ` 1,206 crore) and reversal of disputed liabilities of ` Nil (Previous year ` 147 crore), provisions for Asset Retirement Obligation

(ARO) made by the Company’s subsidiary in respect of undersea cables and equipments of ` 896 crore (Previous year ` 812 crore).

The aforesaid provisions shall be utilised on settlement of the claims, if any, there against.

(ii) Pursuant to the Schemes of Amalgamation and Arrangement (“the Schemes”) under Sections 391 to 394 of the Companies Act, 1956

approved Hon’ble High Court of Judicature at Bombay vide orders dated July 21, 2006 and August 10, 2006 (revised) and by Hon’ble High

Court of Gujarat vide order dated July 18, 2006, out of the excess of fair value of assets over liabilities, ` 3,000 crore was credited to and held

as Provision for Business Restructuring (PBR) to meet increased depreciation cost, expenses and losses including on account of impairment or

write down of assets which would be suffered by the Company, pursuant to the Scheme or otherwise in course of its business or in carrying

out such restructuring of the operations of the Company or its Subsidiaries. The Company has reassessed the requirement for maintaining such

PBR and based thereon, reversed balance of ` 441 crore (Previous year ` 550 crore) during the year as no longer required, The said amount

on reversal of PBR has been reflected as part of Other Income.

Note 2.34

Contingent Liabilities and Capital Commitment (as represented by the Management)

(` in Crore)

As at

March 31, 2014

As at

March 31, 2013

(i) Estimated amount of contracts remaining to be executed on capital accounts (net of advances)

and not provided for

708 638

(ii) Disputed Liabilities not provided for

- Sales Tax and VAT 61 66

- Custom, Excise and Service Tax 1,136 409

- Entry Tax and Octroi 67 62

- Income Tax 730 618

- Other Litigations 1,376 1,103

(iii) Claims against the Company not acknowledged as debts 794 306

(iv) Guarantees given including on behalf of other companies for business purpose 132 3

(v) Consequent to the investigations by an investigative agency (CBI) in relation to the entire telecom sector in India, certain preliminary charges

have been framed by a Trial Court in October, 2011 against Reliance Telecom Limited (RTL), a Wholly Owned Subsidiary of the Company, and

three of the executives of the Group. The charges so framed are preliminary in nature based on investigations only, and the persons named

are presumed to be innocent, till their alleged guilt is established after a fair trial.

As legally advised, the persons so named deny all charges, and a writ petition is filed in October, 2013 in the Hon’ble Supreme Court against

charges framed by the Trial Court, which is pending for hearing. These preliminary charges have no impact on the business, operations, and/

or licenses of RTL and of the Company and, even more so, are not connected in any manner to any other listed group companies.

F-40



(vi) License Fees

The Hon’ble Supreme Court of India, vide its judgment dated October 11, 2011, has set aside the Order of the Hon’ble Telecom Disputes

Settlement and Appellate Tribunal (TDSAT) dated August 30, 2007 and allowed time to the licensees to raise their disputes before the

Hon’ble TDSAT w.r.t. the demands already raised by Department of Telecommunications (DoT). The Hon’ble Supreme Court of India, in the

meanwhile, also restrained DoT from enforcing its demands already raised. Subsequently, Hon’ble TDSAT granted all licensees/ operators the

liberty to file additional affidavits thereby bringing on record the material facts including the subsequent events with respect to the petitions

already pending before Hon’ble TDSAT which got revived post AGR judgment of Hon’ble Supreme Court of India dated October 11, 2011. On

April 12, 2012, all the petitions (both old and new of all the operators including the Company’s) were heard and interim order of protection,

earlier passed by Hon’ble TDSAT was extended to the new petitions also. The matter is now pending for hearing before Hon’ble TDSAT and

accordingly, no additional provision is required in this regard.

(vii) Spectrum Charges

Department of Telecommunication (DoT) has, during the previous year, issued demand on the Company for ̀ 1,758 crore towards levy of one

time Spectrum Charges, being the prospective charges for holding CDMA Spectrum beyond 2.5 MHz for the period from January 1, 2013

till the expiry of the initial terms of the respective Licenses. DoT has also issued a demand on the Subsidiary of the Company for one time

Spectrum Charges, being retrospective charges of ` 5 crore for holding GSM Spectrum beyond 6.2 MHz for the period from July 1, 2008 to

December 31, 2012 and prospective charge of ` 169 crore for GSM spectrum held beyond 4.4 MHz for the period from January 1, 2013

till the expiry of the initial terms of the respective Licenses. Based on a petition filed by the Company and its subsidiary, the Hon’ble High

Court of Kolkata, vide its orders dated February 14, and April 19, 2013 has stayed the operation of the impugned demand till further order.

The Company is of the opinion that the said demand, inter alia, is an alteration of financial terms of the licenses issued in the past and has

also been legally advised. Accordingly, no provision in this regard is required.

(viii) Special Audit

Pursuant to the Telecom License Agreement, Department of Telecommunications (DoT) directed audit of various Telecom companies including

of the Company. The Special Auditors appointed by DoT were required to verify records of the Company and some of its subsidiaries for the

years ended March 31, 2007 and March 31, 2008 relating to license fees and revenue share. The Company and its subsidiary had received

show cause notices dated January 31, 2012 and subsequently received demand note dated November 8, 2012 based on report of the

Special Audit directed by DoT relating to alleged shortfall of license fees of ` 314 crore and interest thereon as applicable. The Company has

challenged the Special audit demand notices dated November 11, 2012, inter alia demanding license fee on non telecom revenue based on

Special Audit Report before the Hon’ble TDSAT and also before the Hon’ble High Court of Kerala. Both the Courts have stayed the operation

of such impugned demand during the pendency of the Petitions before them. The Company is confident that based on advice and, inter alia,

on current understanding of the regulation by the industry and judicial pronouncements directly applicable to the issues raised in the special

audit report, there shall not be any liability in this regard and hence, no provision is required in the accounts of the Company.

Note 2.35 (` in Crore)

Leases

(a) Operating Lease For the year ended

March 31, 2014

For the year ended

March 31, 2013

Estimated future minimum payments under non cancellable operating leases.

(i) Not later than one year 32 31

(ii) Later than one year and not later than five years 46 58

(iii) Later than five years 8 1

(b) Finance Lease

The details of minimum lease rentals outstanding as at March 31, 2014 in respect of fixed assets acquired on or after April 1, 2001

(` in Crore)

Minimum

Lease payment

Present Value of

Minimum Lease payment

As March 31 As at March 31

2014 2013 2014 2013

(i) Not later than one year 37 36 20 18

(ii) Later than one year and not later than five years 149 144 95 85

(iii) Later than five years 209 248 175 203

(iv) Total 395 428 290 306

(v) Less : Finance Cost 105 122

(vi) Present value of minimum lease payments 290 306

Disclosed under

Other Long Term Liabilities 271 294

Other Current Liabilities 19 12

Total 290 306

F-41



(ii) General description of the significant leasing arrangements is as mentioned below.

(a) The lease agreement is valid for a fixed non cancellable period from the date of commencement of lease rentals.

(b) Upon termination of the lease agreement, the Company shall return the assets to the lessor.

(c) In the event, the claim of lessor for depreciation is disallowed partly or fully in their tax assessment, the lease rentals will

increase to the extent of depreciation disallowed to the lessor.

Note 2.36

Particulars of Derivative Instruments


acquired for hedging For the year ended March 31, 2014 For the year ended March 31, 2013

No. of

Instruments

Value No. of

Instruments

Value

(US $ crore) (` in Crore) (US $ crore) (` in Crore)

Principal Only Swap 1 2 127 1 1 54

Interest Rate Swaps FC 5 16 947 19 80 4,359

Interest Rate Swaps INR 3 4 225 13 9 500

Options FC - - - 2 13 684

No derivative instruments are for speculation purpose.

In respect of Foreign Currency Swap and Interest Rate Swap transactions, which are linked with LIBOR rates and exchange rate during the binding

period of contract, the gains/ losses, if any, are recognised on the settlement day or the reporting day, whichever is earlier, at the rate prevailing on

respective day.

Foreign Currency exposures that are not hedged by derivative instruments or otherwise are US $ 404 crore (Previous year US $ 481 crore),

equivalent to ` 24,180 crore (Previous year ` 26,119 crore), Pounds 4,000 (Previous year Pounds 12,410), equivalent to ` 1,67,557 (Previous

year ` 10,20,442) and Euro 38,378 (Previous year Euro 8,354), equivalent to ` 31,73,289 (Previous year ` 5,80,561)

The unamortised premium of Buyers’ Line of Credit to be recognised is ` 4 crore (Previous year ` 2 crore) for one or more subsequent accounting

periods.

Note 2.37

Earnings per Share (EPS) For the year ended

March 31, 2014

For the year ended

March 31, 2013

Basic and Diluted EPS after Exceptional Items

(a) Profit attributable to Equity Shareholders (` in crore) (used as

numerator for calculating Basic EPS)

1,047 672

(b) Weighted average number of Equity Shares (used as

denominator for calculating Basic EPS)

2,06,40,26,881 2,06,40,26,881

(c) Profit attributable to Equity Shareholders (` in crore) (used as

numerator for calculating Diluted EPS)

1,047 672

(d) Weighted average number of Equity Shares (used as

denominator for calculating Diluted EPS)

2,064,026,881 2,064,026,881

(e) Basic Earnings per Share of ` 5 each (`) 5.07 3.26

(f) Diluted Earnings per Share of ` 5 each (`) 5.07 3.26

Note 2.38

Exceptional Items

Pursuant to the direction of the Hon’ble High Court of Judicature at Bombay and option exercised by the Boards of the respective companies,

in accordance with and as per the scheme of arrangements approved by the Hon’ble High Court under different Schemes of Arrangement

binding on the Company and three of its subsidiaries, namely, RCIL, RITL and RTL, expenses and/ or losses, identified by the Boards of the

respective companies as being exceptional or otherwise subject to the accounting treatment prescribed in the Schemes of Arrangement

sanctioned by the Hon’ble High Court and comprising of ` Nil (Previous year ` 325 crore) by write off of capital work in progress, ` 385

crore (Previous year ` 275 crore) of depreciation consequent to addition of exchange differences on long term borrowing relating to capital

assets to the cost of capitalised assets, as also ` 155 crore (Previous year ` 203 crore) of exchange variations (net), ` 440 crore (Previous

year ` 638 crore) being amortisation of Foreign Currency Monetary Items Translation Difference Account (FCMITDA), excluding the portion

added to the cost of fixed assets or carried forward as FCMITDA in accordance with Para 46 A inserted into Accounting Standard (AS) 11 “The

Effects of Changes in Foreign Exchange Rates” in context of unprecedented volatility in exchange rates during the year, ` Nil (Previous year

F-42



` 62 crore) fuel cost considered to be incremental and arising from the non availability of contracted or expected power, ` Nil (Previous year ` 354

crore) deferred tax charge have been met by withdrawal from corresponding General Reserves, leaving no impact on profit for the year ended March

31, 2014. Such withdrawals have been included/ reflected in the Statement of Profit and Loss. While the Company has been legally advised that

such inclusion in the Statement of Profit and Loss is in accordance with Revised Schedule VI of the Companies Act, 1956, the Company has also

sought clarification from ICAI that such inclusion in the Statement of Profit and Loss is not contrary to Revised Schedule VI.

Had such write off of expenses and losses and deferred tax (refer note no. 2.04) not been met from General Reserves, the consolidated financial

statements would have reflected a profit / (loss) after tax of ` 67 crore (Previous year ` (1,185) crore) and the consequential effect of this on

consolidated profit after tax would have been of ` 980 crore (Previous year ` 1,857 crore).

Note 2.39

General Reserve

The Company has, from the year ended on March 31, 2008 onwards, combined the balances of General Reserve I, II and III and disclosed as General

Reserve in Consolidated Accounts. General Reserve I and II were arising pursuant to the Schemes of demerger of ‘Telecommunication Undertaking’

of RIL into the Company and the Scheme of Amalgamation and Arrangement of Group Companies respectively in earlier years. General Reserve III

includes the reserve arising pursuant to the Schemes of Amalgamation with erstwhile Reliance Gateway Net Limited.

Note 2.40

1 Related Parties

As per the Accounting Standard ("AS") 18 of "Related Party Disclosures" as referred to in Accounting Standard Rules, the disclosure of

transactions with the related parties as defined therein are given below.

A List of related party

Name of the Related Party Relationship

(i) Reliance Innoventures Private Limited Holding Company

(ii) AAA Communication Private Limited Fellow subsidiary

(iii) AAA Industries Private Limited Fellow subsidiary

(iv) ADA Enterprises and Ventures Private Limited Fellow subsidiary

(v) Reliance Capital Limited Fellow subsidiary

(vi) Reliance General Insurance Company Limited Fellow subsidiary

(vii) Shri Anil D. Ambani Person having control during the year

(viii) Shri Prakash Shenoy Key Managerial Personnel

B Transactions during the year with related parties

(Figures in bracket represent Previous year) (` in Crore)

Holding

Company

Fellow

Subsidiaries

Others Total

1 Reliance Capital Limited

(i) Loans taken

Opening Balance as on April 1, 2013 - - - -

- (-) - (-)

Taken during the year - 175 - 175

- (-) - (-)

Repaid during the year - 175 - 175

- (-) - (-)

Closing Balance as on March 31, 2014 - - - -

- (-) - (-)

(ii) Advances

Opening Balance as on April 1, 2013 - - - -

` 30,89,108 (Previous year ` 30,89,108) - (-) - (-)

Add :Advances made during the year - - - -

` Nil (Previous year ` Nil) - (-) - (-)

Less : Repayment during the year - - - -

- (-) - (-)

Closing Balance as on March 31, 2014 - - - -

` 30,89,108 (Previous year ` 30,89,108) - (-) - (-)

(included in Note 2.13)

F-43





Holding

Company

Fellow

Subsidiaries

Others Total

(iii) Trade Receivable - 2 - 2

- (2) - (2)

(iv) Income

Service Income - - - -

` 4,33,514 (Previous year ` 3,78,371) - (-) - (-)

(v) Dividend paid - - - -

- (1) - (1)

2 Reliance General Insurance Company Limited

(i) Trade Receivable - 4 - 4

- (3) - (3)

(ii) Trade Payable - 1 - 1

- (-) - (-)

(iii) Income

Service Income - 1 - 1

(Previous year ` 46,60,255) - (-) - (-)

(iv) General and Administration Expenses - - - -

- (2) - (2)

3 Reliance Innoventures Private Limited

Dividend paid - - - -

(Previous year ` 30,94,750) (-) (-) - (-)

4 AAA Communication Private Limited


- (18) - (18)

5 ADA Enterprises and Ventures Private Limited


- (8) - (8)

6 AAA Industries Private Limited


- (8) - (8)

7 Person having control during the year

Shri Anil D. Ambani - Sitting fees - - - -

` 2,00,000 (Previous year ` 2,20,000), Dividend paid

` Nil (Previous year ` 4,64,793)

- - (-) (-)

8 Key Managerial Personnel

Managerial Remuneration

Shri Prakash Shenoy - - - -

` 22,16,809 (Previous year ` 22,42,618) - - (-) (-)

Note 2.41


The Company operates two Employee Stock Option Plans; ESOS Plan 2008 and ESOS Plan 2009, which cover eligible employees of the Company

and its Subsidiaries. ESOS Plans are administered through an ESOS Trust. The Vesting of the options is on the expiry of one year from the date of

Grant as per Plan under the respective ESOS(s). In respect of Options granted, the accounting value of Options (based on market price of the share

on the date of the grant of the option) is accounted as deferred employee compensation, which is amortised on a straight line basis over the Vesting

Period. Each Option entitles the holder thereof to apply for and be allotted/ transferred one Equity Share of the Company of ̀ 5 each upon payment

of the Exercise Price during the Exercise Period. The maximum Exercise Period is 10 years from the date of Grant of Options.

F-44



The Company has established a Trust for the implementation and management of ESOS for the benefit of its present and future employees. Advance

of ` 387 crore (Previous year ` 387 crore) has been granted to the Trust and the said amount has been utilised by the Trust for purchasing 2.13

crore (Previous year 2.13 crore) Equity Shares during the period upto March 31, 2014. (Refer Note 2.01(5)).

Amortization of compensation includes write back of ` 1 crore (Previous year ` 2 crore) based on intrinsic value of Options which has been vested

under ESOS Plan 2008 and reflected in Statement of Profit and Loss under Employees Benefits Expenses. No amount is chargeable in respect of

Options granted under ESOS Plan 2009.

Particulars Employees Stock Option Plans

ESOS Plan 2008 ESOS Plan 2009

Number of

Options

Weighted

average

exercise price

[`]

Number of

Options

Weighted

average

exercise price

[`]

Number of Options Outstanding at the beginning of the year 3 91 465 460 30 17 764 206

Number of Options granted Nil - Nil -

Total number of Options surrendered - -

Number of Options vested during the year Nil - Nil -

Total number of Options exercised Nil - Nil -

Total number of Options forfeited/ lapsed 53 050 423 12 04 774 206

Number of Options outstanding at the end of the year 3 38 415 466 18 12 990 206

If the entity would have estimated fair value computed on the basis of Black-Scholes pricing model, the compensation cost for the year ended

March 31, 2014 for ESOS Plan 2008 and ESOS Plan 2009 would have been ` 3 crore and ` 6 crore respectively. The key assumptions used to

estimate the fair value of options are given below.

Particulars ESOS Plan 2008 ESOS Plan 2009

Risk-free interest rate 8.79% 8.90%

Expected life 4 years 5 years

Expected volatility 54.14% 54.14%

Expected dividend yield 0.02% 0.07%

Price of the underlying share in market at the time of grant of option ` 541 ` 174

Pursuant to consolidation of financial statements of RCOM ESOS Trust (Trust) as at March 31, 2014 with Standalone Financial Statements of

the Company in terms of SEBI (ESOS and ESPS) Guidelines, 1999 and recent opinion of the Expert Advisory Committee (EAC) of the Institute

of Chartered Accountants of India (the ICAI), balance ` 380 crore being an amount exceeding the face value of equity shares held by the Trust

is presented as deduction from Securities Premium with corresponding adjustment to the loan receivable from the Trust and ` 4 crore of opening

balance of Trust Fund is considered in Surplus in Statement of Profit and Loss.

Note 2.42

Export Commitments

The Company and its subsidiaries have obtained licenses/ authorisations under the Export Promotion Capital Goods (EPCG) Scheme for importing

capital goods at a concessional rate of customs duty against submission of bonds. Under the terms of the respective licenses/ authorisations, the

Company and its subsidiaries are required to export goods of FOB value equivalent to or more than, eight times the amount of duty saved in respect

of such licenses/ authorisations, where export obligation has been refixed by the order of Director General Foreign Trade, Ministry of Commerce

and Industry, Government of India, as applicable. The Company has fulfilled its export obligation under the aforesaid license as on March 31, 2014

and has submitted the necessary documents to DGFT for availing redemption letter for completion of export obligation amounting to ` 334 crore

(Previous year ` 334 crore). Balance export obligations outstanding as on March 31, 2014 in case of its subsidiaries namely; RCIL and RITL under

the aforesaid licenses/ authorisations is ` 472 crore and ` 1,100 crore respectively (Previous year ` 619 crore and ` 1,293 crore) respectively.

Note 2.43

Employee Benefits

Gratuity: In accordance with the applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Plan) for all its

employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based

on respective employees last drawn salary and for the years of employment with the Company.

F-45



The following table set out the status of the Gratuity Plan as required under Accounting Standard (“AS”) 15 (Revised) “Employee Benefits” (Revised).

(`. in Crore)

Gratuity* Leave Encashment

Particulars As at As at

March 31,

2014

March 31,

2013

March 31,

2014

March 31,

2013

(i) Reconciliation of opening and closing balances of the present value of the defined benefit obligation

Obligation at beginning of the year 39 34 54 67

Service cost 6 8 4 4

Interest cost 3 3 4 6

Actuarial (gain)/ loss 8 1 6 (12)

Benefits paid (8) (7) (16) (11)

Liabilities Extinguished on Settlement (7) - (7) -

Obligation at year end 41 39 45 54

*Defined benefit obligation liability as at the balance sheet is wholly funded by the Company

(ii) Change in plan assets

Plan assets at beginning of the year, at fair value 29 31 1 -

Expected return on plan assets 2 3 - -

Actuarial (gain)/ loss (1) - - -

Contributions - 3 2 16

Benefits (7) (8) (2) (15)

Assets distributed on settlement (7) - - -

Plan assets at year end, at fair value 16 29 1 1

(iii) Reconciliation of present value of the obligation and the fair value of the plan assets

Fair value of plan assets at the end of the year 16 29 1 1

Present value of the defined benefit obligations at the end of the year 41 39 45 54

Liability recognised in the Balance Sheet 25 10 44 53

(iv) Cost for the year

Service Cost 6 8 4 4

Interest Cost 3 3 4 6

Expected return on plan assets (2) (3) (0) -

Actuarial (gain)/ loss 8 - 6 (12)

Net Gratuity Cost 15 8 14 (2)

(v) Experience adjustment

On Plan Liabilities (Gain)/Loss 6 1 N.A N.A

On Plan Assets Gain / (Loss) (1) - N.A N.A

(vi) Investment details of plan assets

100% of the plan assets are invested in balanced Fund Instruments

(vii) Actual return on plan assets 2 3 - -

(viii) Assumptions

Interest rate 9.30% 8.10% 9.30% 8.10%

Estimated return on plan assets 9.30% 8.70% - -

Salary Growth rate 8.00% 6.00% 8.00% 6.00%

The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors

such as supply and demand factors in the employment market.

(ix) Particulars of the amounts for the year and previous years

Gratuity

As at March 31,

2014 2013 2012 2011 2010

Present Value of benefit obligation 41 39 35 38 35

Fair value of plan assets 16 29 31 32 36

Excess of obligation over plan assets / (plan assets over obligation) 25 10 4 6 (1)

F-46



The expected contribution is based on the same assumptions used to measure the company's gratuity obligations as of March 31, 2014.

Provident Fund : The guidance on Implementing ("AS") 15 "Employee Benefits" (revised 2005) issued by the ICAI states that the benefits involving

employer established Provident Fund, which require interest shortfalls recompensed are to be considered as / in defined benefit plans. The employee

and employer each make monthly contribution to the plan equal to 12% of the covered employee’s salary. Contributions are made to the trust

established by the Company. During the year ended March 31, 2012, the Actuarial Society of India issued the final guidance for measurement of

provident fund liabilities. As at March 31, 2014, Fair value of plan assets is ` 298 crore (Previous year ` 311 crore), the present value of defined

benefit obligation is ̀ 298 crore (Previous year ̀ 311 crore). For the year ended March 31, 2014, the Company has contributed ̀ 18 crore (Previous

year ` 21 crore) towards Provident Fund. The Employee Benefits as disclosed herein pertain to the Company and its significant subsidiaries.

The assumptions made for the above are Discount rate of 9.25%, average remaining tenure of Investment Portfolio is 6 years and guaranteed rate

of return is 8.75%.

Note 2.44

Consolidated Segment Information:

The Company has, during the year, reorganized its internal financial reporting, performance evaluation and organisational structure

by geographical locations of its operations, where its service rendering activities are based. Accordingly, the Company has identified

geographic segments as primary segments and disclosed segment information, for the year and restated for previous year, as “India

Operations” and “Global Operations”. The said change will not leave any impact on reported revenue and profitability. As the change

in primary segments is from business segments to geographic segments, the effects of financial disclosure arising due to such change

would not be meaningful, not reasonably determinable and accordingly not disclosed. The accounting policies adopted for segment

reporting are in line with the accounting policy of the Company with following additional policies for segment reporting.

(a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment.

Revenue and expenses, which relate to the enterprise as a whole and are not allocable to a segment on reasonable basis have

been disclosed as “Unallocable”.

(b) Segment assets and liabilities represent the assets and liabilities in respective segments. Tax related assets and other assets and

liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as “Unallocable”.

(i) Primary Segment Information (` in Crore)

Particulars India

Operations

Global

Operations

Unallocable Eliminations Total

Segment Revenue

External Revenue 17,843 4,037 441 - 22,321

16,950 4,278 550 - 21,778

Inter Segment Revenue 726 584 - (1,310) -

834 650 - (1,484) -

Total Revenue 18,569 4,621 441 (1,310) 22,321

17,784 4,928 550 (1,484) 21,778

Segment Result before Exceptional and

non recurring items, interest & taxes

2,385 365 441 - 3,191

1,808 956 550 - 3,314

Less: Finance Costs - - 3,019 - 3,019

- - 2,499 - 2,499

Segment Result before Exceptional and

non recurring items, taxes

2,385 365 (2,578) - 172

1,808 956 (1,949) - 815

Less:Provisions, Exceptional and Non

Recurring items

- - - - -

- - - - -

Less: Provision for Taxation - - (1,021) - (1,021)

- - 71 - 71

Less: Prior Period Adjustment - - 56 - 56

- - - - -

Segment Result after Tax 2,385 365 (1,613) - 1,137

1,808 956 (2,020) - 744

F-47



Particulars India

Operations

Global

Operations

Unallocable Eliminations Total

Other Information

Segment Assets 76,745 11,064 3,749 (1,206) 90,352

78,151 11,528 2,194 (1,691) 90,182

Segment Liabilities 10,608 3,661 43,780 (849) 57,200

10,399 3,989 42,918 (1,699) 55,607

Capital Expenditure 3,214 128 - - 3,342

3,334 587 - - 3,921

Depreciation 3,979 556 - - 4,535

3,383 462 - - 3,845


- The India Operations includes operations of the Company and its subsidiaries in India, Reliance Communications Infrastructure

Limited, Reliance Telecom Limited, Reliance Infratel Limited, Reliance Webstore Limited, Reliance Big TV Limited, Reliance

Infocomm Infrastructure Private Limited and Reliance IDC Limited.

- The Global Operations includes the retail operations outside India of Reliance Communications (UK) Limited, Reliance

Communications International Inc., Reliance Communications Canada Inc., Reliance Communications (Australia) Pty.

Limited, Reliance Communications (New Zealand) Pte. Limited and wholesale operations outside India of its subsidiary viz.

Reliance Globalcom BV and its subsidiaries.

(ii) Secondary Segment Information

Secondary segment relates to Telecommunication product wise segments viz. Voice and Non-voice.

(` in Crore)

Voice Non Voice Total

Segment Revenue - External Turnover 14,196 8,125 22,321

13,216 8,562 21,778

Fixed Assets used by the Company’s business or liabilities contracted have not been identified to any of the reportable

segments, as the fixed assets and services are used interchangeably between the segments. Accordingly no disclosure

relating to any segment assets and liabilities are made.

The reportable secondary segments are further described below.

- The “Voice” segment includes the operations of the Company and its subsidiaries relating to Call usage, Voice carrier

and Inter Usage Connectivity etc in India and Outside India.

- The “Non Voice “ segment includes the operations of the Company and its subsidiaries relating to Data/ Broadband

Services, Tower Infrastructure, Handsets, Optic Fiber Cables, Direct To Home Services, Internet Data Center,

Marketing, Infrastructure Services etc.





For B S R & Co. LLP




Directors

J. Ramachandran

A. K. Purwar

C.D. Lala

Partner


Bhavesh Dhupelia

Partner


R. N. Bhardwaj


Mumbai

May 2, 2014


F-48



To

The Board of Directors of Reliance Communications Limited

We have audited the accompanying consolidated financial

statements of Reliance Communications Limited (“the Company’)

and its subsidiaries, associates and joint ventures (collectively

referred to as “the Group”), which comprise of the consolidated

balance sheet as at 31 March 2013, the consolidated statement

of profit and loss and consolidated cash flow statement for the

year then ended, and a summary of significant accounting

policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial

Statements

Management is responsible for the preparation of these

consolidated financial statements that give a true and fair view

of the consolidated financial position, consolidated financial

performance and consolidated cash flows of the Group in

accordance with the accounting principles generally accepted in

India; this includes the design, implementation and maintenance

of internal control relevant to the preparation and presentation

of the consolidated financial statements that give a true and fair

view and are free from material misstatement, whether due to

fraud or error.

The consolidated financial statements have been prepared by the

Company in accordance with the requirements of Accounting

Standard (AS 21) on Consolidated Financial Statements,

Accounting Standard (AS 23)- Accounting for Investments in

Associates in Consolidated Financial Statements and (AS 27) on

Financial reporting of interests in Joint Ventures as prescribed by

the Companies (Accounting Standard’s) Rules, 2006.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated

financial statements based on our audit. We conducted our

audit in accordance with the Standards on Auditing issued by

the Institute of Chartered Accountants of India. Those standards

require that we comply with ethical requirements and plan and

perform the audit to obtain reasonable assurance about whether

the consolidated financial statements are free from material

misstatement.

An audit includes performing procedures to obtain audit evidence

about the amounts and disclosures in the consolidated financial

statements. The procedures selected depend on the auditor’s

judgment, including the assessment of the risks of material

misstatement of the consolidated financial statements, whether

due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the Group’s preparation

and presentation of the consolidated financial statements that

give a true and fair view in order to design audit procedures

that are appropriate in the circumstances. An audit also includes

evaluating the appropriateness of accounting policies used and

the reasonableness of the accounting estimates made by the

management, as well as evaluating the overall presentation of

the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according

to the explanations given to us and based on the consideration

of the reports of the other auditors on the financial statements

of the subsidiaries, as noted below, the consolidated financial

statements give a true and fair view in conformity with the

accounting principles generally accepted in India:

(i) in the case of the consolidated balance sheet, of the state

of affairs of the Group as at 31 March 2013;

(ii) in the case of consolidated statement of profit and loss, of

the profit for the year ended on that date; and

(iii) in the case of consolidated cash flow statement, of the

cash flows of the Group for the year ended on that date.

Emphasis of Matter

1 We draw your attention to Note 2.39 of the consolidated

financial statements regarding the Schemes of Arrangement

(‘the Schemes’) sanctioned by the Hon’ble High Court of

Judicature at Mumbai, permit the Company and three of its

subsidiaries, namely, Reliance Communications Infrastructure

Limited, Reliance Infratel Limited and Reliance Telecom

Limited to adjust expenses and/or losses identified by the

respective Board of the Company and its three subsidiaries,

which are required to be debited/ credited to the Statement

of profit and loss by a corresponding withdrawal or credit

from/ to General Reserve, which is considered to be an

override to the relevant provisions of Accounting Standard

5 (AS 5) ‘Net Profit or Loss for the Period, Prior Period

Items and Changes in Accounting Policies’. The Company

and its three subsidiaries have identified exchange variations

incurred during the year of ` 203 crore (previous year

` 1,528 crore), fuel cost of ` 62 crore (previous year ` 70

crore), provision for doubtful debts and subsidy receivable

of ` Nil (previous year ` 1,107 crore), depreciation on

exchange losses capitalised of ` 275 crore (previous year

` Nil), capital work in progress written off of ` 325 crore

(previous year ` Nil), amortization of Foreign Currency

Monetary Items Translation Difference Account (FCMITDA)

of ` 638 crore (previous year ` 45 crore), as in the opinion

of the respective Boards, such exchange loss, provisions

and costs are considered to be of an exceptional nature

and accordingly, these expenses and deferred tax liability

of ` 354 crore (previous year ` 651 crore) of one of its

subsidiary have been met by corresponding withdrawal from

General Reserve. Pending clarification from the Institute of

Chartered Accountants of India (ICAI), the Company has

credited such withdrawal to the Statement of profit and

loss. Had such write off of expenses, losses and deferred

taxes not been met from General Reserve, the consolidated

financial statements would have reflected a loss after tax

of ` 1,185 crore (previous year ` 2,473 crore) and the

consequential effect of this on the consolidated profit

after tax would have been of ` 1,857 crore (previous year

` 3,401 crore). Our opinion is not qualified in respect of

this matter.

2 We draw your attention to Note 2.35 of the consolidated

financial statements regarding investigations by an

investigating agency (CBI) and framing of certain preliminary

charges by a Trial Court in October, 2011 against a director

of Company’s subsidiary and the subsidiary company,

against which the subsidiary company has filed a writ

petition in October, 2011 in Hon’ble High Court of Delhi,

which is pending for hearing as set out in the aforesaid

note. Our opinion is not qualified in respect of this matter.

F-49


Other matters

1. The Company has computed goodwill on consolidation

by comparing the cost of investments with the equity of

subsidiaries as on date on which investments were made by

Reliance Industries Limited (‘the transferor company’) prior

to demerger instead of considering the date of demerger as

the date of investment.

2. We did not audit the financial statements and other financial

information of certain subsidiaries. The financial statements

of these subsidiaries for the year ended 31 March 2013

have been audited by other auditors whose reports have

been furnished to us and our opinion, in so far as it relates

to the amounts included in respect of subsidiaries, is based

solely on these reports. The attached consolidated financial

statements include assets of ` 8,299 crores as at 31

March 2013, revenues of ` 4,675 crores and cash inflows

amounting to ` 61 crores in respect of the aforementioned

subsidiaries for the year then ended.

3. The financial statements of certain subsidiaries for the year

ended 31 March 2013 have been audited by one of the

joint auditors, Chaturvedi & Shah, Chartered Accountants.

The attached consolidated financial statements include

assets of ̀ 17,380 crores as at 31 March 2013, revenues

of ` 6,477 crores and cash inflows amounting to ` 48

crores in respect of the aforementioned subsidiaries for the

year then ended.


4. We have relied on the unaudited financial statements of the

subsidiaries, joint ventures and associates, whose financial

statements reflect total assets of ` 3,654 crores as at 31

March 2013, total revenue of ̀ 128 crores and cash inflows

amounting to ` 16 crores for the year ended 31 March

2013. These unaudited financial statements as approved by

the respective Board of Directors of these companies have

been furnished to us by the management, and our report

in so far as it relates to the amounts included in respect of

the subsidiaries is based solely on such approved financial

statements.



Firm’s Reg. No: 101720W

C. D. Lala

Partner


For B S R & Co.


Firm’s Reg. No: 101248W

Bhavesh Dhupelia

Partner


Mumbai

10 May 2013

F-50


Consolidated Balance Sheet as at March 31,2013

( ` in Crore)

Notes As at

March 31, 2013

As at

March 31, 2012








(b) Deferred Tax Liabilities (net) 2.04 1,372 1,018

(c) Other Long Term Liabilities 2.05 1,233 1,217

(d) Long Term Provisions 2.06 885 32,168 824 32,705

Current Liabilities





TOTAL 90,182 92,265

ASSETS

Non Current Assets





69,252 71,478

(b) Goodwill 5,125 5,009


(d) Long Term Loans and Advances 2.13 3,210 2,482

(e) Other Non Current Assets 2.14 223 77,921 618 79,720

Current Assets




(d) Cash and Bank Balances 2.18 731 550



TOTAL 90,182 92,265


Notes on Accounts 2


As per our Report of even date For and on behalf of the Board



Firm Registration No: 101720W

For B S R & Co.




Directors {J. Ramachandran

Deepak ShourieC. D. Lala

Partner

Membership No. 35671

Bhavesh Dhupelia

Partner


Mumbai

May 10, 2013


F-51


( ` in Crore)

Notes For the year ended

March 31, 2013

For the year ended

March 31, 2012

INCOME


Other Income 2.22 1,217 705

Total Revenue 21,778 20,382

EXPENDITURE

Access Charges, License Fees and Network Expenses 2.23 10,368 9,652



Depreciation, Impairment and Amortisation 2.11 & 2.32 5,331 5,450

Depreciation adjusted by/transfer from :

Provision for Business Restructuring (Refer Note 2.30 (iii)) (99) (102)

General Reserve (Refer Note 2.30 (vi)) (123) (113)

General Reserve (Refer Note 2.30 (iii)) (1,264) 3,845 (1,257) 3,978



Profit before Exceptional Items, Tax and Adjustment 815 882


Bad debts and subsidy written off - 1,107

Equivalent amount withdrawn from General Reserve - (1,107)

Capital Work in Progress written off 325 -

Equivalent amount withdrawn from General Reserve (325) -

Depreciation on account of change in exchange rate 275 -

Equivalent amount withdrawn from General Reserve (275) -

Foreign Currency Exchange Fluctuation Loss (net) 841 1,573

Equivalent amount withdrawn from General Reserve (841) (1,573)

Fuel Expenses 62 70


Profit Before Tax 815 882

Provision for:

- Current Tax 71 (106)

- Deferred Tax 2.04 354 651

- Equivalent amount withdrawn from General Reserve 2.39 (354) 71 (651) (106)

Profit After Tax (before adjustment of Minority

Interest/ Associates)

744 988


Less: Share of Loss/ (Profit) of Associates (1) (1)

Profit After Tax (after adjustment of Minority

Interest/ Associates)

672 928

Earnings per Share of ` 5 each fully paid up (before

and after Exceptional Items)

2.38

- Basic (`) 3.26 4.50

- Diluted (`) 3.26 4.41


Notes on Accounts 2






For B S R & Co.






Partner


Bhavesh Dhupelia

Partner


Mumbai

May 10, 2013



F-52


( ` in Crore)For the year ended

March 31, 2013

For the year ended

March 31, 2012A CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before tax as per Statement of Profit and Loss 815 882Adjusted for:Provision for Doubtful Debts, Loans and Advances 108 60Depreciation, Impairment and Amortisation 3,845 3,978Effect of changes in Foreign Exchange Rate (net) (12) (136)(Profit)/ Loss on Sale of Fixed Assets and Capital Work in Progress 28 (7)Net gain on Sale of Investments (35) (23)Finance Costs 2,499 1,630Write back of Provision for Business Restructuring (550) -Write back of Provision for Liabilities no longer required (192) -Interest Income (11) (40)

5,680 5,462Operating Profit before Working Capital Changes 6,495 6,344Adjusted for:Receivables and other Advances (553) (2,423)Inventories 70 (49)Trade Payables and other liabilities (2,391) 1,798

(2,874) (674)Cash Generated from Operations 3,621 5,670Income Tax Refund 477 470Income Tax Paid (273) 204 (389) 81Net Cash from Operating Activities 3,825 5,751

B CASH FLOW FROM INVESTING ACTIVITIESAdditions of Fixed Assets and Capital Work in Progress (including

realised variation capitalised)

(2,114) (4,850)

Sale of Fixed Assets and Capital Work in Progress - 216Purchase of Investments (12,876) (26,941)Sale of Investments 12,911 26,964Interest Income 10 40Net Cash used in Investing Activities (2,069) (4,571)

C CASH FLOW FROM FINANCING ACTIVITIESNet Proceeds from/ (Repayment of ) Short term Borrowings (net) 3,268 (5,211)Expenses on FCCBs (withholding tax) - (177)Realised Foreign Exchange Loss (1,266) (167)Proceeds from Long Term Borrowings 1,476 10,756Repayment of Long Term Borrowings (2,529) (8,861)Dividend Paid (Including tax on dividend) (60) (119)Finance Costs (2,465) (1,718)Net Cash from/ (used in) Financing Activities (1,576) (5,497)Net Increase/ (Decrease) in Cash and Cash Equivalents 180 (4,317)Opening Balance of Cash and Cash Equivalents 550 4,866Effect of Exchange Gain/ (Loss) on Cash and Cash Equivalents 1 1Closing Balance of Cash and Cash Equivalents (Refer Note 2.18) 731 550

Note:

Cash and Cash Equivalents include cash on hand, cheques on hand, remittances- in-transit and bank balance including Fixed Deposits

with Banks.





For B S R & Co.






Partner


Bhavesh Dhupelia

Partner


Mumbai

May 10, 2013



F-53


Note 1


The Consolidated Financial Statements relate to Reliance Communications Limited (‘the Company’) and all of its subsidiary

companies and the companies controlled, that is, the companies over which the Company exercises control/ joint control

over ownership and voting power and the associates and joint venture (hereinafter collectively referred to as the “Group”). The

Consolidated Financial Statements have been prepared on the following bases.

(a) The financial statements of the Company and its subsidiaries are consolidated on a line-by-line basis, by adding together

the book values of like items of assets, liabilities, incomes and expenses after fully eliminating intra group balances

and intra group transactions resulting in unrealized profits or losses in accordance with the Accounting Standard (“AS”)

21 “Consolidated Financial Statements” as referred to in the Companies Accounting Standard Rules, 2006 (Accounting

Standard Rules).

(b) In case of the foreign subsidiaries and companies controlled by the Company, revenue is consolidated at the average

exchange rate prevailing during the year. All monetary assets and liabilities are converted at the exchange rate prevailing at

the end of the year. While, non monetary assets and liabilities are recorded at the exchange rate prevailing on the date of

the transaction or closing rate, as applicable. Any exchange difference arising on consolidation of integral foreign operation

and non integral foreign operation is recognised in the Statement of Profit and Loss and Exchange Fluctuation Reserve

respectively.

(c) Investments in subsidiaries are eliminated and differences between the cost of investment over the net assets on the date

of investment or on the date of the financial statements immediately preceeding the date of investment in subsidiaries are

recognised as Goodwill or Capital Reserve, as the case may be.

(d) The difference between the proceeds from disposal of investment in a subsidiary or in a company controlled by the

Company and the proportionate carrying amount of its assets less liabilities as on the date of disposal, is recognised in the

Consolidated Statement of Profit and Loss as profit or loss on disposal of investment in subsidiaries.

(e) Minority Interest’s share of net profit or loss of consolidated subsidiaries for the year is identified and adjusted against the

income of the Group in order to arrive at the net income attributable to the Equity Shareholders of the Company.

(f) Minority Interest’s share of net assets of consolidated subsidiaries is identified and presented in the consolidated Balance

Sheet as a separate item from liabilities and the Shareholders’ Equity.

(g) In case of associates, where the Company directly or indirectly through subsidiaries holds 20% or more of Equity Shares,

investments in associates are accounted for using equity method in accordance with Accounting Standard (“AS”) 23

“Accounting for Investments in Associates in Consolidated Financial Statements” as referred to in the Accounting Standard

Rules. The Company accounts for its share in the change in the net assets of the associates, post acquisition, after

eliminating unrealised profits and losses resulting from transactions between the Company and its associates to the extent

of its share, through its Statement of Profit and Loss, to the extent such change is attributable to the associates’ Statement

of Profit and Loss, based on available information.

(h) Interest in a jointly controlled entity is reported using proportionate consolidation in accordance with the Accounting

Standard (“AS”) 27 “Financial Reporting of Interests in Joint Ventures” as referred to in Accounting Standards Rules.

(i) As far as possible, the Consolidated Financial Statements are prepared using uniform Accounting Policies for like transactions

and other events in similar circumstances and are presented in the same manner as the standalone financial statements of

the Company.

1.2 Investments other than in subsidiaries, associates and joint ventures are accounted as per Accounting Standard (“AS”) 13

“Accounting for Investments” as referred to in the Accounting Standard Rules.


(a) Basis of Preparation of Consolidated Financial Statements

The financial statements are prepared under historical cost convention/ fair valuation under a Scheme approved by the High

Court, in accordance with the generally accepted accounting principles in India and provisions of the Companies Act, 1956

read with the Companies Accounting Standard Rules as well as applicable pronouncements of the Institute of Chartered

Accountants of India (ICAI).

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and

other criteria set out in Revised Schedule VI to the Companies Act, 1956. Based on the nature of the services and their

realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose

of current or non-current classification of assets and liabilities.


The preparation and presentation of Consolidated Financial Statements requires estimates and assumptions to be made

that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial

statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual

results and estimates is recognised in the period in which the results are known/ materialised.


F-54


(c) Fixed Assets


(i) Fixed Assets are stated at cost/ fair value net of Modvat/ Cenvat, Value Added Tax and include amount added on

revaluation less accumulated depreciation, amortisation and impairment loss, if any.

(ii) All costs including financing cost of qualifying assets till commencement of commercial operations, net charges of

foreign exchange contracts and adjustments arising up to March 31, 2007 from exchange rate variations, relating to

borrowings attributable to fixed assets are capitalised.

(iii) Expenses incurred relating to project, prior to commencement of commercial operation, are considered as project

development expenditure and shown under Capital Work-in-Progress.

(iv) Telecom Licenses are stated at fair value or at cost as applicable less accumulated amortisation.


(vi) In respect of accounting period commencing on or after April 1, 2011, consequent to the insertion of para 46A of AS

11 ‘The Effects of Changes in Foreign Exchange Rates’, related to acquisition of depreciable assets capatalied pursuant

to notifications dated December 29, 2011 and August 9, 2012 issued by Ministry of Corporate Affairs (MCA), under the

Companies (Accounting Standards) (Second Amendment) Rules 2011, the cost of depreciable capital assets includes foreign

exchange differences arising on translation of long term foreign currency monetary items as at the balance sheet date in so

far as they relate to the acquisitions of such assets.

(d) Lease

(i) In respect of Operating Leases, lease rentals are expensed on straight line basis with reference to the term of lease,

except for lease rentals pertaining to the period up to the date of commencement of commercial operations, which

are capitalised.

Where the lessor effectively retains substantially all risk and benefits of ownership of the leased assets they are classified

as operating lease.Operating lease payments are recognised as an expense in the Statement of Profit and Loss.


(iii) Finance Leases on or after April 1, 2001: The lower of the fair value of the assets and present value of the minimum

lease rentals is capitalised as Fixed Assets with corresponding amount shown as liabilities for leased assets. The

principal component in lease rental in respect of the above is adjusted against liabilities for leased assets and the

interest component is recognised as an expense in the year in which the same is incurred except in case of assets used

for capital projects where it is capitalised.

(e) Depreciation/ Amortisation

(i) Depreciation on Fixed Assets is provided on Straight Line Method at the rates and in the manner prescribed in Schedule

XIV to the Companies Act, 1956 except in case of the following assets which are depreciated at the rates as given

below.

(a) Telecom Electronic Equipments - 18 years

(b) Telecom Towers - 35 years

(c) Furniture, Fixtures and Office Equipments - 5, 10 years

(d) Customer Premises Equipments - 3 years

(e) Vehicles - 5 years

(f) Leasehold improvements - Shorter of the remaining lease term or useful life

(g) Cable Systems - Shorter of 15 years or remaining useful life

In case of Falcon project, the asset life of Sub Marine Cable Network and Terrestrial Network is estimated at 25

years and 15 to 25 years respectively.

(ii) Depreciation on assets, taken on finance lease on or after April 1, 2001, is provided over the remaining period of lease

from commencement of commercial operations.

(iii) Expenditure of capital nature incurred on assets taken on operating lease is depreciated over the remaining period of

the lease term.


(v) Intangible assets, namely entry fees/ fees for Telecom Licenses and Brand Licenses are amortised over the balance

period of Licenses. IRC and Software are amortized from the date of acquisition or commencement of commercial


F-55


services, whichever is later. The life of amortisation of the intangible assets are as follows.









(vi) Depreciation on foreign exchange differences, capitalised pursuant to para 46A of AS 11 ‘The Effects of Changes in Foreign

Exchange Rates‘ vide notifications dated December 29, 2011 and August 9, 2012 by Ministry of Corporate Affairs (MCA),

under the Companies (Accounting Standards) (Second Amendment) Rules, 2011, is provided over the balance useful life

of depreciable capital assets.



Asset Retirement Obligation (ARO) relates to the removal of cable systems and equipments when they will be retired

from its active use. Provision is recognised based on the best estimate, of the management, of the eventual costs (net of

recovery) that relates to such obligation and is adjusted to the cost of such assets.


An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged

to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in

prior accounting period is increased/ reversed where there is change in the estimate of recoverable value. The recoverable

value is higher of net selling price and value in use.

(h) Investments

Current Investments are carried at lower of cost and market value computed Investment wise. Long Term Investments are

stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than

temporary in the opinion of the management.


Inventories of stores, spares and communication devices are accounted for at costs, determined on weighted average basis

or net realisable value, whichever is less, except in case of certain subsidiaries, where cost is determined on First In First Out

basis.

(j) Employee Benefits


All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee

benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The undiscounted

amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is

recognized as an expense during the period.



The Company’s contribution towards Employees’ Superannuation Plan is recognized as an expense during the period

in which it accrues.


Provident Fund

Provident Fund contributions are made to a Trust administered by the Trustees. Interest payable to the Provident Fund

members, shall not be at a rate lower than the statutory rate. Liability is recognized for any shortfall in the Income of

the fund vis-à-vis liability of the Interest to the members as per statutory rates.

Gratuity Plan

The Company’s gratuity benefit scheme is a defined benefit plan. The Company’s net obligation in respect of the

gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return

for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair

value of any plan assets is deducted.


F-56


The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using

the Projected Unit Credit Method.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for

determining the present value of the obligation under defined benefit plan, are based on the market yields on

Government securities as at the balance sheet date.



Compensated absences which are not expected to occur within twelve months after the end of the period in which the

employee renders the related services are recognized as a liability at the present value of the defined benefit obligation

at the Balance Sheet date, determined based on actuarial valuation using Projected Unit Credit Method. The discount

rates used for determining the present value of the obligation under defined benefit plan, are based on the market

yields on Government securities as at the balance sheet date.

(k) Borrowing Cost

Borrowing costs, that are attributable to the acquisition or construction of qualifying assets, are capitalised as part of the

cost of such assets upto the commencement of commercial operations. A qualifying asset is one that necessarily takes

substantial period of time to get ready for intended use. Other borrowing costs are recognised as expense in the year in

which they are incurred.

(l) Issue Expenses and Premium on Foreign Currency Convertible Bonds (FCCBs)

The Premium payable/ paid on redemption of Foreign Currency Bonds (FCCBs) is charged to Securities Premium Account

over the period of the Issue. Issue expenses are debited to Securities Premium Account at the time of the issue.

(m) Foreign Currency Transactions

(i) Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at the time of the

transaction.

(ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of monetary

items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the

date of the contract is recognised as exchange difference and the premium paid on forward contracts is recognised

over the life of the contract.


(iv) Any income or expense on account of exchange difference in case of monetary items other than mentioned above,

either on settlement or on translation, is recognised in the Statement of Profit and Loss.

(v) Any loss arising out of marking a class derivative contracts to market price is recognised in the Statement of Profit

and Loss. Income, if any, arising out of marking a class of derivative contracts to market price is not recognised in the

Statement of Profit and Loss.

(vi) All long term foreign currency monetary items consisting of liabilities which relate to acquisition of depreciable capital

assets at the end of the period/ year have been restated at the rate prevailing at the Balance Sheet date. The exchange

difference, arising as a result has been added or deducted from the cost of the assets as per the notifications issued by

the Ministry of Corporate Affairs (MCA) dated December 29, 2011 and August 9, 2012. Exchange difference on other

long term foreign currency monetary items is accumulated in “Foreign Currency Monetary Items Translation Difference

Account (FCMITDA)” which will be amortized over the balance period of monetary assets or liabilities.

(n) Revenue Recognition

(i) Revenue is recognised as and when the services are provided on the basis of actual usage of the Company’s network.

Revenue on upfront charges for services with lifetime validity and fixed validity periods of one year or more are

recognised over the estimated useful life of subscribers and specified fixed validity period, as appropriate. The estimated

useful life is consistent with estimated churn of the subscribers.

(ii) The Company sells Right of Use (ROUs) that provide customers with network capacity, typically over a 10- to 15-

year period without transferring the legal title or giving an option to purchase the network capacity. Capacity services

revenues are accounted as operating lease and recognised in the Company’s income statement over the life of the

contract. Bills raised on customers/ payments received from customers for long term contracts and for which revenue

is not recognised are included in deferred revenue. Revenue on non cancellable ROUs are recognised upfront as

licencing income on activation of services.

(iii) Standby maintenance charges are invoiced separately from capacity sales. Revenues relating to standby maintenance

are recognised over the period in which the service is provided. Any amounts billed prior to providing of service are

included in deferred revenue.


F-57


(iv) Network services include Capacity lease services, IP transit, IPLC (private lines leased to customers), backup service

for other network operators and all other services. The customer typically pays the charges for network services

periodically over the life of the contract, which may be up to three years. Network revenue is recognised in the

Company’s income statement over the term of the contract.

(v) Sale of Handsets and accessories are recognised when goods are supplied and are recorded net of trade discounts,

rebates, commissions to distributors and dealers and sales taxes. It does not include inter company transfers.

(vi) Interest income on investment is recognised on time proportion basis. Dividend is considered when right to receive is

established. The Group recognises income from the units in the Fixed Income Schemes of Mutual Funds where income

accrued is held, till the declaration or payment thereof, for the benefit of the unit holders.

(vii) Revenue is recognised net of taxes when the Base Transceiver Station (BTS) Tower is Ready For Installation of customer

equipments and as per the terms of the agreements.

(viii) Activation fees in resepct of DTH is recognised on upfront basis at the time of activation of services in customers’

premises. Subscription revenue and carriage fees towards initial customers are recognised upfront as and when it is

realised and the monthly subscription is recognised on accrual basis, net of service tax, entertainment tax and trade

discount.

(o) Provision for Doubtful Debts and Loans and Advances

Provision is made in the accounts for doubtful debts and Loans and Advances in cases where the management considers

the debts, loans and advances, to be doubtful of recovery.

(p) Miscellaneous Expenditure


(q) Taxes on Income and Deferred Tax

Provision for income tax is made on the basis of taxable income for the year at current rates. Tax expense comprises of

Current Tax and Deferred Tax at the applicable enacted or substantively enacted rates. Current tax represents the amount

of Income Tax payable/ recoverable in respect of the taxable income/ loss for the reporting period. Deferred tax represents

the effect of timing difference between taxable income and accounting income for the reporting period that originate in

one period and are capable of reversal in one or more subsequent periods. The deferred tax asset is recognised and carried

forward only to the extent that there is a reasonable certainty that the asset will be realised in future. However, where

there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there

is virtual certainty of realisation of assets. MAT credit is recognised as an asset only if there is convincing evidence that the

Company will pay normal income tax during the specified period.

(r) Government Grants

Subsidies granted by the Government for providing telecom services in rural areas are recognised as Other Operating Income

in accordance with the relevant terms and conditions of the scheme and agreement.

(s) Provisions and Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as

a result of past events and it is probable that there will be an outflow of resources. A disclosure for a contingent liability

is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow

of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow

of resources is remote, no provision or disclosure is made. Contingent Assets are neither recognised nor disclosed in the

financial statements.

(t) Earning per Share

In determining Earning per Share, the Group considers the net profit after tax and includes the post tax effect of any extra-

ordinary/ exceptional item. The number of shares used in computing Basic Earnings per Share is the weighted average

number of shares outstanding during the period. The number of shares used in computing Diluted Earnings per Share

comprises the weighted average shares considered for deriving Basic Earnings per Share, and also the weighted average

number of shares that could have been issued on the conversion of all dilutive potential Equity Shares where the results

would be anti - dilutive. Dilutive potential Equity Shares are deemed converted as of the beginning of the period, unless

issued at a later date.

(u) Employee Stock Option Scheme

In respect of stock options granted pursuant to the Company’s Employee Stock Options Scheme, the intrinsic value of the

options (excess of market price of the share over the exercise price of the option) is treated as discount and accounted as

employee compensation cost over the vesting period. Employee compensation cost recognised earlier on grant of options

is reversed in the period when the options are surrendered by any employee.


F-58



( ` in Crore)

As at

March 31, 2013

As at

March 31, 2012

Note : 2.01

Share Capital

Authorised

5,00,00,00,000 Equity Shares of ` 5 each 2,500 1,500

(3,00,00,00,000)

2,500 1,500


2,06,40,26,881 Equity Shares of ` 5 each fully paid up 1,032 1,032

(2,06,40,26,881)

1,032 1,032

(1) Shares held by Holding/ Ultimate Holding Company and/ or their subsidiaries/ associates



(b) AAA Communication Private Limited, Subsidiary of Holding Company 72,31,10,172 72,31,10,172


(d) ADA Enterprises and Ventures Private Limited, Subsidiary of Holding Company 30,00,00,000 30,00,00,000

(2) Details of Shareholders holding more then 5% shares in the Company






(3) The Company has only one class of equity shares having a par value of ` 5 per share. Each holder of equity share is entitiled to

one vote per share. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining

assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholder.

During the year ended March 31, 2013, the amount of per share dividend recognised as distributable to equity shareholders is

` 0.25 (March 31, 2012: ̀ 0.25 ). The dividend proposed by the Board of Directors is subject to the approval of the shareholders

in the ensuing Annual General Meeting.

(4) Reconcilation of shares outstanding at the beginning and at the end of the reporting period,

March 31, 2013 March 31, 2012


Equity Shares

At the beginning of the year 2,06,40,26,881 1,032 2,06,40,26,881 1,032

Add/ Less : Changes during the year - - - -

At the end of the year 2,06,40,26,881 1,032 2,06,40,26,881 1,032

F-59


( ` in Crore)

As at

March 31, 2013

As at

March 31, 2012

Note : 2.02

Reserves and Surplus


As per last Balance Sheet ( ` 6,13,000, Previous year ` 6,13,000) - -

Capital Reserve

As per last Balance Sheet ( ` 5,00,000, Previous year ` 5,00,000) - -



Add: Transferred from Surplus in Statement of Profit and Loss 268 441 91 173

Exchange Fluctuation Reserve 377 543



Less : Withholding tax paid on Redemption of FCCBs - 177

: Premium on Redemption of FCCBs (Refer Note 2.30 (ix)) - 8,047 357 8,047

General Reserve


Add : Amount credited on reversal of withdrawal in previous year on

account of foreign exchange variance attributable to interest (Refer

Note 2.29)

992 -

Less : As per the Scheme of Arrangement (Refer Note 2.31) 470 -

Transferred to Statement of Profit and Loss (Refer Note 2.39) 325 -

Transferred to Statement of Profit and Loss (Refer Note 2.39) - 1,107

Transferred to Statement of Profit and Loss

(Refer Note 2.04 and 2.39)

354 651

Transferred to Statement of Profit and Loss (Refer Note 2.39) 1,116 1,573

Transferred to Statement of Profit and Loss (Refer Note 2.30(vi)) 123 113

Transferred to Statement of Profit and Loss (Refer Note 2.39) 62 70




Foreign Currency Monetary Items Translation Difference Account (686) (425)

Surplus in the Statement of Profit and Loss


Add: Profit during the year 672 928

Less : Transferred to Debenture Redemption Reserve 268 91

: Proposed Dividend on Equity Shares 52 52

: Tax on Proposed Dividend 9 12,564 8 12,221

32,818 35,264


F-60


( ` in Crore)

As at

March 31, 2013

As at

March 31, 2012

Note : 2.03


Debentures

Secured

3,000 (3,000), 11.20 % Redeemable, Non Convertible Debentures

of ` 1 crore each

3,000 3,000

5,000 (5,000), 11.60 % Redeemable, Non Convertible Debentures

of ` 10 lac each

500 500

1,500 (1,500) , 11.25 % Redeemable, Non Convertible Debentures

of ` 1 crore each

1,500 1,500

Term Loans from Banks

Secured

Foreign Currency Loans from Banks 23,658 24,626

Rupee Term Loans 20 23,678 20 24,646

28,678 29,646


During the earlier year, the Company, on March 2, 2009, allotted , 3,000, 11.20% Secured Redeemable, Non Convertible

Debentures (“NCDs”) of the face value of ` 1,00,00,000 each, aggregating to ` 3,000 crore to be redeemed at the end

of 10th year from the date of allotment thereof. On February 7, 2012, the Company also allotted, 1,500, 11.25% and

5,000, 11.60% Secured Redeemable, Non Convertible Debentures (“NCDs”) of the face value of ` 1,00,00,000 each and

` 10,00,000 each respectively, aggregating to ` 2,000 crore. Redemption of NCDs of ` 1,500 crore shall be in four annual

equal installments starting at the end of fourth year from the date of allotment thereof and NCDs of ` 500 crore shall be

at the end of 5th year from the date of allotment thereof.

Secured Redeemable, Non Convertible Debentures along with foreign currency loans and rupee term loans (“the said secured

loans”) have been secured by first pari passu charge on the whole of the movable plant and machinery, of the Company

including (without limitations) tower assets and optic fiber cables, if any (whether attached or otherwise), Capital Work in

Progress (pertaining to movable fixed assets) both present and future including all the rights, title, interest, benefits, claims

and demands in respect of all insurance contracts relating thereto of the RCOM Group (“the Borrower Group”); comprising

of the Company and its subsidiary companies namely; Reliance Telecom Limited (RTL), Reliance Infratel Limited (RITL)

and Reliance Communications Infrastructure Limited (RCIL) in favour of the Security Trustee for the benefit of the NCD

Holders and the Lenders of the said Secured Loans. The said loans also include ` 9,195 crore (Previous year ` 9,342 crore)

guaranteed. The Company, for the benefit of the Lenders of foreign currency loans, rupee term loans and 11.60%, 5,000

Secured Redeemable, Non Convertible Debentures aggregating to ` 500 crore has, apart from the above, also assigned 20

Telecom Licenses for services under Unified Access Services (UAS), National Long Distance (NLD) and International Long

Distance (ILD) by execution of Tripartite Agreements with Department of Telecommunications (DoT) and IDBI Bank, being

the agent acting on their behalf. Similarly, RTL, a subsidiary of the Company has, apart from the above, also for the benefit

of its Lenders of foreign currency loans and rupee term loan assigned 8 Telecom Licenses for services under UAS.

Assignment of Telecom Licenses of the Company for 1,500, 11.25% Secured Redeemable, Non Convertible Debentures

aggregating to ` 1,500 crore is pending to be executed. The Company, for the benefit of the Lenders of foreign currency

loans, rupee term loans, 11.20%, 3000, Secured Redeemable NCDs of the face value of ` 1,00,00,000 each aggregating

to ` 3,000 crore and 11.60%, 5,000 Secured Redeemable NCDs aggregating to ` 500 crore has, apart from the above,

also pledged equity shares held by the Company and Reliance Infocomm Infrastructure Private Limited in RCIL and RTL by

execution of the Share Pledge Agreement with the Share Pledge Security Trustee.

Reliance Globalcom B.V. (RGBV), the Netherlands, a Subsidiary of the Company, during the year, availed facility of USD

200 million in addition to USD 500 million against pledge of shares of material subsidiaries of Reliance Globalcom Limited,

Bermuda, a subsidiary of RGBV.


F-61



(a) Debentures

(` in Crore)


2015-16 2016-17 2017-18 2018-19

11.20% - - - 3,000

11.60% - 500 - -

11.25% 375 375 375 375

(b) Foreign Currency Loans

(` in Crore)


2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22

0.89% 59 59 59 59 63 67 22 6

1.24% 562 375 - - - - - -

1.27% 329 164 - - - - - -

2.33% 550 977 977 570 285 - - -

2.28% - 34 17 - - - - -

2.48% 8 11 11 35 38 30 22 -

2.51% 48 68 68 213 233 184 135 -

2.80% 461 461 461 - - - - -

3.46% - 1,358 - - - - - -

3.24% - 271 - - - - - -

3.25% - 271 - - - - - -

3.53% 433 578 650 1,300 1,300 1,300 1,372 -

4.95% 1,267 1,267 - - - - - -

5.20% 502 301 904 1,256 1,607 - - -

(c) Rupee Term Loans

( ` in Crore)


2015-16

12.50% 20


F-62


( ` in Crore)

As at

March 31, 2013

As at

March 31, 2012

Note : 2.04


The Deferred Tax Liabilities relating to subsidiary of the

Company comprise of the following.



Related to timing difference on depreciation/ amortisation 372 2,211 274 1,663


Related to carried forward losses 839 645

Net Deferred Tax Liabilities 1,372 1,018

The Deferred Tax Assets of the Company and its subsidiaries

comprise of the following.


Related to carried forward losses 2,175 1,230

Related to timing difference on depreciation/ amortisation 675 678

Disallowances, if any, under the Income Tax Act, 1961 778 760



Related to timing difference on depreciation/ amortisation 748 433

Interest capitalised 75 72

Impairment/ Loss on sale of capital assets 883 1,706 841 1,346


* In absence of virtual certainity of realisability of deferred tax assets, the Company on a conservative basis has restricted deferred

tax asset to ` Nil.

Deferred Tax Liability of ` 354 crore (Previous year ` 651 crore) has been provided by Reliance Infratel Limited (RITL) and adjusted

by withdrawing an equivalent amount from General Reserve pursuant to the Scheme of Amalgamation between RITL and erstwhile

Reliance Global IDC Limited (RGIDCL), a Wholly Owned Subsidiary of RITL into RITL sanctioned by the Hon’ble High Court of Bombay

vide order dated May 6, 2011, leaving no impact on profit for the year.

( ` in Crore)

As at

March 31, 2013

As at

March 31, 2012

Note : 2.05


Advance from Customers - 98


Security Deposits 50 -


Capital Creditors 143 -

1,233 1,217

Note : 2.06


Provision for Income Tax 20 -

Provision for Employee Benefit 53 63

Others

Asset Retirement Obligations 812 761

885 824


F-63


( ` in Crore)

As at

March 31, 2013

As at

March 31, 2012

Note : 2.07


From Banks

Cash Credit (Secured) 1,251 300

Foreign Currency Loans 1,407 1,385

Rupee Loans (Secured) 5,205 2,900

Rupee Loans 500 -

Commercial Papers 100 945

Non Convertible Debentures (Secured) 87 -

From Others (Secured) 250 -

From Others - 8,800 9 5,539

8,800 5,539

2.07.01 Cash Credit and Rupee Loans from Banks

Cash Credit from Banks and Rupee Loan from Others as above are secured by first pari passu charge over current assets comprising

of stock and receivables of the Company (“Current Assets”). Apart from this, Cash Credit from Banks is secured by second pari passu

charge on whole of the movable plant and machinery, including (without limitation) the tower assets and optic fibre cables, if any

(whether attached or otherwise), capital work in progress (pertaining to movable fixed assets) both present and future including all the

rights, title, interest, benefits relating thereto of the Borrower Group (“Fixed Assets of the Borrower Group”). Cash Credit from Banks of

` 1,251 crore and Loan from Others of ` 250 crore are pending creation of first pari passu charge over Current Assets.

The Company and its subsidiary have been sanctioned Rupee Loans of ` 6,550 crore (Term Loan Facility) under consortium banking

arrangement on the terms and conditions as set out in sanction letters. Certain Lenders have, pursuant to the sanction letters for

Term Loan Facility, agreed to grant ` 4,455 crore as interim disbursement/ short term loan (Interim Facility) of the Term Loan Facility,

pending the finalization and execution, of definitive documents within twelve months from the drawdown of the said Interim Facility,

for availing the Term Loan Facility. The said Interim Facility, shall be repaid within its tenure with availment of the Term Loan Facility

upon execution of definitive documents and accordingly, has been classified as part of Short Term Borrowings.Interim Facility includes

loans of ` 1,425 crore secured by second pari passu charge on Fixed Assets of the Borrower Group. The Term Loan Facility and Non

Convertible Debentures aggregating to ` 87 crore are, inter alia, secured by first pari passu charge on Fixed Assets of the Borrower

Group, including claims and demands in respect of all insurance contracts relating thereto. Apart from the above, the Term Loan

Facility has also been secured by assignment of telecom licenses of the Company and its subsidiary and pledge of equity shares held

by the Company and Reliance Infocomm Infrastructure Private Limited in RCIL and RTL. The Company is in process of creating such

security. Rupee Loans also include ` 250 crore secured by first pari passu charge over Current Assets, and ` 500 crore secured by

second pari passu charge on Fixed Assets of the Borrower Group.

( ` in Crore)

As at

March 31, 2013

As at

March 31, 2012

Note : 2.08

Trade Payables

Due to Micro, Small and Medium Enterprises 157 156

Others 2,207 2,364 2,162 2,318

2,364 2,318


Under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) which came into force from October 2, 2006,

certain disclosures are required to be made relating to MSME. On the basis of the information and records available with the

Company, the following disclosures are made for the amounts due to the Micro and Small Enterprises.


F-64


( ` in Crore)

As at

March 31, 2013

As at

March 31, 2012


(ii) Interest due on the principal amount unpaid at the year end

to any supplier

56 38

(iii) Amount of Interest paid by the Company in terms of Section

16 of the MSMED, alongwith the amount of the payment

made to the supplier beyond the appointed day during the

accounting year

- -

(iv) Payment made to the enterprises beyond appointed date

under Section 16 of MSMED

208 252

(v) Amount of Interest due and payable for the period of delay

in making payment, which has been paid but beyond the

appointed day during the year but without adding the interest

specified under MSMED

21 7

(vi) Amount of interest accrued and remaining unpaid at the end

of each accounting year

77 46

(vii) Amount of further interest remaining due and payable even in

the succeeding years, until such date when the interest dues as

above are actually paid to the small enterprises for the purpose

of disallowance as a deductible expenditure under Section 23

of MSMED

45 15

Note : 2.09



Foreign Currency Loan (Secured) (Refer Note 2.03.1) 4,069 3,118

Others



Employees Stock Option 3 5

Capital Creditors 1,146 1,829

Liability for Leased Assets - 2


Advance from Customers and Income Received in Advance 962 6,332 1,225 8,763

10,401 11,881

Note : 2.10


(a) Provision for Employee Benefits


(b) Others

Disputed and Other Claims (Refer Note 2.34) 1,215 1,362

Business Restructuring (Refer Note 2.34) 488 1,137

Income Tax (net of advance tax) 79 52



Proposed Dividend on Equity Shares 52 52

Tax on Proposed Dividend 9 1,845 8 2,613

1,874 2,666


F-65


Note

s on A

ccounts

to t

he C

onso

lidate

d B

ala

nce

Sheet

and C

onso

lidate

d S

tate

ment

of

Pro

fit

and L

oss

Note

2.1

1

Fix

ed A

ssets

(`

in C

rore

)

Desc

ription

Gro

ss B

lock

Depre

cia

tion/ A

mort

isati

on

Net

Blo

ck

As

at A

pril

1,

2012

Add

ition

s/

Adj

ustm

ents

(Ded

uctio

ns)/

Adju

stm

ent

Incu

ding

on

Acco

unt

of C

TR

As

at M

arch

31, 2

013

As

at A

pril

1,

2012

Tran

sfer

fro

m

Res

erve

s

Dep

reci

atio

n

for th

e ye

ar

(Ded

uctio

ns)/

Adj

ustm

ent

As

at M

arch

31, 2

013

As

at M

arch

31, 2

013

As

at M

arch

31, 2

012

Tangib

le A

ssets

Lease

hold

Land

25

--

25

2-

--

223

23

Lease

hold

Im

pro

vem

ent

171

-4

175

135

-11

4150

25

36

Freeehold

Land

485

1-

486

6-

--

6480

479

Build

ings

2,3

96

62

2,4

04

671

58

63

1793

1,6

11

1,7

25

Pla

nt

and M

achin

ery

65,3

58

4,2

46

590

70,1

94

24,1

95

1,4

28

2,0

85

371

28,0

79

42,1

15

41,1

63

Offi

ce E

quip

ment

133

5(1

7)

121

78

-8

187

34

55

Furn

iture

and F

ixtu

res

190

2(4

)188

130

-15

(3)

142

46

60

Vehic

les

74

--

74

64

-1

469

510

Sub T

ota

l68,8

32

4,2

60

575

73,6

67

25,2

81

1,4

86

2,1

83

378

29,3

28

44,3

39

43,5

51

Pre

vio

us

Year

60,9

61

7,5

72

299

68,8

32

21,6

74

1,4

73

1,6

37

497

25,2

81

43,5

51

39,2

87

Inta

ngib

le A

ssets

Entr

y fee for Te

lecom

Lic

ence

28,0

47

--

28,0

47

5,6

61

-1,7

13

(1)

7,3

73

20,6

74

22,3

86

Indefe

asible

Rig

ht

of

Connectivity

1,6

68

94

47

1,8

09

1,5

87

-102

99

1,7

88

21

81

Soft

ware

438

31

10

479

273

-56

3332

147

165

Bra

nd L

icence

354

--

354

160

-32

-192

162

194

Lic

ence a

nd K

now

how

223

-14

237

148

-34

10

192

45

75

Sub T

ota

l30,7

30

125

71

30,9

26

7,8

29

-1,9

37

111

9,8

77

21,0

49

22,9

01

Pre

vio

us

Year

21,1

30

9,3

52

248

30,7

30

5,6

66

-1,9

71

192

7,8

29

22,9

01

15,4

64

Gra

nd T

ota

l99,5

62

4,3

85

646

1,0

4,5

93

33,1

10

1,4

86

4,1

20

489

39,2

05

65,3

88

66,4

52

Pre

vio

us

Year

82,0

91

16,9

24

547

99,5

62

27,3

40

1,4

73

3,6

08

689

33,1

10

66,4

52

54,7

51

Capit

al W

ork

in P

rogre

ss3,8

64

5,0

26

2.1

1.1

(a

) Fr

eehold

Land inclu

des

` 55,8

08 (

Pre

vio

us

year `

55,8

08)

acquired fro

m K

arn

ata

ka Indust

rial Are

a D

evelo

pm

ent

Board

(a G

overn

ment

of

Karn

ata

ka U

ndert

aki

ng). T

ransf

er of

ow

ners

hip

is

under pro

cess

.

(b

) Fr

eehold

Land inclu

des

` 1 c

rore

(Pre

vio

us

year `

1 c

rore

) to

ward

s la

nd a

cquired, th

e t

ransf

er of

ow

ners

hip

is

under pro

cess

.

2.1

1.2

Build

ings

inclu

de:

(a

) `

250 (

Pre

vio

us

year `

250)

tow

ard

s cost

of

Share

s in

Co-opera

tive S

ocie

ty (

held

by R

elia

nce T

ele

com

Lim

ited).

(b

) `

2,0

0,0

00 (

Pre

vio

us

year `

2,0

0,0

00)

tow

ard

s cost

of

Share

s acquired in a

com

pany (

held

by R

elia

nce C

om

munic

ations

Infrast

ructu

re L

imited).

2.1

1.3

Pla

nt

and M

achin

ery

inclu

des

Ele

ctr

ical equip

ments

of

` 3 c

rore

(Pre

vio

us

year `

3 c

rore

), w

hic

h a

re u

nder cust

ody a

nd c

ontr

ol of

Mahara

shtra S

tate

Ele

ctr

icity D

istr

ibution C

om

pany L

imited.

2.1

1.4

Pla

nt

and M

achin

ery

inclu

des

Ass

et

Retire

ment

Oblig

ations

(ARO

) G

ross

Blo

ck

` 812 c

rore

(Pre

vio

us

year `

761 c

rore

), A

ccum

ula

ted D

epre

cia

tion `

248 c

rore

(Pre

vio

us

year `

195 c

rore

) and

Net

Blo

ck

` 564 c

rore

(Pre

vio

us

year `

566 c

rore

).

2.1

1.5

(a

) G

ross

Blo

ck

inclu

des

` 3,5

85 c

rore

bein

g t

he a

mount

added o

n reva

luation a

s on January

1, 2006.

(b

) G

ross

Blo

ck

for th

e p

revio

us

years

inclu

des

` 1,9

63 c

rore

, bein

g a

n a

mount

added o

n fair v

alu

ation a

s on A

pril 10, 2007.

2.1

1.6

D

uring t

he y

ear, a

dditio

n t

o P

lant

and M

achin

ery

and T

ele

com

Lic

ense

inclu

des

` 1,7

89 c

rore

and `

Nil

cro

re resp

ectively

(Pre

vio

us

year `

1,5

86 c

rore

and `

163 c

rore

) o

n a

ccount

of

fore

ign

exchange v

ariations.

2.1

1.7

Capital W

ork

-in

-Pro

gre

ss inclu

des:

(a

) `

296 c

rore

(Pre

vio

us

year `

361 c

rore

) on a

ccount

of

pro

ject

develo

pm

ent

expenditure

.

(b

) `

43 c

rore

(Pre

vio

us

year `

57 c

rore

) on a

ccount

of

mate

rials

at

site

.

(c

) N

et

of

Capital W

ork

in P

rogre

ss w

ritt

en o

ff o

f `

325 c

rore

(Pre

vio

us

year `

370 c

rore

)

2.1

1.8

Tr

ansf

er of

title o

f cert

ain

land a

nd b

uild

ings

receiv

ed f

rom

Relia

nce Indust

ries

Lim

ited p

urs

uant

to t

he S

chem

es

of

Arrangem

ent

is u

nder pro

cess

.

2.1

1.9

D

eductions/

Adju

stm

ents

inclu

de e

xchange fl

uctu

ation o

n a

ccount

of

currency t

ransl

ation o

f fo

reig

n s

ubsidia

ries.

2.1

1.1

0 Refe

r N

ote

2.0

3.1

and 2

.07.0

1 for se

curity

in favour of

the L

enders

.

F-66


( ` in Crore)

As at

March 31, 2013

As at

March 31, 2012

Note: 2.12




Quoted, fully paid up

39 342

(39 342)

Groupon INC-Class A Common Stock of USD 0.0001

each

13 12

5 95 074

(5 95 074)

Sequans Communications SA of Euro 0.02 each 20 18

33 30

Other Investments


6 50 25 000 Warf Telecom International Private Limited of MRf 1

each

22 22

(6 50 25 000) Less : Share of Loss of Associates (11) (12)

11 10

Nil

(4 000)

Ordinary Share in eWave China of No Par Value - 23

13 000

(13 000)

Mumbai Metro Transport Private Limited of ` 10 each

` 1,22,807 (Previous year ` 1,28,788)

- -

Nil

(5 000)

International Convention Centre Construction Private

Limited of ` 10 each ( Previous year ` 50,000)

- -

1 600

(1 600)

Macronet Private Limited of ` 10 each

` 16,000 (Previous year ` 16,000)

- -

1 600

(1 600)

Macronet Mercantile Private Limited of ` 10 each

` 16,000 (Previous year ` 16,000)

- -

1 00 000

(Nil)

Reliance Composite Insurance Broking Limited of ` 10

each ` 10,00,000 (Previous year ` Nil)

- -

100

(100)

Nodia Global SEZ Private Limited of ` 10 each

` 1,000 (Previous year ` 1,000)- 11 - 33



(Nil)

(10 00 000)

9% Redeemable Preference Shares of Reliance BPO

Private Limited of ` 10 each

- 5

20 45 455

(20 45 455)

Series D Preferred Stock of Stoke Inc. of USD 2.2

each

25 25

5 85 993

(5 85 993)

Series A Preferred Stock of Scalable Display

Technologies Inc. of USD 1.62 each

5 5

14 63 415

(14 63 415)

Series C Preferred Stock of Stoke Inc. of USD 2.05

each

16 15

84 74 576

( 84 74 576)

Series B Preferred Stock of E Band Communications

Corporation of USD 0.354 each

16 62 15 65


F-67


( ` in Crore)

As at

March 31, 2013

As at

March 31, 2012

In Partnership Firm


Tip Top Typography 5 5

Less: Share of Loss in the Partnership Firm - 5 - 5

` 19,47,920 (Previous year ` 1,22,674)

In Government Bonds


6 Year National Savings Certificates (Lodged with

Sales Tax Department) ` 2,49,500 (Previous year

` 2,49,500)

- -

5 1/2 years Kisan Vikas Patra

(Lodged with Chennai Metropolitan Development

Authority) ` 5,000 (Previous year ` 5,000)

- - - -

111 133


Unquoted 78 103

Quoted 33 30

111 133

Partners Capital Account Details

A Tip Top Typography

Name of the Partners and share in profits Capital (in `) Share (%) Capital (in `) Share (%)

Reliance Land Private Limited 11,79,066 34% 31,67,810 34%

AAA Entertainement Private Limited (formerly Swan Sorority

Finance Private Limited)

(28,74,246) 33% (9,26,326) 33%

Reliance Webstore Limited 4,98,40,630 33% 5,17,88,550 33%

Total Capital of the Firm 4,81,45,450 100% 5,40,30,034 100%

Note : 2.13



Capital Advances 1,577 898




Unamortised Arranger’s Fees 257 245

Other Loans and Advances 387 389


Bank Deposits with Maturity for more than 12 months - -

` 47,87,148 (Previous year ` 31,41,206) 3,210 2,482


F-68


( ` in Crore)

As at

March 31, 2013

As at

March 31, 2012

Note : 2.14



Deposits 223 230

Others - 388

223 618

Note: 2.15

Current Investments (valued at lower of cost and market value)


Quoted

34 000

( 34 000)

6.83% GOI Bonds - 2039 of ` 100 each fully paid

up ` 29,07,000 (Previous year ` 27,26,726)

- -

Unquoted

113

(Nil)

Reliance Liquidity Fund - Growth of ` 10 each

` 1,72,652 (Previous year ` Nil)

- -

6 88 192

( 12 12 461)

BlackRock US Dollar Liquidity First Fund - Institutional

Share Class of USD 1 each

4 6

15 721

( 15 721)

BlackRock US Dollar Liquid Investment Fund of USD

1 each

547

513

551 519


Unquoted 551 519

Quoted ` 30,52,000 (Previous year ` 30,52,000) - -

551 519

Note : 2.16

Inventories

Stores and Spares 371 427

Stock in Trade (Communication Devices and Accessories) 126 139

497 566


F-69


( ` in Crore)

As at

March 31, 2013

As at

March 31, 2012

Note : 2.17


Due for more than six months from the date they are due for payment


Considered Doubtful 1,253 1,038

2,827 2,880

Less: Provision for doubtful receivables 1,253 1,038

1,574 1,842

Others



2,391 1,903


2,337 1,742

3,911 3,584

Note : 2.18


Cash on hand ( ` 2,87,295, Previous year ` 2,05,851) - -


Balance with Banks 637 327


Balances held as Margin Money - 120


Bank deposits with less than 3 months’ maturity 3 -

731 550

Note : 2.19






4,416 5,092

Less: Provision for doubtful advances 123 4,293 133 4,959

Balance with Customs, Central Excise Authorities etc. 288 29

4,581 4,988

Note : 2.20


Deposits * 1,709 1,733

Interest accrued on Investments (Previous year ` 16,05,894) 1 -


Others 35 325

1,990 2,338

* Deposits include ` 1,574 crore (Previous year ` 1,527 crore) paid against disputed claims.


F-70


( ` in Crore)

For the year ended

March 31, 2013

For the year ended

March 31, 2012

Note : 2.21


Sale of services 22,319 21,172

Less: Service Tax 3,025 2,456

19,294 18,716

Other Operating Income* 1,267 961

(*includes realisation from telecom terminals and accessories etc.)

20,561 19,677

Note : 2.22

Other Income


Profit on Disposal of Fixed Assets - 7


Dividend Income ( ` 11,000, Previous year ` Nil) - -

Miscellaneous Income (Refer Note 2.34 (ii)) 1,017 635

1,217 705

Note : 2.23







Power, Fuel and Utilities 1,697 1,662



10,368 9,652

Note : 2.24


Salaries (including Managerial Remuneration) 1,057 1,148

Contribution to Provident, Superannuation and Gratuity Fund 53 53


Write back of compensation under Employee Stock Option Scheme (2) (5)

1,189 1,283


F-71


( ` in Crore)

For the year ended

March 31, 2013

For the year ended

March 31, 2012

Note : 2.25

Finance Costs

Interest and Other charges on Term Loans 1,132 859

Interest on other loans 1,133 2,265 618 1,477


2,499 1,630

Note : 2.26


Selling Expenses

Commission 592 596







Insurance 17 18



- Machinery 81 17

- Buildings - 13

- Others 37 34

Travelling 56 58


Foreign Exchange (Gain)/ Loss (Net) (1) 10

Loss on Sale/Discarding of Assets (Previous year ` 3,10,533) 30 -



Wealth Tax (` 5,50,000) - 1,091 1 898


3,062 2,957

Note : 2.27

Previous Year

The consolidated financial statements has been prepared as per Revised Schedule VI under the Companies Act, 1956. Figures of the

previous year have been regrouped and reclassified, whereever required. Amount in financial statements are presented in Rupee in

crore, except as otherwise stated.


F-72


Note : 2.28

Consolidation


Sr.

No.


Incorporation

Proportion of

ownership interest










10 Reliance IDC Limited (Formerly Reliance Communications Investment and

Leasing Limited)

India 100.00%







17 Reliance Communications (New Zealand) Pte Limited New Zealand 100.00%

18 Reliance Communications (Australia) Pty Limited Australia 100.00%


20 Gateway Net Trading Pte Limited Singapore 100.00%











31 FLAG Telecom Nederland B.V. The Netherlands 99.95%




35 YTV Inc. USA 100.00%









F-73


Sr.

No.


Incorporation

Proportion of

ownership interest







49 Reliance Vanco Group Ltd United Kingdom 100.00%



52 Vanco (Shanghai) Co Ltd. China 100.00%

53 Vanco (Asia Pacific) Pte. Ltd. Singapore 100.00%


55 Vanco EpE (Under Liquidation) Greece 100.00%


57 Vanco Gmbh Germany 100.00%











68 Vanco UK Ltd United Kingdom 100.00%

69 Vanco International Ltd United Kingdom 100.00%


71 Vanco Global Ltd United Kingdom 100.00%

72 VNO Direct Ltd United Kingdom 100.00%


74 Vanco Solutions Inc USA 100.00%

(b) The Company also consolidates the following companies as it exercises control over ownership and/ or composition of Board of

Directors.

Sr.

No.


Incorporation

Proportion of

ownership interest






Sr.

No.


Incorporation

Proportion of

ownership interest


2 Mumbai Metro Transport Private Limied India 26.00%


F-74


(d) The following subsidiary companies/ associates acquired during the year also form part of Consolidated Financial Statements

Sr.

No.


Incorporation

Proportion of

ownership interest

1 Reliance Data Center Limited (Formerly known as Reliance Telephones Limited)

(w.e.f April 1, 2012)

India 100.00%

2 Reliance BPO Private Limited (w.e.f. April 30, 2012) India 100.00%

3 Reliance Globalcom Limited (w.e.f. July 3, 2012) India 100.00%

4 Kerala Communication Network Private Limited (w.e.f. March 21, 2013) India 100.00%

5 MP Network Private Limited (w.e.f. March 21, 2013) India 100.00%

(e) The following subsidiary companies/ companies controlled/ companies consolidated/ joint venture ceased to remain subsidiaries/

controlled/ joint venture/ consolidated during the year.

Sr.

No.

Name of the Company

1 Alcatel Lucent Managed Solutions India Private Limited has been ceased to be Joint Venture w.e.f. December 30, 2012

2 Reliance Data Center Limited (Formerly known as Reliance Telephones Limited) has been ceased to be subsidiary w.e.f.

March 14, 2013

3 Reliance WiMAX World Limited BVI has been dissolved w.e.f. January 17,2013

4 Reliance WiMAX World B.V. has been ceased to be subsidiary w.e.f. January 17, 2013

5 Reliance WiMAX World Limited has been ceased to be subsidiary w.e.f. January 17, 2013

6 Reliance WiMAX World LLC has been dissolved w.e.f. June 7,2012

7 Reliance WiMAX Congo Brazzaville B.V. has been ceased to be subsidiary w.e.f. January 17, 2013

8 Interconnect Brazzaville S. A. has been ceased to be subsidiary w.e.f. January 17, 2013

9 Reliance WiMAX Guinea B.V. has been ceased to be subsidiary w.e.f. June 8, 2012

10 Acess Guinea SARL has been ceased to be subsidiary w.e.f. June 8, 2012

11 Reliance WiMAX Sierra Leone B. V. has been ceased to be subsidiary w.e.f. June 8, 2012

12 Equatorial Communications Limited has been ceased to be subsidiary w.e.f. June 8, 2012

13 Reliance WiMAX Cameroon B. V. has been ceased to be subsidiary w.e.f. January 17, 2013

14 Equatorial Communications SARL has been ceased to be subsidiary w.e.f. January 17, 2013

15 Reliance WiMax D.R.C. B.V. has been dissolved w.e.f. June 20, 2012

16 Reliance WiMax Gambia B.V. has been dissolved w.e.f. June 8, 2012

17 Reliance WiMax Mauritius B.V. has been dissolved w.e.f. September 14, 2012

18 Reliance WiMax Mozambique B.V.has been dissolved w.e.f. June 8, 2012

19 Reliance WiMax Niger B.V. has been dissolved w.e.f. September 14, 2012

20 Reliance WiMax Zambia B.V. has been dissolved w.e.f. June 8, 2012

21 Access Bissau LDA has been ceased to be subsidiary w.e.f. June 8, 2012

Note 2.29

Foreign Currency Monetary Items; Long Term

In view of the Option allowed pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs

(MCA), Government of India, for the year ended on March 31, 2013, the Company has added ` 1,084 crore (Previous year ` 1,749

crore), including ` Nil (Previous year ` 163 crore) regarded as an adjustment to interest cost on account of restating long term

monetary items expressed in foreign currency at year end prevailing rates, of exchange differences on long term borrowing relating

to acquisition of depreciable capital assets to the cost of capitalised assets. Further, the Company has accumulated foreign currency

variations of ` 615 crore (Previous year ` 470 crore) arising on other long term foreign currency monetary items in FCMITDA, and

` 638 crore (Previous year ` 45 crore) has been amortised during the year, leaving balance to be amortised over the balance period

of loans.

In accordance with the notification issued by the MCA on August 9, 2012, the Company has, during the year, added ` 705 crore to

the cost of capitalised assets and ` 287 crore to the FCMITDA by reversing the exchange difference regarded as an adjustment to

interest cost on account of restating long term monetary items expressed in foreign currency at year end prevailing rates in accordance

with para 4(e) of Accounting Standard 16 “Borrowing Costs”. The said interest was adjusted by withdrawal of an equivalent amount

from General Reserve during the previous year ended March 31, 2012 and hence, it has been credited to General Reserve.


F-75



Note 2.30


The Company, during the past years, undertook various Schemes including restructuring of ownership structure of telecom business so

as to align the interest of the shareholders. Accordingly, pursuant to the Schemes of Amalgamation and Arrangement (“the Schemes”)

under Sections 391 to 394 of the Companies Act, 1956 approved by Hon’ble High Court of respective judicature, the Company,

during the respective years, recorded all necessary accounting effects, along with requisite disclosure in the notes to the accounts, in

accordance with the provisions of the said Schemes. Reserves, pursuant to the said Schemes, include;

(i) ` 8,047 crore being Securities Premium Account, which was part of the Securities Premium of erstwhile Reliance Infocomm

Limited (RIC), the transferor company.

(ii) ` 12,345 crore, being part of General Reserve, on fair valuation of assets and liabilities of the Company in accordance with the

Scheme of Amalgamation, amalgamating Reliance Gateway Net Limited (RGNL) into the Company.

(iii) Additional depreciation arising on fair value of the assets has been adjusted from General Reserve and from Provision for Business

Restructuring.

(iv) ` 1,287 crore, being the balance was transferred to Reserve for Business Restructuring in accordance with the Scheme of

Arrangement for demerger of passive infrastructure assets to RITL.

(v) ` 7 crore being Goodwill arising on consolidation pursuant to the Scheme of Amalgamation between subsidiaries was debited

during the earlier year to General Reserve.

(vi) Additional depreciation of subsidiaries consequent upon revaluation of assets carried out has been adjusted to General Reserve.

(vii) Pursuant to the said Scheme of Amalgamation (Refer Note (ii) above), on account of the fair valuation during the year ended

on March 31, 2009, additions/ adjustments to the fixed assets included increase in Freehold Land by ` 225 crore, Buildings by

` 130 crore and Telecom Licenses by ` 14,145 crore.

(viii) Pursuant to the demerger, the Company computed goodwill of ` 2,659 crore arising on consolidation using the step up method

based on date of original investment by Reliance Industries Limited (RIL) prior to demerger instead of considering the date of

demerger as the date of investment in absence of specific guidance in Accounting Standard (AS) 21 “Consolidated Financial

Statements” in a demerged scenario.

(ix) Premium of ` 357 crore paid on redemption of the FCCBs was charged to Securities Premium Account during the previous year.

(x) Also refer note 2.39 “Exceptional Items” below.

Note 2.31

Scheme of Arrangement

(i) Pursuant to the Scheme of Arrangement (“the Scheme”) under Section 391 to 394, read with Sections 78, 100, 103 of the

Companies Act, 1956 sanctioned by the Hon’ble High Court of Judicature at Mumbai vide Order dated December 20, 2012

with an Appointed Date being April 1, 2012, BPO Division of Reliance BPO Private Limited (“RBPO” or ‘the Transferor Company’),

a Wholly Owned Subsidiary of Reliance Communications Infratsructure Limited (“RCIL” or ‘the Transferee Company’), a Wholly

Owned Subsidiary of the Company, has been demerged into RCIL.

Upon the Scheme becoming effective on February 18, 2013, all the assets and liabilities as appearing in the books of account

relating to BPO Division as on the Appointed Date have been recorded in the books of RCIL at their respective book values and

investment in Preference Shares of RBPO is debited to Statement of Profit and Loss and adjusted by withdrawing an equivalent

amount from Securities Premium Account. Excess of liabilities of ` 470 crore over assets has been charged to Securities

Premium Account by RCIL and as required for consolidation to General Reserve.

Note 2.32

Depreciation, Impairment and Amortisation and Change in Method of Depreciation

(i) During the previous year, pursuant to an approval by the Ministry of Corporate Affairs (MCA) under Section 205 (2) (d) of the

Companies Act, 1956, Reliance Infratel Limited (RITL), a Subsidiary of the Company had provided depreciation on Telecom

Towers at 2.72% under Straight Line Method (SLM) over the useful life of asset. As a result, depreciation charge in Consolidated

Accounts for the previous year ended March 31, 2012 was lower by ` 173 crore and profit was higher by the said amount.

(ii) During the previous year, Reliance Telecom Limited, a Wholly Owned Subsidiary of the Company had also aligned policy of

depreciation with the Company and accordingly, provided depreciation based on SLM. As a result, in Consolidated Accounts,

excess depreciation of ` 306 crore accounted during the previous period up to September 30, 2011 had been reversed during

the previous year ended March 31, 2012. As a consequence, depreciation charge was lower and profit was higher by the said

amount for the previous year ended March 31, 2012.

F-76



Note 2.33


(i) Details of Project Development Expenditure (Included under Capital Work-in-Progress) :

(` in Crore)

For the year ended

March 31, 2013

For the year ended

March 31, 2012


Add:

Expenditure incurred during the year 100 267

Interest on Term Loans - 100 297 564

461 1,164

Less:

Capitalized during the year 165 803


Note 2.34

Provisions

(i) Provisions include, provision for disputed claims for verification of customer ` 9 crore (Previous year ` 9 crore) and others of

` 1,206 crore (Previous year ̀ 1,353 crore) and reversal of disputed liabilities of ̀ 147 crore (Previous year ̀ 46 crore), provisions

for Asset Retirement Obligation (ARO) made by the Company’s subsidiary in respect of undersea cables and equipments of

` 812 crore (Previous year ` 761 crore).


(ii) Pursuant to the Schemes of Amalgamation and Arrangement (“the Schemes”) under Sections 391 to 394 of the Companies Act,

1956 approved Hon’ble High Court of Judicature at Mumbai vide orders dated July 21, 2006 and August 10, 2006 (revised) and

by Hon’ble High Court of Gujarat vide order dated July 18, 2006, out of the excess of fair value of assets over liabilities, ` 3,000

crore was credited to and held as Provision for Business Restructuring (PBR) to meet increased depreciation, cost, expenses

and losses including on account of impairment or write down of assets which would be suffered by the Company, pursuant to

the Scheme or otherwise in course of its business or in carrying out such restructuring of the operations of the Company or its

Subsidiaries. The Company has reassessed the requirement for maintaining such PBR and based thereon, reversed ` 550 crore

during the year as no longer required, leaving balance of ` 488 crore being dealt with in accordance with the said Scheme. The

said amount on reversal of PBR has been reflected as part of Other Income.

Note 2.35

Contingent Liabilities and Capital Commitment (as represented by the Management)

(` in Crore)

As at

March 31, 2013

As at

March 31, 2012

(i) Estimated amount of contracts remaining to be executed

on capital accounts and not provided for

638 657



- Custom, Excise and Service Tax 409 12


- Income Tax 618 16

- Other Litigations 1,103 439

(iii) Claims against the Company not acknowledged as debts 306 137


(v) Consequent to the investigations by an investigative agency (CBI) in relation to the entire telecom sector in India, certain

preliminary charges have been framed by a Trial Court in October, 2011 against Reliance Telecom Limited (RTL), a Subsidiary of

the Company, and three of the executives of the Group. The charges so framed are preliminary in nature based on investigations

only, and the persons named are presumed to be innocent, till their alleged guilt is established after a fair trial. As legally advised,

the persons so named deny all charges, and a writ petition for quashing the charges framed have been filed in October, 2011 in

the Hon’ble High Court of Delhi has been objected by the investigative agency before Hon’ble Supreme Court for seeking stay

thereagainst and transferring the matter thereto, which is pending for hearing. These preliminary charges have no impact on the

business, operations, and/ or licenses of RTL and of the Company and, even more so, are not connected in any manner to any

other listed group companies.

F-77



(vi) License Fees

The Hon’ble Supreme Court of India, vide its judgment dated October 11, 2011, has set aside the Order of the Hon’ble Telecom

Disputes Settlement and Appellate Tribunal (TDSAT) dated August 30, 2007 and allowed time to the licensees to raise their

disputes before the Hon’ble TDSAT w.r.t. the demands already raised by Department of Telecommunications (DoT). The Hon’ble

Supreme Court of India, in the meanwhile, also restrained DoT from enforcing its demands already raised. Subsequently, Hon’ble

TDSAT granted all licensees/ operators the liberty to file additional affidavits thereby bringing on record the material facts

including the subsequent events with respect to the petitions already pending before Hon’ble TDSAT which got revived post AGR

judgment of Hon’ble Supreme Court of India dated October 11, 2011. On April 12, 2012, all the petitions (both old and new

of all the operators including the Company’s) were heard and interim order of protection, earlier passed by Hon’ble TDSAT were

also extended to the new AGR petitions. The matter is now pending before Hon’ble TDSAT. Accordingly no additional provision

is required in this regard.

(vii) Spectrum Charges

Department of Telecommunication (DoT) has, during the year, issued demand on the Company for ` 1,758 crore towards levy

of one time Spectrum Charges, being the prospective charges for holding CDMA Spectrum beyond 2.5 MHz for the period from

January 1, 2013 till the expiry of the initial terms of the respective Licenses. DoT has also issued a demand on the Subsidiary

of the Company for one time Spectrum Charges, being retrospective charges of ` 5 crore for holding GSM Spectrum beyond

6.2 MHz for the period from July 1, 2008 to December 31, 2012 and prospective charge of ` 169 crore for GSM spectrum

held beyond 4.4 MHz for the period from January 1, 2013 till the expiry of the initial terms of the respective Licenses. Based

on a petition filed by the Company and its subsidiary, the Hon’ble High Court of Kolkata, vide its orders dated February 14, and

April 19, 2013 has stayed the operation of the impugned demand till further order. The Company is of the opinion that the

said demand, inter alia, is an alteration of financial terms of the licenses issued in the past and has also been legally advised.

Accordingly, no provision in this regard is required.

(viii) Access Deficit Charges (ADC)

The Hon’ble TDSAT and Hon’ble Supreme Court of India vide its judgment dated January 17, 2006 and April 30, 2008

respectively upheld the circular of the Bharat Sanchar Nigam Limited (BSNL) dated January 14, 2005 whereby and where under

the Company’s Fixed Wireless Phone (FWP) service was declared as limited mobile service. The period of claim, which was

raised before the Hon’ble Supreme Court of India was for the period from November 14, 2004 to August 26, 2005. As directed

by the Hon’ble Supreme Court on April 30, 2008, the Company moved before TDSAT for quantification of ADC for aforesaid

period. The Hon’ble TDSAT vide its judgment dated April 17, 2012 confirmed the liability of the Company for the said period

and for subsequent periods. The Company already has an adequate provision of ` 540 crore in the books for the liability which is

determined to be payable. Further course of action including the financial impact, if any, for the balance amount, which is under

dispute and shall be determined on completion of reconciliation with BSNL.

(ix) Special Audit

Pursuant to the Telecom License Agreement, DoT directed audit of various Telecom companies including of the Company.

The Special Auditors appointed by DoT were required to verify records of the Company and some of its subsidiaries for

the years ended March 31, 2007 and March 31, 2008 relating to license fees and revenue share. The Company and its

subsidiary had received show cause notices dated January 31, 2012 and subsequently received demand notice dated

November 8, 2012 based on report of the Special Audit directed by DoT relating to alleged shortfall of license fees of

` 313 crore and interest thereon as applicable. The Company has challenged the said demand notices, inter alia demanding

license fee on non telecom revenue based on Special Audit Report before the Hon’ble TDSAT and also before the Hon’ble High

Court of Kerala. Both the Courts have stayed the operation of such impugned demand during the pendency of the Petitions before

them. The Company is confident that based on advice and, inter alia, on current understanding of the regulation by the industry

and judicial pronouncements directly applicable to the issues raised in the special audit report, there shall not be any liability in

this regard and hence, no provision is required in the accounts of the Company.

Note 2.36

Leases

Operating Lease (` in Crore)

As at

March 31, 2013

As at

March 31, 2012





F-78



Note 2.37



acquired for hedging

As at March 31, 2013 As at March 31, 2012

No. of

Instruments

Value No. of

Instruments

Value

(US $ Crore) (` in Crore) (US $ Crore) (` in Crore)


Interest Rate Swaps FC 19 80 4,359 14 44 2,228


Options FC 2 13 684 3 31 1,570


In respect of Foreign Currency Swap and Interest Rate Swap transactions, which are linked with LIBOR rates and exchange rate during

the binding period of contract, the gains/ losses, if any, are recognised on the settlement day or the reporting day, whichever is earlier,

at the rate prevailing on respective day.

Foreign Currency exposures that are not hedged by derivative instruments or otherwise are US $ 481 crore (Previous year

US $ 547 crore), equivalent to ` 26,119 crore (Previous year ` 27,819 crore), Euro 8,354 (Previous year Euro 76,822 ), equivalent

to ` 5,80,561 (Previous year ` 1 crore) and Pounds 12,410 (Previous year Pounds Nil), equivalent to ` 10,20,442 (Previous year

` Nil)

The unamortised premium of Buyers’ Line of Credit to be recognised is ` 2 crore (Previous year ` 3 crore) for one or more subsequent

accounting periods.

Note 2.38

Earnings per Share (EPS) For the year ended

March 31, 2013

For the year ended

March 31, 2012

Basic and Diluted EPS before and after Exceptional Items

(a) Profit attributable to Equity Shareholders (` in crore) (used as numerator for

calculating Basic EPS)

672 928

(b) Weighted average number of Equity Shares (used as denominator for

calculating Basic EPS)

2,06,40,26,881 2,06,40,26,881

(c) Profit attributable to Equity Shareholders (` in crore) (used as numerator for

calculating Diluted EPS)

672 928

(d) Add: Effect of potential Equity Shares to be issued under FCCBs - 4,00,20,055

(e) Weighted average number of Equity Shares (used as denominator for

calculating Diluted EPS)

2,06,40,26,881 2,10,40,46,936

(f) Basic Earnings per Share of ` 5 each (`) 3.26 4.50

(g) Diluted Earnings per Share of ` 5 each (`) 3.26 4.41

Note 2.39

Exceptional Items

Pursuant to the direction of the Hon’ble High Court of Judicature at Mumbai and option exercised by the Boards of the respective

companies, in accordance with and as per the scheme of arrangements approved by the Hon’ble High Court under different

Schemes of Arrangement binding on the Company and three of its subsidiaries, namely, RCIL, RITL and RTL, expenses and/ or

losses, identified by the Boards of the respective companies as being exceptional or otherwise subject to the accounting treatment

prescribed in the Schemes of Arrangement sanctioned by the Hon’ble High Court and comprising of ` Nil (Previous year ` 1,107

crore) of debts due and subsidy claimed from the Government, ` 325 (Previous year ` Nil) by writing off of capital work in

progress, ` Nil (Previous year ` 951 crore) regarded as an adjustment to interest cost on account of restating long term monetary

items expressed in foreign currency at year end prevailing rates, ` 275 crore (Previous year ` Nil) of depreciation consequent

to addition of exchange differences on long term borrowing relating to capital assets to the cost of capitalised assets, as also

` 203 crore (Previous year ` 577 crore) of net losses on settlement of items recovered and/ or discharged in foreign currency,

` 638 crore (Previous year ` 45 crore) being amortisation of Foreign Currency Monetary Items Translation Difference Account

(FCMITDA), excluding the portion added to the cost of fixed assets or carried forward as FCMITDA in accordance with Para

46 A inserted into Accounting Standard (AS) 11 “The Effects of Changes in Foreign Exchange Rates” in context of unprecedented

volatility in exchange rates during the year, ` 62 crore (Previous year ` 70 crore) fuel cost considered to be incremental and arising

from the non availability of contracted or expected power, ` 354 crore (Previous year ` 651 crore) deferred tax liability have been

met by withdrawal from corresponding General Reserves, leaving no impact on profit for the year ended March 31, 2013. Such

withdrawals have been included/ reflected in the Statement of Profit and Loss. While the Company has been legally advised that such

F-79



inclusion in the Statement of Profit and Loss is in accordance with Revised Schedule VI of the Companies Act, 1956, the Company

has also sought clarification from ICAI that such inclusion in the Statement of Profit and Loss is not contrary to Revised Schedule VI.

Had such write off of expenses, losses and deferred tax (refer note no. 2.04) not been met from General Reserves, the consolidated

financial statements would have reflected a loss after tax of ` 1,185 crore (Previous year ` 2,473 crore) and the consequential effect

of this on consolidated profit after tax would have been of ` 1,857 crore (Previous year ` 3,401 crore).

Note 2.40

General Reserve

The Company has, from the year ended on March 31, 2008 onwards, combined the balances of General Reserve I, II and III and

disclosed as General Reserve in Consolidated Accounts. General Reserve I and II were arising pursuant to the Scheme of demerger of

‘Telecommunication Undertaking’ of RIL into the Company and the Schemes of Amalgamation and Arrangement of Group Companies

respectively in earlier years. General Reserve III includes the reserve arising pursuant to the Scheme of Amalgamation with erstwhile

Reliance Gateway Net Limited.

Note 2.41

1 Related Parties

As per the Accounting Standard (“AS”) 18 of “Related Party Disclosures” as referred to in Accounting Standard Rules, the

disclosure of transactions with the related parties as defined therein are given below.




(ii) AAA Communication Private Limited Subsidiary of Holding Company

(iii) Reliance Capital Limited Fellow subsidiary

(iv) Reliance General Insurance Company Limited Fellow subsidiary

(v) Shri Anil D. Ambani Person having control during the year

(vi) Shri Prakash Shenoy Key Managerial Personnel


(Figures in bracket represent Previous year)

(` in Crore)

Fellow

Subsidiaries

Others Total


(i) Advances

Opening Balance as on April 1, 2012

` 30,89,108 (Previous year ` 29,60,936)

-

(-)

-

-

-

(-)

Add : Advances made during the year

` Nil (Previous year ` 1,28,172)

-

(-)

-

-

-

(-)

Less : Repayment during the year -

(-)

-

-

-

(-)

Closing Balance as on March 31, 2013

` 30,89,108 (Previous year ` 30,89,108)

-

(-)

-

-

-

(-)

(ii) Trade Receivables 2

(2)

-

-

2

(2)

(iii) Income

Service Income

` 3,78,371 (Previous year ` 4,48,788)

-

(-)

-

-

-

(-)


(i) Advances

Balance as on April 1, 2012 -

(1)

-

-

-

(1)

Add: Advances made during the year -

(3)

-

-

-

(3)

Less: Repayment during the year -

(4)

-

-

-

(4)

Balance as on March 31, 2013 -

(-)

-

-

-

(-)

F-80



(` in Crore)

Fellow

Subsidiaries

Others Total

(ii) Trade Receivables 3

(3)

-

-

3

(3)

(iii) Trade Payables -

(1)

-

-

-

(1)

(iv) Income

Service Income

` 46,60,255 (Previous year ` Nil)

-

(-)

-

-

-

(-)

(v) General and Administration Expenses 2

(2)

-

-

2

(2)


Shri Anil D. Ambani - Sitting fees

` 2,20,000 (Previous year ` 2,60,000)

-

-

-

-

-

(-)



Shri Prakash Shenoy ` 22,42,618 (Previous year ` 21,56,178)

Shri Hasit Shukla ` Nil (Previous year ` 6,58,398)

-

-

-

(-)

-

(-)

Note 2.42


The Company operates two Employee Stock Option Plans; ESOS Plan 2008 and ESOS Plan 2009, which cover eligible employees

of the Company and its Subsidiaries. ESOS Plans are administered through an ESOS Trust. The Vesting of the options is on the expiry

of one year from the date of Grant as per Plan under the respective ESOS(s). In respect of Options granted, the accounting value of

Options (based on market price of the share on the date of the grant of the option) is accounted as deferred employee compensation,

which is amortised on a straight line basis over the Vesting Period. Each Option entitles the holder thereof to apply for and be

allotted/ transferred one Equity Share of the Company of ` 5 each upon payment of the Exercise Price during the Exercise Period.

The maximum Exercise Period is 10 years from the date of Grant of Options.

The Company has established a Trust for the implementation and management of ESOS for the benefit of its present and future

employees. Advance of ` 387 crore (Previous year ` 389 crore) has been granted to the Trust and the said amount has been utilised

by the Trust for purchasing 2.13 crore (Previous year 2.13 crore) Equity Shares during the period upto March 31, 2013.

Amortization of compensation includes write back of ` 2 crore (Previous year ` 5 crore) based on intrinsic value of Options which has

been vested under ESOS Plan 2008 and reflected in Statement of Profit and Loss under Employees Benefit Expenses. No amount is

chargeable in respect of Options granted under ESOS Plan 2009.



Number of

Options

Weighted

average exercise

price [`]

Number of

Options

Weighted

average exercise

price [`]

Number of Options Outstanding at the beginning of the year 5 69 194 448 39 12 214 206

Number of Options granted Nil – Nil -

Total number of Options surrendered Nil – Nil -

Number of Options vested during the year Nil – Nil -

Total number of Options exercised Nil – Nil -

Total number of Options forfeited/ lapsed 1 77 729 422 8 94 450 206

Number of Options outstanding at the end of the year 3 91 465 460 30 17 764 206

F-81



If the entity would have estimated fair value computed on the basis of Black-Scholes pricing model, the compensation cost for the

year ended March 31, 2013 for ESOS Plan 2008 and ESOS Plan 2009 would have been ` 3 crore and ` 8 crore respectively. The

key assumptions used to estimate the fair value of options are given below.






Price of the underlying share in market at the time of grant of option ` 541 ` 174

Note 2.43

Export Commitments

The Company and its subsidiaries have obtained licenses/ authorisations under the Export Promotion Capital Goods (EPCG) Scheme

for importing capital goods at a concessional rate of customs duty against submission of bonds. Under the terms of the respective

licenses/ authorisations, the Company and its subsidiaries are required to export goods of FOB value equivalent to or more than, eight

times the amount of duty saved in respect of such licenses/ authorisations, where export obligation has been refixed by the order of

Director General Foreign Trade, Ministry of Commerce and Industry, Government of India, as applicable. Balance export obligations

outstanding as on March 31, 2013 in case of the Company and its subsidiaries namely; RCIL and RITL under the aforesaid licenses/

authorisations is ` 334 crore, ` 619 crore and ` 1,293 crore respectively (Previous year ` 334 crore, ` 619 crore and ` 2,030 crore

respectively).

Note 2.44

Employee Benefits

Gratuity: In accordance with the applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity

Plan) for all its employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of

employment, an amount based on respective employees last drawn salary and for the years of employment with the Company.

The following table set out the status of the Gratuity Plan as required under Accounting Standard (“AS”) 15 (Revised) “Employee

Benefits” (Revised).

(` in Crore)



March 31,

2013

March 31,

2012

March 31,

2013

March 31,

2012





Actuarial (gain)/ loss 1 (4) (12) (2)

Benefits paid (7) (10) (11) (28)


* Defined benefit obligation liability as at the balance sheet is wholly funded by the Company


Plan assets at beginning of the year, at fair value 31 32 - -


Actuarial (gain)/ loss - (2) - -

Contributions 3 8 16 28

Benefits (8) (10) (15) (28)

Plan assets at year end, at fair value 29 31 1 -

F-82



(` in Crore)



March 31,

2013

March 31,

2012

March 31,

2013

March 31,

2012


Fair value of plan assets at the end of the year 29 31 1 -

Present value of the defined benefit obligations at the end

of the year

39 34 54 67





Expected return on plan assets (3) (3) - -

Actuarial (gain)/ loss - (2) (12) (2)

Net Gratuity Cost 8 5 (2) 6


On Plan Liabilities (gain)/ loss 1 3 N.A N.A

On Plan Assets gain/ (loss) - (1) N.A N.A




(viii) Assumptions

Interest rate 8.10% 8.50% 8.10% 8.50%

Estimated return on plan assets 8.70% 8.50% - -


The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and

other relevant factors such as supply and demand factors in the employment market.

(ix) Particulars of the amounts for the year and previous

years

Gratuity

As at March 31,

2013 2012 2011 2010 2009



Excess of (obligation over plan assets)/ plan assets over

obligation

10 4 6 (1) 10

The expected contribution is based on the same assumptions used to measure the Company’s gratuity obligations as of March

31, 2013.

Provident Fund : The guidance on Implementing (“AS”) 15 “Employee Benefits” (revised 2005) issued by the ICAI states that the

benefits involving employer established Provident Fund, which require interest shortfalls recompensed are to be considered as/

in defined benefit plans. The employee and employer each make monthly contribution to the plan equal to 12% of the covered

employee’s salary. Contributions are made to the trust established by the Company. During the year ended March 31, 2012,

the Actuarial Society of India issued the final guidance for measurement of provident fund liabilities. As at March 31, 2013, Fair

value of plan assets is ` 311 crore (Previous year ` 311 crore), the present value of defined benefit obligation is ` 311 crore.

(Previous year ` 313 crore) Accordingly, based on such actuarial valuation, the Company has charged ` Nil crore (Previous year

` 2 crore), being shortfall in interest, during the year. For the year ended March 31, 2013, the Company has contributed ` 21

crore (Previous year ` 23 crore) towards Provident Fund. The Employee Benefits as disclosed herein pertain to the Company and

its significant subsidiaries.

The assumptions made for the above are Discount rate of 8.10%, average remaining tenure of Investment Portfolio is 7 years

and guaranteed rate of return is 8.50%.

F-83



Note 2.45


The Company has identified three reportable segments viz. Wireless, Global Enterprise Business Unit (GEBU), and Others. The

segments have been identified and reported taking into account the nature of services provided, the differing risks and returns and

the internal business reporting systems. The accounting policies adopted for segment reporting are in line with the accounting policy

of the Company with following additional policies for segment reporting.

(a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment.

Revenue and expenses, which relate to the enterprise as a whole and are not allocable to a segment on reasonable basis have

been disclosed as “Unallocable”.

(b) Segment assets and liabilities represent the assets and liabilities in respective segments. Tax related assets and other assets and

liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as “Unallocable”.

(i) Primary Segment Information

(` in Crore)

Particulars Wireless GEBU Others Unallocable Eliminations Total

Segment Revenue

External Revenue 13,983 6,681 1,114 - - 21,778

13,562 6,080 740 - - 20,382

Inter Segment Revenue 4,107 3,123 348 - (7,578) -

4,134 3,338 360 - (7,832) -

Net Revenue 18,090 9,804 1,462 - (7,578) 21,778

17,696 9,418 1,100 - (7,832) 20,382

Segment Result before Exceptional

items, interest and taxes

2,549 1,117 (352) - - 3,314

2,431 1,093 (1,012) - - 2,512

Less: Finance Costs - - - 2,499 - 2,499

- - - 1,630 - 1,630

Segment Result before Exceptional

items and taxes

2,549 1,117 (352) (2,499) - 815

2,431 1,093 (1,012) (1,630) - 882

Less:Provisions and Exceptional

items

- - - - - -

- - - - - -

Less: Provision for Taxation - - - 71 - 71

- - - (106) - (106)

Segment Result after Tax 2,549 1,117 (352) (2,570) - 744

2,431 1,093 (1,012) (1,524) - 988

Other Information

Segment Assets 69,111 26,847 4,934 20,696 (32,616) 88,972

69,059 19,243 4,604 25,382 (26,882) 91,406

Segment Liabilities 12,450 11,534 1,686 7,360 (18,970) 14,060

12,707 9,030 856 5,033 (11,840) 15,786

Other Corporate Assets - - - 1,210 - 1,210

- - - 1,284 - 1,284

Other Corporate Liabilities - - - 41,547 - 41,547

- - - 39,323 - 39,323

Capital Expenditure 2,221 1,526 174 - - 3,921

2,735 2,996 117 - - 5,848

Depreciation, Impairment and

Amortisation

2,279 1,174 392 - - 3,845

2,303 1,199 476 - - 3,978

F-84




- The Wireless segment includes wireless operations of the Company, Reliance Communications Infrastructure Limited,

Reliance Telecom Limited, Reliance Infratel Limited, Reliance Webstore Limited, Alcatel Lucent Managed Solutions India

Private Limited and the retail operations of Reliance Communications (UK) Limited, Reliance Communications International

Inc., Reliance Communications Canada Inc., Reliance Communications (Australia) Pty. Limited, Reliance Communications

(New Zealand) Pte. Limited.

- The GEBU segment includes Broadband operations, National Long Distance and International Long Distance operations,

of the Company and the wholesale operations of its subsidiaries viz. Reliance Globalcom BV and its subsidiaries, Reliance

Communications Infrastructure Limited, Reliance IDC Limited and Reliance Wimax Limited.

- The businesses, which were not reportable segments during the year, have been grouped under the “Others” segment. This

mainly comprises of the marketing activities of Reliance Webstore Limited, Facility Usage activities of Reliance Infocomm

Infrastructure Private Limited and DTH activities of Reliance Communications Infrastructure Limited and Reliance Big TV

Limited.


The secondary segment relates to geographical segments viz. Operations within India and outside India.

( ` in Crore )

Within India Outside India Total

1. Segment Revenue - External Turnover 16,304 5,474 21,778

15,171 5,211 20,3822. Segment Assets 72,497 16,475 88,972

76,098 15,308 91,4063. Segment Liability 6,155 7,905 14,060

11,847 3,939 15,7864. Segment - Capital expenditure 3,334 587 3,921

4,611 1,237 5,848


- The “Within India” segment includes the operations of the Company and its subsidiaries in India.

- The “Outside India” segment includes the operations of the Company’s subsidiaries viz. Reliance Globalcom BV and its

subsidiaries.





For B S R & Co.






Partner


Bhavesh Dhupelia

Partner


Mumbai

May 10, 2013


F-85


ToThe Board of Directors of Reliance Communications Limited

We have audited the attached consolidated Balance sheet of Reliance Communications Limited (‘the Company’) and its subsidiaries and associates (collectively called ‘the Group’) as at March 31, 2012, the consolidated Statement of profit and loss and the consolidated Cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1 We did not audit the financial statements and other financial information of certain subsidiaries. The financial statements of these subsidiaries for the year ended March 31, 2012 have been audited by other auditors whose reports have been furnished to us and our opinion, in so far as it relates to the amounts included in respect of subsidiaries, is based solely on these reports. The attached consolidated financial statements include assets of ` 4,118 crore as at March 31, 2012, revenues of ` 3,907 crore and cash outflows amounting to ` 29 crore in respect of the aforementioned subsidiaries for the year then ended.

2 The financial statements of certain subsidiaries for the year ended March 31, 2012 have been audited by one of the joint auditors, Chaturvedi & Shah, Chartered Accountants. The attached consolidated financial statements include assets of ` 17,277 crore as at March 31, 2012, revenues of ` 6,092 crore and cash outflows amounting to ` 497 crore in respect of the aforementioned subsidiaries for the year then ended.

3 We have relied on the unaudited financial statements of the subsidiaries and joint ventures whose financial statements reflect total assets of ` 7,317 crore as at March 31, 2012, total revenue of ` 157 crore and cash outflows amounting to ` 81 crore for the year ending March 31, 2012. These unaudited financial statements as approved by the respective Board of Directors of these companies have been furnished to us by the management, and our report in so far as it relates to the amounts included in respect of the subsidiaries is based solely on such approved financial statements.

4 The consolidated financial statements have been prepared by the Company’s management in accordance with the requirements of Accounting Standard 21 - Consolidated Financial Statements, Accounting Standard 23 - Accounting for Investment in Associates in Consolidated Financial Statements and Accounting Standard 27 – Financial Reporting of Interest in Joint Ventures, prescribed by the Companies (Accounting Standards) Rules, 2006.

5 Without qualifying our report, we draw your attention to:

(a) Note 2.31(x) of the consolidated financial statements, the Company has computed goodwill on consolidation by comparing the cost of investments with the equity of subsidiaries as on date on which investments were made by Reliance Industries Limited (‘the transferor company’) prior to demerger instead of considering the date of demerger as the date of investment.

(b) Note 2.36 of the consolidated financial statements regarding certain preliminary charges framed by a Trial Court in October, 2011 against one of the Director of

the Company’s subsidiary and the subsidiary through its Director for alleged charges under Indian Penal Code (IPC) in relation to the breach of rules of Regulatory Authorities for the application of License made by a Private Limited Company pursuant to Unified Access Service License (‘UASL’) guidelines referred to in the aforesaid note. In the opinion of the management, the charges so framed are preliminary in nature based on investigations only, and pending the hearing of a writ petition for quashing the said charges in October, 2011 before the Hon’ble Delhi High Court, there is no impact based on the legal advice received by the Company, on these financial statements at this stage.

(c) Note 2.40 of the consolidated financial statements regarding the Schemes of Arrangement (‘the Schemes’) sanctioned by the Hon’ble High Court of Judicature at Mumbai, permit the Company and three of its subsidiaries, namely, Reliance Communication Infrastructure Limited, Reliance Infratel Limited and Reliance Telecom Limited to adjust expenses and/or losses identified by the respective Board of the Company and its three subsidiaries, which are required to be debited/ credited to the Statement of profit and loss by a corresponding withdrawal or credit from/ to General Reserve, which is considered to be an override to the relevant provisions of Accounting Standard 5 (AS 5) ‘Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies’. The Company and its three subsidiaries have identified exchange variations incurred during the year of ` 1,573 crore (including ` 951 crore in the nature of borrowing costs), fuel cost of ` 70 crore (Previous year ` 77 crore), provision for doubtful debts and subsidy receivable of ` 1,107 crore (Previous year ` 159 crore), as in the opinion of the respective Boards, such exchange loss and provisions are considered to be of an exceptional nature and accordingly, these expenses and deferred tax liability of ` 651 crore of one of its subsidiary have been met by corresponding withdrawal from General Reserve. Pending clarification from the Institute of Chartered Accountants of India (ICAI), the Company has credited such withdrawal to the Statement of profit and loss. Had such write off of expenses and losses not been met from General Reserve, the consolidated financial statements would have reflected a loss after tax of ` 2,472 crore and the consequential effect of this on the consolidated profit after tax would have been of ` 3,401 crore.

6 Based on our audit as aforesaid, and on consideration of reports of other auditors and accounts approved by the Board of Directors as explained in paragraphs 1, 2 and 3 above, and to the best of our information and according to the explanations given to us, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India.

(i) in the case of the consolidated balance sheet, of the state of affairs of the Group as at March 31, 2012;

(ii) in the case of the consolidated Statement of profit and loss, of the profit of the Group for the year ended on that date; and

(iii) in the case of the consolidated cash flow statement, of the cash flows of the Group for the year ended on that date.

For Chaturvedi & Shah For B S R & Co.Chartered Accountants Chartered AccountantsFirm Reg. No.: 101720W Firm Reg. No.: 101248W

C. D. Lala Bhavesh DhupeliaPartner PartnerMembership No: 035671 Membership No: 042070

MumbaiMay 26, 2012

Auditors’ Report on Consolidated Financial Statements

F-86


Consolidated Balance Sheet as at March 31, 2012

( ` in Crore)

Notes As atMarch 31, 2012

As atMarch 31, 2011








(b) Deferred Tax Liabilities (Net) 2.04 1,018 367

(c) Other Long Term Liabilities 2.05 1,217 1,171

(d) Long Term Provisions 2.06 824 32,705 247 21,098

Current Liabilities





TOTAL 92,690 94,723

ASSETS

Non Current Assets





71,478 71,351

(b) Goodwill 5,009 4,747


(d) Foreign Currency Monetary Item Translation Difference Account

2.30 425 -

(e) Long Term Loans and Advances 2.13 2,482 2,059

(f) Other Non Current Assets 2.14 618 80,145 - 78,275

Current Assets




(d) Cash and Bank Balances 2.18 550 4,866



TOTAL 92,690 94,723


Notes on Accounts 2

The Notes referred to above form an integral part of the Financial Statements.

As per our Report of even date


C. D. Lala Bhavesh DhupeliaPartner PartnerMembership No.: 035671 Membership No.: 042070

Mumbai May 26, 2012

For and on behalf of the Board


J. Ramachandran

Directors S. P. Talwar

Deepak Shourie

A. K. Purwar


F-87


( ` in Crore)

Notes For the year endedMarch 31, 2012

For the year endedMarch 31, 2011

INCOME


Other Income 2.22 705 738

Total Revenue 20,382 23,169

EXPENDITURE

Access charges, License Fees and Network Expenses 2.23 9,652 9,276



Depreciation, Impairment and Amortisation 2.11 & 2.33 5,450 8,512

Depreciation adjusted by/transfer from:

Provision for Business restructuring (102) (86)

General Reserve (Refer note 2.31(vii)) (113) (631)

General Reserve (Refer note 2.31(iii)) (1,257) 3,978 (1,291) 6,504



Profit before Exceptional Items, Adjustments and Tax 882 1,512


Employee Restructuring Cost - (5)

Bad Debts and Subsidy written off 1,107 159

Equivalent amount withdrawn from General Reserve (1,107) (159)

Foreign Currency Exchange Fluctuation (Gain)/ Loss (net) 1,573 -

Equivalent amount withdrawn from General Reserve (1,573) -

Fuel Expenses 70 77


Profit Before Tax 882 1,517

Provision for:

- Current Tax (106) (280)

- Deferred Tax 2.04 651 292

- Equivalent amount withdrawn from General Reserve (651) (106) - 12

Profit After Tax (before adjustment of Minority Interest/ Associates)

988 1,505


Less: Share of (Loss)/ Profit of Associates (1) 10

Profit After Tax (after adjustment of Minority Interest/ Associates)

928 1,345

Earning per Share of ` 5 each fully paid up(before Exceptional Items)

2.39

- Basic (`) 4.50 6.46

- Diluted (`) 4.41 6.19

Earning per Share of ` 5 each fully paid up(after Exceptional Items)

2.39

- Basic (`) 4.50 6.52

- Diluted (`) 4.41 6.25


Notes on Accounts 2

The Notes referred to above form an integral part of the Financial Statements.





Mumbai May 26, 2012



J. Ramachandran


Deepak Shourie

A. K. Purwar


F-88


(` in Crore)



A CASH FLOW FROM OPERATING ACTIVITIESNet Profit before tax as per Statement of Profit and Loss 882 1,517Adjusted for:Provision for Doubtful Debts, Loans and Advances 60 93Depreciation/ Impairment and Amortisation 3,978 6,504Exceptional and Non - Recurring items - (7)Effect of Foreign Exchange Rate Changes (net) (136) (163)(Profit)/ Loss on Sale of Assets and Capital Work in Progress (net) (7) (331)Profit on Sale of Investments (23) (57)Dividend Income (Previous year ` 3,15,172) - -Other Financial Cost 153 114Interest Expenses 1,477 902Financial Income (40) 5,462 (11) 7,044Operating Profit before Working Capital Changes 6,344 8,561Adjusted for:Receivables and other Advances (2,423) (1,049)Inventories (49) 27Trade Payables and Other Liabilities 1,798 (674) (5,025) (6,047)Cash Generated from Operations 5,670 2,514Tax Refund 470 519Tax Paid (389) (599)Net Cash from Operating Activities 5,751 2,434

B CASH FLOW FROM INVESTING ACTIVITIES

Additions of Fixed Assets and Capital Work in Progress (4,850) (10,327)Sale of Fixed Assets and Capital Work in Progress 216 206Purchase of Investments (26,941) (48,449)Sale of Investments 26,964 52,096Financial Income 40 16Net Cash Used in Investing Activities (4,571) (6,458)

C CASH FLOW FROM FINANCING ACTIVITIES

Net Proceeds from/ (Repayment of) Short term Borrowings (5,211) 2,684Expenses on FCCB (Withholding Tax) (177) -Realised Forex Loss withdrawn from General Reserve (167) -Proceeds from Long Term Borrowings 10,756 9,090Repayment of Long Term Borrowings (8,861) (2,139)Dividends Paid (Including tax on dividend) (119) (202)Finance Cost (1,718) (1,362)Net Cash from/ (used in) Financing Activities (5,497) 8,071Net Increase/ (Decrease) in Cash and Cash Equivalents (4,317) 4,047Opening Balance of Cash and Cash Equivalents 4,866 819Effect of Exchange Gain/ (Loss) on Cash and Cash Equivalents(Previous year ` 40,53,971)

1 -

Closing Balance of Cash and Cash Equivalents 550 4,866

Note:

(a) Cash and Cash Equivalents include cash on hand, cheques on hand, remitances-in-transit and bank balance including Fixed Deposits with Banks.

(b) Prepaid expenses of ` Nil (Previous year ` 891 crore) written off during the previous year has not been shown separately as adjusted, pursuant to the Scheme by withdrawal from General Reserve.





Mumbai May 26, 2012



J. Ramachandran


Deepak Shourie

A. K. Purwar


F-89


Note : 1


The Consolidated Financial Statements relate to Reliance Communications Limited (‘the Company’) and all of its subsidiary companies and the companies controlled, that is, the companies over which the Company exercises control/ joint control over ownership and voting power and the associates and joint venture (hereinafter collectively referred to as the “Group”). The Consolidated Financial Statements have been prepared on the following bases.

(a) The financial statements of the Company and its subsidiaries are consolidated on a line-by-line basis, by adding together the book values of like items of assets, liabilities, incomes and expenses after fully eliminating intra group balances and intra group transactions resulting in unrealised profits or losses in accordance with the Accounting Standard (“AS”) 21 “Consolidated Financial Statements” as referred to in the Companies (Accounting Standards) Rules, 2006 (Accounting Standard Rules).

(b) In case of the foreign subsidiaries and companies controlled by the Company, revenue is consolidated at the average exchange rate prevailing during the year. All monetary assets and liabilities are converted at the exchange rate prevailing at the end of the year. While, non monetary assets and liabilities are recorded at the exchange rate prevailing on the date of the transaction or closing rate, as applicable. Any exchange difference arising on consolidation of integral foreign operation and non integral foreign operation is recognised in the Statement of Profit and Loss and Exchange Fluctuation Reserve respectively.

(c) Investments in subsidiaries are eliminated and differences between the cost of investment over the net assets on the date of investment or on the date of the financial statements immediately preceeding the date of investment in subsidiaries are recognised as Goodwill or Capital Reserve, as the case may be.

(d) The difference between the proceeds from disposal of investment in a subsidiary or in a company controlled by the Company and the proportionate carrying amount of its assets less liabilities as of the date of disposal, is recognised in the Consolidated Statement of Profit and Loss as the profit or loss on disposal of investment in subsidiaries.

(e) Minority Interest’s share of net profit or loss of consolidated subsidiaries for the year is identified and adjusted against the income of the Group in order to arrive at the net income attributable to the Equity Shareholders of the Company.

(f) Minority Interest’s share of net assets of consolidated subsidiaries is identified and presented in the consolidated Balance Sheet as a separate item from liabilities and the Shareholders’ Equity.

(g) In case of associates, where the Company directly or indirectly through subsidiaries holds 20% or more of equity shares, investments in associates are accounted for using equity method in accordance with Accounting Standard (“AS”) 23 “Accounting for Investments in Associates in Consolidated Financial Statements” as referred to in the Accounting Standard Rules. The Company accounts for its share in the change in the net assets of the associates, post acquisition, after eliminating unrealised profits and losses resulting from transactions between the Company and its associates to the extent of its share, through its Statement of Profit and Loss, to the extent such change is attributable to the associates’ Statement of Profit and Loss, based on available information. The difference between the cost of investment in the associates and the share of net assets, at the time of acquisition of shares in the associates, is identified in the financial statements as Goodwill or Capital Reserve, as the case may be.

(h) Interest in a jointly controlled entity is reported using proportionate consolidation in accordance with the Accounting Standard (“AS”) 27 “Financial Reporting of Interests in Joint Ventures” as referred to in Accounting Standards Rules.

(i) As far as possible, the Consolidated Financial Statements are prepared using uniform Accounting Policies for like transactions and other events in similar circumstances and are presented in the same manner as the standalone financial statements of the Company.

1.02 Investments other than in subsidiaries, associates and joint ventures are accounted as per Accounting Standard (“AS”) 13 “Accounting for Investments” as referred to in the Accounting Standard Rules.


(a) Basis of Preparation of Financial Statements

The Financial Statements are prepared under historical cost convention and fair valuation under a Scheme approved by the Hon’ble High Court, in accordance with the generally accepted accounting principles (GAAP) in India and provisions of the Companies Act, 1956 read with Accounting Standards Rules, as well as applicable pronouncements of the Institute of Chartered Accountants of India (ICAI).

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956. Based on the nature of the services and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or non-current classification of assets and liabilities.


The preparation and presentation of Consolidated Financial Statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of


F-90


the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates is recognised in the period in which the results are known/ materialised.

(c) Fixed Assets


(i) Fixed Assets are stated at cost/ fair value net of Modvat/ Cenvat, Value Added Tax and include amount added on revaluation less accumulated depreciation, amortisation and impairment loss, if any.

(ii) All costs including financing cost of qualifying assets till commencement of commercial operations, net charges of foreign exchange contracts and adjustments arising upto March 31, 2007 from exchange rate variations, relating to borrowings attributable to fixed assets are capitalised.

(iii) Expenses incurred relating to project, prior to commencement of commercial operation, are considered as project development expenditure and shown under Capital Work in Progress.

(iv) Telecom Licenses are stated at fair value or at cost as applicable, less accumulated amortisation.


(vi) In respect of accounting periods commencing on or after April 1, 2011, consequent to the insertion of para 46A of AS 11 ‘The Effects of Changes in Foreign Exchange Rates‘, notified under the Companies (Accounting Standard) (Second Amendment) Rules 2011, the cost of depreciable capital assets includes foreign exchange differences arising on translation of long term foreign currency monetary items as at the balance sheet date in so far as they relate to the acquisition of such assets.

(d) Lease

(i) In respect of Operating Leases, lease rentals are expensed on straight line basis with reference to the term of lease, except for lease rentals pertaining to the period up to the date of commencement of commercial operations, which are capitalised.

Where the lessor effectively retains substantially all risks and benefits of ownership of the leased assets they are classified as operating lease. Operating lease payments are recognised as an expense in the Statement of Profit and Loss.


(iii) Finance Leases on or after April 1, 2001: The lower of the fair value of the assets and present value of the minimum lease rentals is capitalised as Fixed Assets with corresponding amount shown as liabilities for leased assets. The principal component in lease rental in respect of the above is adjusted against liabilities for leased assets and the interest component is recognised as an expense in the year in which the same is incurred except in case of assets used for capital projects where it is capitalised.

(e) Depreciation/ Amortisation

(i) Depreciation on Fixed Assets is provided on Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 except in case of the following assets which are depreciated at the rates as given below.

(a) Ducts and Cables - 18, 20 years

(b) Telecom Electronic Equipments - 18 years

(c) Telecom Towers - 35 years

(d) Furniture, Fixtures and Office Equipments - 5, 10 years

(e) Customer Premises Equipments - 3 years

(f) Vehicles - 5 years

(g) Leasehold improvements - Shorter of the remaining lease term or useful life

(h) Cable Systems - Shorter of 15 years or remaining useful life

In case of Falcon project, the asset life of Sub Marine Cable Network and Terrestrial Network is estimated at 25 years and 15 to 25 years respectively.

(ii) Depreciation on assets, taken on finance lease on or after April 1, 2001, is provided over the remaining period of lease from commencement of commercial operations.

(iii) Expenditure of capital nature incurred on assets taken on operating lease is depreciated over the remaining period of the lease term.



F-91


(v) Intangible assets, namely entry fees/ fees for Telecom Licenses and Brand Licenses are amortised equally over the balance period of Licenses. IRC and Software are amortized from the date of acquisition or commencement of commercial services, whichever is later. The Rights in Cinematography Films are treated as intangible assets and are amortised over the balance period of rights remaining after commencement of commercial operation. The life of amortisation of the intangible assets are as follows.









(vi) Depreciation on foreign exchange differences capitalised pursuant to para 46A of AS 11 ‘The Effects of Changes in Foreign Exchange Rates‘ vide notification dated December 29, 2011 by Ministry of Corporate Affairs (MCA), Government of India is provided over the balance useful life of depreciable capital assets.



Asset Retirement Obligation (ARO) relates to the removal of cable systems and equipments when they will be retired from its active use. Provision is recognised based on the best estimate, of the management, of the eventual costs (net of recovery) that relates to such obligation and is adjusted to the cost of such assets.


An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is increased/ reversed where there is a change in the estimate of recoverable value. The recoverable value is higher of net selling price and value in use.

(h) Investments

Current Investments are carried at lower of cost and market value computed Investment wise. Long Term Investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary in the opinion of the management.


Inventories of stores, spares and communication devices are accounted for at costs, determined on weighted average basis or net realisable value, whichever is less, except in case of certain subsidiaries, where cost is determined on First In First Out basis.

(j) Loans and Advances

Initial direct costs incurred specifically to earn revenue, in the nature of severance cost paid to third party vendors to acquire the contract are deferred and expensed over the term of the revenue contract, provided that the Company has a legal enforceable right to recover the unabsorbed costs in the event of early termination of the revenue contract.

(k) Employee Benefits


All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized as an expense during the period.



The Company’s contribution towards Employees’ Superannuation Plan is recognized as an expense during the period in which it accrues.


Provident Fund

Provident Fund contributions are made to a Trust administered by the Trustees. Interest payable to the Provident Fund members, shall not be at a rate lower than the statutory rate. Liability is recognized for any shortfall in the Income of the fund vis-à-vis liability of the Interest to the members as per statutory rates.


F-92


Gratuity Plan

The Company’s gratuity benefit scheme is a defined benefit plan. The Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date.



Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the Balance Sheet date, determined based on actuarial valuation using Projected Unit Credit Method. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date.

(l) Borrowing Cost

Borrowing costs, that are attributable to the acquisition or construction of qualifying assets, are capitalised as part of the cost of such assets upto the commencement of commercial operations. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Other borrowing costs are recognised as expense in the year in which they are incurred.

(m) Issue Expenses and Premium on Foreign Currency Convertible Bonds (FCCBs)

The Premium payable/ paid on redemption of Foreign Currency Bonds (FCCBs) is charged to Securities Premium Account over the period of the Issue. Issue expenses are debited to Securities Premium Account at the time of the issue.

(n) Foreign Currency Transactions

(i) Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at the time of the transaction.

(ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts is recognised over the life of the contract.


(iv) Exchange difference arising either on settlement or on translation of monetary items other than those mentioned above is recognised in the Statement of Profit and Loss.

(v) Any loss arising out of marking a class of derivative contracts to market price is recognised in the Statement of Profit and Loss. Income, if any, arising out of marking a class of derivative contracts to market price is not recognised in the Statement of Profit and Loss.

(vi) All long term foreign currency monetary items consisting of liabilities which relate to acquisition of depreciable capital assets at the end of the period/ year have been restated at the rate prevailing at the Balance Sheet date. The exchange difference arising as a result has been added or deducted from the cost of the assets as per the notification issued by the Ministry of Corporate Affairs (MCA) dated December 29, 2011. Exchange difference on other long term foreign currency monetary items is accumulated in “Foreign Currency Monetary Item Translation Difference Account” which will be amortized over the balance period of monetary assets or liabilities.

(o) Revenue Recognition

(i) Revenue is recognised as and when the services are provided on the basis of actual usage of the Company’s network. Revenue on upfront charges for services with lifetime validity and fixed validity periods of one year or more are recognised over the estimated useful life of subscribers and specified fixed validity period, as appropriate. The estimated useful life is consistent with estimated churn of the subscribers.

(ii) The Company sells Right of Use (ROUs) that provide customers with network capacity, typically over a 10- to 15-year period without transferring the legal title or giving an option to purchase the network capacity. Capacity services revenues are accounted as operating lease and recognised in the Company’s income statement over the life of the contract. Bills raised on customers/ payments received from customers for long term contracts and for which revenue is not recognised are included in deferred revenue. Revenue on non cancellable ROUs are recognised upfront as licencing income on activation of services.


F-93


(iii) Standby maintenance charges are invoiced separately from capacity sales. Revenues relating to standby maintenance are recognised over the period in which the service is provided. Any amounts billed prior to providing of service are included in deferred revenue.

(iv) Network services include Capacity lease services, IP transit, IPLC (private lines leased to customers), backup service for other network operators and all other services. The customer typically pays the charges for network services periodically over the life of the contract, which may be up to three years. Network revenue is recognised in the Company’s income statement over the term of the contract.

(v) Sales on Handsets and accessories are recognised when goods are supplied and are recorded net of trade discounts, rebates, commissions to Distributors and Dealers and sales taxes. It does not include inter company transfers.

(vi) Interest income on investment is recognised on time proportion basis. Dividend is considered when right to receive is established. The Group recognises income from the units in the Fixed Income Schemes of Mutual Funds where income accrued is held, till the declaration or payment thereof, for the benefit of the unit holders.

(vii) Revenue is recognised net of taxes when the Base Transceiver Station (BTS) Tower is Ready For Installation of customer equipments and as per the terms of the agreements.

(viii) Activation fees in respect of DTH is recognised on upfront basis at the time of activation of services in customers’ premises. Subscription revenue towards initial customers are recognised upfront as and when it is realised and the monthly subscription is recognised on accrual basis, net of service tax, entertainment tax and trade discount.

(p) Provision for Doubtful Debts and Loans and Advances

Provision is made in the Accounts for doubtful debts and Loans and Advances in cases where the management considers the debts, loans and advances, to be doubtful of recovery.

(q) Miscellaneous Expenditure


(r) Taxes on Income and Deferred Tax

Provision for income tax is made on the basis of taxable income for the year at current rates. Tax expense comprises of Current Tax and Deferred Tax at the applicable enacted or substantively enacted rates. Current tax represents the amount of Income Tax payable/ recoverable in respect of the taxable income/ loss for the reporting period. Deferred tax represents the effect of timing difference between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future. However, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of assets. MAT credit is recognised as an asset only if there is convincing evidence that the Company will pay normal income tax during the specified period.

(s) Government Grants

Subsidies granted by the Government for providing telecom services in rural areas are recognised as Other Operating Income in accordance with the relevant terms and conditions of the scheme and agreement.

(t) Provisions and Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent Assets are neither recognised nor disclosed in the financial statements.

(u) Earning per Share

In determining Earning per Share, the Group considers the net profit after tax and includes the post tax effect of any extra-ordinary/ exceptional item. The number of shares used in computing Basic Earnings per Share is the weighted average number of shares outstanding during the period. The number of shares used in computing Diluted Earnings per Share comprises the weighted average shares considered for deriving Basic Earnings per Share, and also the weighted average number of shares that could have been issued on the conversion of all dilutive potential equity shares where the results would be anti - dilutive. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date.

(v) Employee Stock Option Scheme

In respect of stock Options granted pursuant to the Company’s Employee Stock Options Scheme, the intrinsic value of the Options (excess of market price of the share over the exercise price of the Option) is treated as discount and accounted as employee compensation cost over the vesting period. Employee compensation cost recognised earlier on grant of Options is reversed in the period when the Options are surrendered by any employee.


F-94


( ` in Crore)

As atMarch 31, 2012

As atMarch 31, 2011

Note : 2.01

Share Capital

Authorised

3,00,00,00,000 Equity Shares of ` 5 each 1,500 1,500

(3,00,00,00,000)

1,500 1,500


2,06,40,26,881 Equity Shares of ` 5 each fully paid up 1,032 1,032

(2,06,40,26,881)

1,032 1,032

(1) Shares held by Holding/ Ultimate Holding Company and/ or their Subsidiaries/ Associates



(b) AAA Communication Private Limited, Subsidiary of Holding Company 72,31,10,172 72,31,10,172


(d) ADA Enterprises and Ventures Private Limited, Subsidiary of Holding Company 30,00,00,000 30,00,00,000

(2) Details of Shareholders holding more than 5% shares in the Company






(3) The Company has only one class of equity shares having a par value of ` 5 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholder.

During the year ended March 31, 2012, the amount of per share dividend recognized as distributable to equity shareholders is ` 0.25 (March 31, 2011: ̀ 0.50 ). The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

(4) The Company, during the past years, undertook various Schemes including restructuring of ownership structure of telecom business so as to align the interest of the shareholders. Accordingly, pursuant to the Schemes of Amalgamation and Arrangement (“the Schemes”) under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon’ble High Court of respective Judicature, the Company, during the respective years, recorded all necessary accounting effects, alongwith requisite disclosure in the notes to accounts, the cumulative effects of the Schemes of the Equity Share Capital of the Company due to allotment of equity shares as fully paid up without payment being received in cash have been disclosed herein below.

Number of Shares

(a) Pursuant to demerger of Telecom Undertaking of Reliance Industries Limited into the Company 1,22,31,30,422

(b) Pursuant to the Scheme of Amalgamation and Arrangement involving Group Company 82,14,84,568

2,04,46,14,990

(5) The Company is no longer required to issue 8.91 crore equity shares of ` 5 each as required on conversion of Foreign Currency Convertible Bonds (FCCBs) due to its redemption (Refer Note 2.29).

(6) Reconciliation of shares outstanding at the beginning and at the end of the reporting period.

March 31, 2012 March 31, 2011


Equity Shares

At the beginning of the Year 2,06,40,26,881 1,032 2,06,40,26,881 1,032

Add/Less: Changes during the year - - - -

At the end of the Year 2,06,40,26,881 1,032 2,06,40,26,881 1,032

Notes to the Consolidated Balance Sheet and Consolidated Statement of Profit and Loss

F-95


( ` in Crore)

As atMarch 31, 2012

As atMarch 31, 2011

Note : 2.02

Reserve and Surplus


As per last Balance Sheet* (` 6,13,000 Previous year ` 6,13,000) - -

Add: Transferred from Statement of Profit and Loss (Previous year ` 81,300) - - - -

Capital Reserve

As per last Balance Sheet (` 5,00,000 Previous year ` 5,00,000) - -



Add: Transferred from Surplus/ (Deficit) in the Statement of Profit and Loss 91 173 - 82

Exchange Fluctuation Reserve 543 (102)



Less: Withholding tax paid on Redemption of FCCBs 177 -

Less: Premium paid on Redemption of FCCBs (Refer Note 2.29) 357 8,047 301 8,581

General Reserve


Less:

Transferred to Surplus/ (Deficit) in the Statement of Profit and Loss(Refer Note 2.41)

- 216

Transferred to Statement of Profit and Loss (Refer Note 2.40) 1,107 159

As per the Scheme of Amalgamation and Arrangement (Refer Note 2.31(v)) - 7

As per the Scheme of Amalgamation and Arrangement (Refer Note 2.31(vi)) - 891

As per the Scheme of Amalgamation and Arrangement (Refer Note 2.31(viii)) - 950

Transferred to Statement of Profit and Loss (Refer Note 2.04) 651 -

Transferred to Statement of Profit and Loss (Refer Note 2.40) 1,573 -

Transferred to Statement of Profit and Loss (Refer Note 2.31 (iii)) 113 630

Transferred to Statement of Profit and Loss (Refer Note 2.40) 70 77




Surplus/ (Deficit) in the Statement of Profit and Loss


Add: Profit during the year 928 1,345

Add: Adjustment (Refer Note 2.41) - 36

Less: Transferred to Statutory Reserve Fund ` Nil (Previous year ` 81,300) - -

Less: Transferred to Debenture Redemption Reserve 91 -

Less/ (Add) : Transferred to/ (from) General Reserve (Refer Note 2.41) - (216)

Less: Proposed Dividend on equity shares 52 103

Less: Tax on Proposed Dividend 8 17

Balance Carried forward 12,221 11,444

35,689 39,467

* Created pursuant to Reserve Bank of India (Amendment) Act, 1997 in respect of Reliance Communications Investment and Leasing Limited (RCILL), a subsidiary of Reliance Communications Infrastructure Limited. RCILL has become Non Banking Finance Company (NBFC) with effect from April 1, 2008. RCILL has already surrendered its certificate of registration to RBI on March 9, 2012 as it no longer operates its NBFC Business.


F-96


( ` in Crore)

As atMarch 31, 2012

As atMarch 31, 2011

Note : 2.03


Debentures

Secured

3,000 (3,000), 11.20 % Redeemable, Non-Convertible Debentures of ` 1 crore each.

3,000 3,000

5,000 (Nil), 11.60 % Redeemable, Non-Convertible Debentures of ` 10 lac each.

500 -

1,500 (Nil), 11.25 % Redeemable, Non-Convertible Debentures of ` 1 crore each.

1,500 -

Term Loans from Banks

Secured


Rupee Term Loans 20 24,646 20 16,313

29,646 19,313


The Company, on February 7, 2012, allotted, 1,500, 11.25% and 5,000, 11.60% Secured Redeemable, Non Convertible Debentures (“NCDs”) of the face value of ` 1,00,00,000 each and ` 10,00,000 each respectively, aggregating to ` 2,000 crore. Redemption of NCDs of ̀ 1,500 crore shall be in four annual equal installments starting at the end of fourth year from the date of allotment thereof and NCDs of ` 500 crore shall be at the end of 5th year from the date of allotment thereof. During the earlier year, the Company, on March 2, 2009, allotted, 3,000, 11.20% Secured Redeemable, Non Convertible Debentures (“NCDs”) of the face value of ` 1,00,00,000 each, aggregating to ` 3,000 crore to be redeemed at the end of 10th year from the date of allotment thereof.

11.20% Secured Redeemable, Non Convertible Debentures and 11.60% Secured Redeemable, Non Convertible Debentures along with foreign currency loans and rupee loans (“The said loans”) have been secured by first pari passu charge on the whole of the movable plant and machinery, of the Company including (without limitations) tower assets and optic fiber cables, if any (whether attached or otherwise), Capital Work in Progress (pertaining to movable fixed assets) both present and future including all the rights, title, interest, benefits, claims and demands in respect of all insurance contracts relating thereto of the RCOM Group (“the Borrower Group“); comprising of the Company and its subsidiary companies namely; Reliance Telecom Limited (RTL), Reliance Infratel Limited (RITL) and Reliance Communications Infrastructure Limited (RCIL) in favour of the Security Trustee for the benefit of the NCDs Holders and the Lenders of the said Secured Loans. The said loans also include ̀ 9,342 crore guaranteed. The Company, for the benefit of the Lenders of foreign currency loans and rupee term loans, has, apart from the above, also assigned 20 Telecom Licenses for services under Unified Access Services (UAS), National Long Distance (NLD) and International Long Distance (ILD) by execution of Tripartite Agreements with Department of Telecommunications (DoT) and IDBI Bank, being the agent acting on behalf of the Lenders. Similarly, Reliance Telecom Limited, a subsidiary of the company has apart from the above also for the benefit of its lenders of foreign currency loans and rupee loan assigned 8 Telecom Licenses for services under UAS.

Assignment of aforesaid Telecom Licenses of the Company for 11.60%, 5,000 Secured Redeemable, Non Convertible Debentures aggregating to ̀ 500 crore and secured foreign currency loans aggregating to ̀ 4,707 crore raised during the year is pending to be executed. Security on the above assets of the Borrower Group on first pari passu charge basis including assignment of Telecom Licenses of the Company for 1,500, 11.25% Secured Redeemable, Non Convertible Debentures aggregating to ` 1,500 crore is also pending for execution. Secured foreign currency loans and rupee loans shall be additionally secured by way of a pledge over the shares held by the Company in its subsidiaries; RTL and RCIL, which is pending to be created on first pari passu basis for necessary consent from the existing Secured Lenders.

Reliance Globalcom B.V. (RGBV), the Netherlands, a Subsidiary of the Company, during the previous year, availed facility of USD 500 million against pledge of shares of material subsidiaries of Reliance Globalcom Limited, Bermuda, a subsidiary of RGBV.


(a) Debentures ` in Crore


2015-16 2016-17 2017-18 2018-19

(i) 11.20% - - - 3,000

(ii) 11.60% - 500 - -

(iii) 11.25% 375 375 375 375


F-97


(b) Foreign Currency Loans ` in Crore


2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22

(i) 0.56% 53 54 54 54 54 57 62 20 6

(ii) 0.90% 1 1 1 1 1 1 2 1 -

(iii) 2.77% 13 33 47 47 147 161 127 94 -

(iv) 2.71% - - - - 1 1 1 1 -

(v) 1.23% 848 - - - - - - - -

(vi) 3.50% - - 254 - - - - - -

(vii) 3.19% - - 1,272 - - - - - -

(viii) 3.49% - - 254 - - - - - -

(ix) 0.79% 848 - - - - - - - -

(x) 0.81% 170 - - - - - - - -

(xi) 1.33% - 527 351 - - - - - -

(xii) 1.35% - 308 154 - - - - - -

(xiii) 2.55% 267 515 916 916 534 267 - - -

(xiv) 3.72% 135 406 541 609 1,218 1,218 1,218 1,286 -

(xv) 2.84% - 432 432 432 - - - - -

(xvi) 2.67% 1 2 3 3 9 10 8 6 -

(xvii) 2.46% - - 32 16 - - - - -

(xviii) 5.50% 282 471 282 847 1,177 1,506 - - -

(xix) 4.95% 848 848 848 - - - - - -

(c) Rupee Loan ` in Crore


2015-16

13.00% 20(` in Crore)

As atMarch 31, 2012

As atMarch 31, 2011

Note : 2.04


The Deferred Tax Liabilities relating to other subsidiaries of the Company comprise of the following.



Related to timing difference on depreciation on fixed assets 274 1,663 - 1,047


Related to carried forward loss 645 317

Disallowances, if any, under the Income Tax Act, 1961 - 5

Related to timing difference on depreciation on fixed assets - 645 358 680

Net Deferred Tax Liabilities 1,018 367

The Deferred Tax Assets of the Company comprise of the following.


Related to carried forward loss 1,690 2,191

Disallowances, if any, under the Income Tax Act, 1961 4,818 3,515



Related to timing difference on depreciation on fixed assets 3,428 3,019

Interest Capitalised 221 87

Impairment/ Loss on sale of capital assets 2,592 6,241 2,592 5,698


* In absence of virtual certainity of realisability of deferred tax assets, the Company on a conservative basis has restricted deferred tax asset to Nil.

Deferred Tax Liability of ̀ 651 crore has been provided by Reliance Infratel Limited (RITL) during the year and adjusted by withdrawing an equivalent amount from General Reserve pursuant to the Scheme of Amalgamation between RITL and Reliance Global IDC Limited (RGIDCL), a Wholly Owned Subsidiary of RITL into RITL sanctioned by the Hon’ble High Court of Bombay vide order dated May 6, 2011, leaving no impact on profit for the year.


F-98


(` in Crore)

As atMarch 31, 2012

As atMarch 31, 2011

Note : 2.05


Advance from Customers 98 5



1,217 1,171

Note : 2.06


Provision for Employee Benefit 63 3

Others

Assets Retirement Obligations 761 244

824 247

Note : 2.07



From Banks

Cash Credit (Secured) 300 -


Rupee Loans (Secured) 2,900 -

Rupee Loans - 8,850

Commercial Papers 945 146

From Others 9 5,539 8 10,682

5,539 10,682

Cash Credit and Rupee Loans from Banks

The Company and its subsidiaries had during the earlier year, also availed Short Term Borrowings (“Secured Short Term Borrowings“) which have been secured by way of second pari passu charge on plant and machinery, including (without limitations) tower assets and optic fiber cables, if any (whether attached or otherwise), capital work in progress (pertaining to movable fixed assets), both present and future, of the Borrower Group; comprising of the Company and its subsidiaries namely; RTL, RITL and RCIL in favour of the Security Trustee for the benefit of Secured Short Term Lenders.

Working capital (Cash Credit) facilities shall be secured by first pari passu charge over current assets comprising of Stock and receivables of the Company in favour of the working capital lenders, which is pending to be created.

Note : 2.08

Trade Payables

Due to Micro and Small Enterprises 156 168

Others 2,162 1,721

2,318 1,889


F-99




Under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) which came into force from October 2, 2006, certain disclosures are required to be made relating to MSE. On the basis of the information and records available with the Company, the following disclosures are made for the amounts due to the Micro and Small Enterprises.

(` in Crore)

As atMarch 31, 2012

As atMarch 31, 2011


(ii) Interest due on the principal amount unpaid at the year end to any supplier

38 25

(iii) Amount of Interest paid by the Company in terms of Section 16 of the MSMED, alongwith the amount of the payment made to the supplier beyond the appointed day during the accounting year

- -

(iv) Payment made to the enterprises beyond appointed date under Section 16 of MSMED

252 67

(v) Amount of Interest due and payable for the period of delay in making payment, which has been paid but beyond the appointed day during the year but without adding the interest specified under MSMED

7 2

(vi) Amount of interest accrued and remaining unpaid at the end of each accounting year

46 27

(vii) Amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprises for the purpose of disallowance as a deductible expenditure under Section 23 of MSMED

15 16

Note : 2.09



Foreign Currency Convertible Bonds (FCCBs) (Refer Note 2.29) - 6,696

Foreign Currency Loan (Secured) (Refer Note 2.03.1) 3,118 3,118 2,380 9,076

Others



Employees Stock Options 5 10

Capital Creditors 1,829 2,729

Liability for Leased Asset 2 1


Advance from Customers and Income Received in Advance 1,225 8,763 1,165 7,543

11,881 16,619

Note : 2.10


(a) Provision for Employee Benefit


(b) Others

Disputed and Other Claims (Refer Note 2.35) 1,362 1,408

Business Restructuring (Refer Note 2.31) 1,137 1,239

Income Tax (net of advanced tax) 52 216



Proposed Dividend on equity shares 52 103

Tax on Proposed Dividend 8 2,613 17 2,986

2,666 3,112

F-100


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s acquired in a

Com

pany (

held

by R

elia

nce C

om

munic

ations

Infrast

ructu

re L

imited).

2.1

1.3

Pla

nt

and M

achin

ery

inclu

des

Ele

ctr

ical equip

ments

of

` 3 c

rore

(Pre

vio

us

year `

3 c

rore

), w

hic

h a

re u

nder cust

ody a

nd c

ontr

ol of

Mahara

shtra S

tate

Ele

ctr

icity D

istr

ibution C

om

pany L

imited.

2.1

1.4

Pla

nt

and M

achin

ery

inclu

des

Ass

et

Retire

ment

Oblig

ations

(ARO

) G

ross

Blo

ck

` 761 c

rore

(Pre

vio

us

year `

244 c

rore

), A

ccum

ula

ted D

epre

cia

tion `

195 c

rore

(Pre

vio

us

year `

138 c

rore

) and

Net

Blo

ck

` 566 (

Pre

vio

us

year `

106 c

rore

).

2.1

1.5

(a

) G

ross

Blo

ck

inclu

des

` 3,5

85 c

rore

bein

g t

he a

mount

added o

n reva

luation a

s on January

1, 2006.

(b

) G

ross

Blo

ck

for th

e p

revio

us

years

inclu

de `

1,9

63 c

rore

, bein

g a

n a

mount

added o

n fair v

alu

ation a

s on A

pril 10, 2007.

2.1

1.6

D

uring t

he y

ear, a

dditio

n t

o P

lant

& M

achin

ery

and T

ele

com

Lic

ense

inclu

des

` 1,5

86 c

rore

and `

163 c

rore

resp

ectively

(Pre

vio

us

year `

Nil)

on a

ccount

of

Fore

ign E

xchange loss

.

(R

efe

r N

ote

2.3

0)

2.1

1.7

Capital W

ork

in P

rogre

ss inclu

des:

(a

) `

361 c

rore

(Pre

vio

us

year `

600 c

rore

) on a

ccount

of

pro

ject

develo

pm

ent

expenditure

.

(b

) `

57 (

Pre

vio

us

year `

223 c

rore

) on a

ccount

of

mate

rials

at

site

.

(c

) N

et

Pro

visio

n for im

pairm

ent

of

` 370 c

rore

(Pre

vio

us

year `

Nil)

(d

) `

Nil

(Pre

vio

us

year `

8,5

85 c

rore

) re

lating t

o 3

G S

pectr

um

Fee p

aid

to D

epart

ment

of Te

lecom

munic

ation (

DoT)

2.1

1.8

Tr

ansf

er of

title o

f cert

ain

land a

nd b

uild

ings

receiv

ed f

rom

Relia

nce Indust

ries

Lim

ited p

urs

uant

to t

he S

chem

es

of

Arrangem

ents

is

under pro

cess

.

2.1

1.9

D

eductions

/ A

dju

stm

ents

inclu

de e

xchange fl

uctu

ation o

n a

ccount

of

currency t

ransl

ation o

f fo

reig

n S

ubsidia

ries.

2.1

1.1

0 Refe

r N

ote

2.0

3.1

and 2

.07 for Security

in favour of

the L

enders

.

F-101


(` in Crore)

As atMarch 31, 2012

As atMarch 31, 2011

Note : 2.12




Quoted, fully paidup

39,342(39,342)

Groupon INC-Class A Common Stock of USD 0.0001 each

12 11

5,95,074(5,95,074)

Sequans Communications SA of Euro 0.02 each 18 30 16 27

Other Investments

Unquoted, fully paidup

6,50,25,000(6,50,25,000)

Warf Telecom International Private Limited - ` 1 eachLess : Share of Loss of Associates

22(12)

22(13)

10 9

4,000(4,000)

Ordinary Share in eWave China of No Par Value 23 19

1,600(1,600)

Macronet Private Limited - ` 10 each(` 16,000 Previous year ` 16,000)

- -

1,601(1,601)

Macronet Mercantile Private Limited - ` 10 each(` 16,010 Previous year ` 16,010)

- -

13,000(13,000)

Mumbai Metro Transport Private Limited - ` 10 each(` 1,28,788 Previous year ` 1,30,000)

- -

5,000(5,000)

International Convention Centre Construction PrivateLimited of ̀ 10 each (` 50,000 Previous year ̀ 50,000)

- -

100(100)

Nodia Global SEZ Private Limited of ` 10 each(` 1,000 Previous year ` 1,000) - 33 - 28



10,00,000(10,00,000)

9% Redeemable Preference Shares of Reliance BPOPrivate Limited of ` 10 each

5 5

20,45,455(20,45,455)

Series D Preferred Stock of Stoke Inc. of USD 2.2 each 25 21

5,85,993(5,85,993)

Series A Preferred Stock of Scalable Display TechnologiesInc. of USD 1.62 each

5 4

14,63,415(14,63,415)

Series C Preferred Stock of Stoke Inc. of USD 2.05 each

15 13

84,74,576(84,74,576)

Series B Preferred Stock of E Band CommunicationsCorporation of USD 0.354 each

15 65 15 58

In Partnership Firm


Tip Top Typography 5 5

Less: Share of Loss in the Partnership Firm ` 1,22,674 (Previous year ` 2,21,218)

- -

Reliance Capital Infrastructure - 5 - 5

In Government Bonds


6 Year National Savings Certificates (` 2,49,500 Previous year ` 1,92,500) (Lodged with Sales Tax Department)

- -

5 1/2 years Kisan Vikas Patra (` 5,000 Previous year ` 5,000) (Lodged with Chennai Metropolitan Development Authority) - - - -

133 118


F-102


As atMarch 31, 2012

As atMarch 31, 2011

Aggregate Amount of Investments

Unquoted 103 91

Quoted 30 27

133 118

Partners Capital Account Details

A Tip Top Typography

Name of the Partners and share in profits Capital (in `) Share (%) Capital (in `) Share (%)

Reliance Land Private Limited 31,67,810 34% 30,42,889 34%

Swan Sorority Finance Private Limited (9,26,326) 33% (8,03,652) 33%

Reliance Webstore Limited 5,17,88,550 33% 5,19,11,224 33%

Total Capital of the Firm 5,40,30,034 100% 5,41,50,461 100%

Note : 2.13


(Unsecured, Considered good - unless stated otherwise)

Capital Advance 898 1,070

Security Deposit 65 23



Unamortised Arranger’s Fee 245 131

Other Long Term Advances 389 389


Bank Deposit with maturity for more than 12 months` 31,41,206 (Previous year ` 25,76,045) - -

2,482 2,059

Note : 2.14



Deposits 230 -

Others 388 -

618 -

Note : 2.15

Current Investment (valued at lower of cost and market value)


Quoted

34,000 6.83% GOI Bonds - 2039 of ` 100 each fully paid up - -

(34,000) (` 27,26,726 Previous year ` 28,33,853)

Unquoted

12,12,461 BlackRock US Dollar Liquidity First Fund - Institutional Share Class of USD 1 each

6 3

(6,88,191)

15,721 BlackRock US Dollar Liquid Investment Fund of USD 1 each 513 449

(15,721) - -

519 452

Aggregate Amount of Investments

Unquoted 519 452

Quoted (` 30,52,000 Previous year ` 30,52,000) - -

519 452

(` in Crore)


F-103


(` in Crore)

As atMarch 31, 2012

As atMarch 31, 2011

Note : 2.16

Inventories

Stores and Spares * 427 405

Stock in Trade (Communications Devices and Accessories) 139 112

566 517

* ` Nil (Previous year ` 6,74,145) is determined based on the First in First out method of inventory valuation and the balance is based on Weighted Average method

Note : 2.17


Due for More than Six months from the date they are due for payment


Considered Doubtful 1,038 636

2,880 1,974

Less: Provision for doubtful receivables/ Bad debts written off 1,038 636

1,842 1,338

Others



1,903 2,484


1,742 2,415

3,584 3,753

Note : 2.18


Cash on hand (` 2,05,851 Previous year ` 1,20,505) - -


Balance with Banks 327 4,626


Balances held as Margin Money 120 147


550 4,866


F-104


(` in Crore)

As atMarch 31, 2012

As atMarch 31, 2011

Note : 2.19


(Unsecured, Considered good - unless stated otherwise)




5,092 4,715

Less: Provision for doubtful advance 133 4,959 75 4,640

Balance with Customs, Central Excise Authorities etc.(Previous year ` 13,12,801)

29 -

4,988 4,640

Note : 2.20


Deposits * 1,733 1,694

Interest accrued on Investments (` 16,05,894) - 4


Others 325 291

2,338 2,220

* Deposit includes ` 1,527 crore (Previous year ` 1,186) paid against disputed claim (Refer Note 2.35).



Note : 2.21


Sale of Services (Refer Note below) 21,172 24,556

Less: Service Tax 2,456 18,716 2,467 22,089

Other Operating Income(*includes realisation from telecom terminals and accessories etc.)

961 342

19,677 22,431

Accounting for Indefeasible Right of Use

(a) During the previous year, the Company reassessed its policy for accounting of income from exclusive and indefeasible right of use (IRU) granted for network capacity to the customers to be recognised upfront as licencing income on the basis of activation of circuits instead of on straight line basis over an assured period of IRU contract as this would better reflect the associated benefit patterns derived by the Company. This view has been taken considering the fact that the Company collects the entire amount upfront and does not have any further obligations under the exclusive IRU arrangements and amounts are non refundable in nature. The Company continues to be responsible for the operation and maintenance of the network assets over which the services are delivered and this cost is separately recovered as a fixed percentage of the contract value. Consequent to above, applying principles of matching cost, the Company charges additional depreciation on corresponding fixed assets in current year as IRU services are delivered by the network assets of the Company.

(b) Accordingly, during the previous year, based on experts’ opinions, income from exclusive IRUs was recognised as license income, in compliance with Accounting Standard (AS) 9 “Revenue Recognition”. As a result, revenue and amortisation for the previous year were higher by ` 2,545 crore and ` 2,564 crore respectively and Profit after Tax was lower by ` 47 crore.


F-105


(` in Crore)



Note : 2.22

Other Income


Profit on Disposal of Fixed Assets 7 331


Dividend Income ` Nil (Previous year ` 3,15,172) - -

Miscellaneous Income 635 289

705 738

Note : 2.23







Power Fuel and Utilities 1,662 1,579



9,652 9,276

Note : 2.24


Salaries (including managerial remuneration) 1148 1325

Contribution to Provident, Gratuity and Superannuation Fund 53 61


Write back of compensation under Employee Stock Option Scheme (5) (7)

1283 1469

Note : 2.25

Finance Costs

Interest and Other Charges on Term Loans 859 459

Interest on Other Loans 618 1,477 443 902


1,630 1,133


F-106




Note : 2.26


Selling Expenses

Commission 596 705







Insurance 18 13

Rent, Rates & Taxes 184 170


- Machinery 17 14

- Building 13 19

- Others 34 22

Travelling 58 71


Foreign Exchange (Gain)/ Loss (Net) 10 (35)

Loss on Sale/ Discarding of Assets(` 3,10,533 Previous year ` 8,23,992)

- -



Wealth Tax (Previous year ` 47,50,000) 1 898 - 993


2,957 3,275

Note : 2.27

Previous Year

The consolidated financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act 1956, the consolidated financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year’s figures have also been reclassified to conform to this year’s classification. The adoption of Revised Schedule VI for previous year’s figures does not impact recognition and measurement principles followed for preparation of financial statements. Amount in financial statements are presented in Rupees in crore, except as otherwise stated.

(` in Crore)


F-107


Note : 2.28

Consolidation


Sr.No.

Name of the Subsidiary Company Country of Incorporation

Proportion of ownership interest










10 Reliance Communications Investment and Leasing Limited India 100.00%







17 Reliance Communications (New Zealand) Pte. Limited New Zealand 100.00%

18 Reliance Communications (Australia) Pty. Limited Australia 100.00%


20 Gateway Net Trading Pte. Limited Singapore 100.00%











31 FLAG Telecom Netherland B.V. The Netherlands 99.94%




35 YTV Inc. USA 99.94%












F-108


Sr.No.

Name of the Subsidiary Company Country of Incorporation





49 Reliance Vanco Group Ltd. United Kingdom 99.94%



52 Vanco (Shanghai) Co. Ltd. China 99.94%

53 Vanco (Asia Pacific) Pte. Ltd. Singapore 99.94%


55 Vanco EpE Greece 99.94%


57 Vanco GmbH Germany 99.94%











68 Vanco UK Ltd. United Kingdom 99.94%

69 Vanco International Ltd. United Kingdom 99.94%


71 Vanco Global Ltd. United Kingdom 99.94%

72 VNO Direct Ltd. United Kingdom 99.94%


74 Vanco Solutions Inc. USA 99.94%

75 Reliance WiMax World BVI British Virgin Islands 69.23%

76 Reliance WiMax World B.V. The Netherlands 69.23%

77 Reliance WiMax World Limited United Kingdom 69.23%

78 Reliance WiMax World LLC USA 69.23%

79 Reliance WiMax Congo Brazzaville B.V. The Netherlands 35.31%

80 Interconnect Brazzaville S. A. Republic of Congo 35.31%

81 Reliance WiMax Guinea B.V. The Netherlands 41.54%

82 Access Guinea SARL Guinea 41.54%

83 Reliance WiMax Sierra Leone B. V. The Netherlands 51.92%

84 Equatorial Communications Limited Sierra Leone 51.92%

85 Reliance WiMax Cameroon B. V. The Netherlands 35.31%

86 Equatorial Communications SARL Cameroon 35.31%

87 Reliance WiMax D.R.C. B.V. The Netherlands 69.23%

88 Reliance WiMax Gambia B.V. The Netherlands 69.23%

89 Reliance WiMax Mauritius B.V. The Netherlands 69.23%

90 Reliance WiMax Mozambique B.V. The Netherlands 69.23%

91 Reliance WiMax Niger B.V. The Netherlands 69.23%

92 Reliance WiMax Zambia B.V. The Netherlands 69.23%

93 Access Bissau LDA Guinea Bissau 41.54%


F-109


(b) The Company also consolidates the following companies as it exercises control over ownership and/ or composition of Board of Directors.

Sr. No. Name of the Company Country of Incorporation










2 Mumbai Metro Transport Private Limited India 26.00%

(d) The following joint venture company also forms part of Consolidated Financial Statements.



1 Alcatel-Lucent Managed Solutions India Private Limited India 33.00%

(e) The following subsidiary companies/ companies controlled/ companies consolidated ceased to remain subsidiaries/ controlled/ consolidated during the year.

Sr. No. Name of the Company

1 Vanco Euronet Sro, Czech Republic has been liquidated and ceased to be subsidiary w.e.f. March 3, 2012

2 Vanco Net Direct Limited, Ireland has been struck off and ceased to be subsidiary w.e.f. April 8, 2011

3 WANcom GmbH, Switzerland has been merged with Vanco Switzerland AG w.e.f. May 30, 2011

4 Netizen Rajasthan Limited has been merged with Reliance Infratel Limited w.e.f. March 1, 2012

Note : 2.29

Foreign Currency Convertible Bonds (FCCBs)

(i) The Company issued FCCBs in two tranches; 5,00,000 FCCBs for 5 Years, 4.65%, USD 500 million issued on May 9, 2006 and 10,000 FCCBs for 5 Years, 4.95%, USD 1000 million issued on February 28, 2007. Pursuant to the exercise of an Option by the FCCB holders and in accordance with the terms and conditions thereof, the Company, during the earlier years, allotted 1,87,44,801 fully paid equity shares of ` 5 each at a pre determined premium of ` 475.68 per share against 2,03,051 FCCBs and 6,67,090 fully paid equity shares of ` 5 each at a pre determined premium of ` 656.23 per share against 100 FCCBs respectively.

(ii) During the earlier years, the Company bought back and cancelled 647 nos. of 5 Year, 4.95%, FCCBs of the face value of USD 1,00,000 each, as per approval of the Reserve Bank of India, at a discount to the face value, resulting in a saving of ` 101 crore then accounted.

(iii) In accordance with the terms of issue of respective FCCBs, the Company, on due date, redeemed all outstanding 2,96,949 FCCBs aggregating USD 296.95 million on May 9, 2011 and balance outstanding 9,253 FCCBs aggregating USD 925.30 million on February 27, 2012. As a result, the Company is not required to allot 8.91 crore equity shares of ` 5 each arising out of conversion of the said FCCBs. Premium of USD 76.73 million and USD 256.22 million respectively, for the entire tenor, paid on redemption of the respective FCCBs has been charged to Securities Premium Account. This includes an amount of USD 1.79 million and USD 51.78 million respectively pertaining to the year ended March 31, 2012.

Note : 2.30

Foreign Currency Monetary Items; long term

In view of the Option allowed pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs (MCA), Government of India, for the year ended on March 31, 2012, the Company has added ` 1,749 crore, including ` 163 crore regarded as an adjustment to interest cost on account of restating long term monetary items expressed in foreign currency at year end prevailing rates, of exchange differences on long term borrowing relating to acquisition of depreciable capital assets to the cost of capitalised assets. Further, the Company has accumulated foreign currency variations of ` 470 crore arising on other long term foreign currency monetary items in “Foreign Currency Monetary Item Translation Difference Account”, out of which, ` 45 crore has been amortised during the year, leaving balance to be amortised over the balance period of loans.


F-110


Note : 2.31


The Company, during the past years, undertook various Schemes including restructuring of ownership structure of telecom business so as to align the interest of the shareholders. Accordingly, pursuant to the Schemes of Amalgamation and Arrangement (“the Schemes”) under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon’ble High Court of respective judicature, the Company, during the respective years, recorded all necessary accounting effects, along with requisite disclosure in the notes to the accounts, in accordance with the provisions of the said Schemes. Reserves, pursuant to the said Schemes, include;

(i) ` 8,581 crore being Securities Premium Account, which was part of the Securities Premium of erstwhile Reliance Infocomm Limited (RIC), the transferor company.

(ii) ` 12,345 crore, being part of General Reserve, on fair valuation of assets and liabilities of the Company in accordance with the Scheme of Amalgamation, amalgamating Reliance Gateway Net Limited (RGNL) into the Company.

(iii) Additional depreciation arising on fair value of the assets has been adjusted from General Reserve and from Provision for Business Restructuring.

(iv) ` 1,287 crore, being the balance was transferred to Reserve for Business Restructuring in accordance with the Scheme of Arrangement for demerger of passive infrastructure assets to Reliance Infratel Limited (RITL).

(v) ` 7 crore being Goodwill arising on consolidation pursuant to the Scheme of Amalgamation between subsidiaries has been debited during the previous year to General Reserve.

(vi) ` 891 crore, being prepaid expenses adjusted during the previous year against Securities Premium Account in accordance with the Scheme of Amalgamation between RITL and Reliance Global IDC Limited (RGIDCL), a Wholly Owned Subsidiary of RITL into RITL and as required for Consolidation, the same was adjusted against General Reserve.

(vii) Additional depreciation of subsidiaries consequent upon revaluation of assets carried out has been adjusted to General Reserve.

(viii) ` 950 crore an amount recoverable which was written off by Reliance Communications Infrastructure Limited (RCIL) during the earlier year, was charged off, as permitted under the Scheme of Amalgamation of Matrix Innovations Limited (MIL), a Wholly Owned Subsidiary of RCIL into RCIL, to General Reserve.

(ix) Pursuant to the said Scheme of Amalgamation (Refer Note (ii) above), on account of the fair valuation during the year ended on March 31, 2009, additions (or) adjustments to the fixed assets included increase in Freehold Land by ` 225 crore, Buildings by ` 130 crore and Telecom Licenses by ` 14,145 crore.

(x) Pursuant to the demerger, the Company computed goodwill of ` 2,659 crore arising on consolidation using the step up method based on date of original investment by Reliance Industries Limited (RIL) prior to demerger instead of considering the date of demerger as the date of investment in absence of specific guidance in Accounting Standard (AS) 21 “Consolidated Financial Statements” in a demerged scenario.

(xi) Also refer note 2.40 “Exceptional Items”.

Note : 2.32

Scheme of Amalgamation and Arrangement

Pursuant to the Scheme of Amalgamation (“the Scheme”) under Section 391 to 394 of the Companies Act, 1956 sanctioned by the Hon’ble High Court of Bombay vide Order dated April 20, 2012, with an Appointed Date being March 1, 2012, Netizen Rajasthan Limited (“NRL” or ‘the Transferor Company’), a Wholly Owned Subsidiary of Reliance Infratel Limited (“RITL” or ‘the Transferee Company’), a subsidiary of the Company, has been amalgamated into RITL and ceased to be subsidiary of the Company.

Upon the Scheme becoming effective, all the assets and liabilities as appearing in the books of NRL as on the Appointed Date have been recorded in the books of RITL at their respective book values and inter-company balances have been cancelled. Investment of ` 1,000 crore by the RITL in the shares of NRL has been written off by RITL to its Statement of Profit and Loss and adjusted by withdrawing an equivalent amount from General Reserve. Excess of assets over liabilities of ` 1,793 crore has been credited to Capital Reserve by RITL.

Note : 2.33

Depreciation, Impairment and Amortisation and Change in Method of Depreciation

Pursuant to an approval by the Ministry of Corporate Affairs (MCA) under Section 205 (2) (d) of the Companies Act, 1956, Reliance Infratel Limited (RITL), a Subsidiary of the Company has provided depreciation on Telecom Towers at 2.72% under Straight Line Method (SLM) over the useful life of asset. As a result, depreciation charge in Consolidated Accounts for the year ended March 31, 2012 is lower by ` 173 crore and profit is higher by the said amount.

Reliance Telecom Limited, a Wholly Owned Subsidiary of the Company has aligned policy of depreciation with the Company and accordingly, provided depreciation based on SLM. As a result, in Consolidated Accounts, excess depreciation of ` 306 crore accounted during the previous period up to September 30, 2011 has been reversed during the year ended March 31, 2012. As a result, depreciation charge is lower and profit is higher by the said amount for year ended March 31, 2012.


F-111


Note : 2.34


Details of Project Development Expenditure (Included under Capital Work in Progress): (` in Crore)




Add: Expenditure incurred during the year 267 325

Interest on Term Loans 297 564 355 680

1,164 858

Less: Capitalized during the year 803 253

Sale of scrap - 803 5 258


Note : 2.35

Provisions

Provisions include, provision for disputed claims for verification of customer ` 9 crore (Previous year ` 9 crore), others of ` 1,353 crore (Previous year ` 1,399 crore) and reversal of disputed liabilities of ` 46 crore (Previous year ` 102 crore), provisions for Asset Retirement Obligation (ARO) made by the Company’s subsidiary in respect of undersea cables and equipments of ` 761 crore (Previous year ` 244 crore).


Note : 2.36

Contingent Liabilities and Capital Commitment (as represented by the Management)(` in Crore)

As atMarch 31, 2012

As atMarch 31, 2011

(i) Estimated amount of contracts remaining to be executed on capital accounts(net of advances) and not provided for

657 1,420



- Custom, Excise and Service Tax 12 12


- Income Tax 16 -

- Other Litigations 97 128

- Interest on ADC on FWP/ T 342 160

(iii) Claims against the Company not acknowledged as debt 137 87


(v) Bonds executed in favour of the Government Authorities - 57

(vi) Consequent to the investigations by an investigative agency (CBI) in relation to the entire telecom sector in India, certain preliminary charges have been framed by a Trial Court in October, 2011 against Reliance Telecom Limited (RTL), a Wholly Owned Subsidiary of the Company, and three of the executives of the Group. The charges so framed are preliminary in nature based on investigations only, and the persons named are presumed to be innocent, till their alleged guilt is established after a fair trial.

As legally advised, the persons so named deny all charges, and a writ petition for quashing the charges framed have been filed in October, 2011 in the Hon’ble High Court of Delhi, which is pending for hearing. These preliminary charges have no impact on the business, operations, and/ or licenses of RTL and of the Company and, even more so, are not connected in any manner to any other listed group companies.

(vii) License Fees

The Hon’ble Supreme Court, vide its judgment dated October 11, 2011, has set aside the Order of Telecom Disputes Settlement and Appellate Tribunal (TDSAT) dated August 30, 2007 and allowed two months’ time to the licencees to raise their disputes before the Hon’ble TDSAT w.r.t. the demands already raised by Department of Telecommunications (DoT). The Hon’ble Supreme Court, in the meanwhile, also restrained DoT from enforcing its demands already raised. By Order dated December 15, 2011, the


F-112


Hon’ble TDSAT granted all licensees/ operators the liberty to file additional affidavits thereby bringing on record the material facts including the subsequent events with respect to the petitions already pending before the Hon’ble TDSAT, which have been revived pursuant to the aforesaid judgement of the Hon’ble Supreme Court. On April 12, 2012, all the petitions (both old and new of all the operators including of the Company) were heard and an interim order of protection, earlier passed was extended to the new AGR petitions. The matter is pending for further hearing/ orders scheduled before the Hon’ble TDSAT on July 2, 2012.

(viii) Access Deficit Charges (ADC)

The Hon’ble TDSAT and the Hon’ble Supreme Court, vide their judgments dated January 17, 2006 and April 30, 2008 respectively upheld the circular of Bharat Sanchar Nigam Limited (BSNL) dated January 14, 2005 whereby and whereunder the Company’s fixed wireless phone (FWP) service was declared as limited mobile service. The period of claim, which was raised before the Hon’ble Supreme Court, was from November 14, 2004 to August 26, 2005. As directed by the Hon’ble Supreme Court, on April 30, 2008, the Company moved before the Hon’ble TDSAT for quantification of ADC for aforesaid period. The Hon’ble TDSAT vide its judgement dated April 17, 2012 confirmed the liability of the Company for the said period and for subsequent periods. The Company already has an adequate provision of ` 540 crore in the books for the liability which has been determined to be payable. Further course of action including the financial impact, if any, for the balance amount, which is under dispute shall be determined on completion of reconciliation with BSNL.

(ix) Special Audit

Pursuant to the Telecom License Agreement, DoT directed audits of various Telecom companies including of the Company. The Special Auditors appointed by DoT were required to verify records of the Company and some of its subsidiaries for the years ended March 31, 2007 and March 31, 2008 relating to license fees and revenue share. The Company and its subsidiary have received show cause notices dated January 31, 2012 based on report of the Special Audit directed by DoT relating to alleged shortfall of license fees and revenue share of ` 306 crore and interest thereon as applicable. The Company has submitted its reply to DoT towards show cause notice. The Company is confident that based on advice and, inter alia, on current understanding of the regulation by the industry and judicial pronouncements directly applicable to the issues raised in the special audit report, there shall not be any liability in this regard and hence, no provision is required in the accounts of the Company.

Note : 2.37

Leases

(a) Finance Lease; as a lessee

(i) The details of gross investments and minimum lease rentals outstanding as at March 31, 2012 in respect of Fixed Assets acquired on or after April 1, 2001.

(Amount in `)

Due Gross Investment Unearned Finance Income Present Value of Minimum Lease Payments

For the year ended March 31,

2012 2011 2012 2011 2012 2011

Within one year 4,55,631 8,32,438 20,957 1,46,723 4,34,674 6,85,715

Later than one year and not later than five years

- 4,55,631 - - - 4,55,631

Later than five years - - - - - -

Total 4,55,631 12,88,069 20,957 1,46,723 4,34,674 11,41,346

(ii) General description of the significant leasing arrangements is as mentioned below.

(a) The lease agreement is valid for a fixed non cancellable period from the date of commencement of lease rentals.

(b) Upon termination of the lease agreement, the Company shall return the assets to the lessor.

(c) In the event, the claim of lessor for depreciation is disallowed partly or fully in their tax assessment, the lease rentals will increase to the extent of depreciation disallowed to the lessor.

(b) Operating Lease (` in Crore)








F-113


Note : 2.38


Particulars of Derivative Instruments acquired for hedging

For the year ended March 31, 2012 For the year ended March 31, 2011

No. of Instruments

Value No. of Instruments

Value

(US $ Crore) (` in Crore) (US $ Crore) (` in Crore)


Interest Rate Swaps FC 14 44 2,228 19 64 2,845


Options FC 3 31 1,570 7 34 1,532


In respect of Foreign Currency Swap and Interest Rate Swap transactions, which are linked with LIBOR rates and exchange rate during the binding period of contract, the gains/ losses, if any, are recognised on the settlement day or the reporting day, whichever is earlier, at the rate prevailing on respective day.

Foreign Currency exposures that are not hedged by derivative instruments or otherwise are US $ 547 crore (Previous year US $ 615 crore), equivalent to ` 27,819 crore (Previous year ` 27,428 crore), and Euro 76,822 (Previous year Euro 5,71,212), equivalent to ` 1 crore (Previous year ` 4 crore)

The unamortised premium of Buyers’ Line of Credit to be recognised is ` 3 crore (Previous year ` 1 crore) for one or more subsequent accounting periods.

Note : 2.39

Earnings per Share (EPS) For the year endedMarch 31, 2012


Basic and Diluted EPS before Exceptional Items

(a) Profit attributable to Equity Shareholders (` in crore) (used as numerator for calculating Basic EPS)

928 1,334

(b) Weighted average number of equity shares (used as denominator for calculating Basic EPS)

2,064,026,881 2,064,026,881

(c) Profit attributable to Equity Shareholders (` in crore) (used as numerator for calculating Diluted EPS)

928 1,334

(d) Weighted average number of equity shares (used as denominator for calculating Diluted EPS)

2,104,046,936 2,153,165,814



Basic and Diluted EPS after Exceptional Items

(a) Profit attributable to Equity Shareholders (` in crore) (used as numerator for calculating Basic EPS)

928 1,346

(b) Weighted average number of equity shares (used as denominator for calculating Basic EPS)

2,064,026,881 2,064,026,881

(c) Profit attributable to Equity Shareholders (` in crore) (used as numerator for calculating Diluted EPS)

928 1,346

(d) Weighted average number of equity shares (used as denominator for calculating Diluted EPS)

2,104,046,936 2,153,165,814




F-114


Note : 2.40

Exceptional Items

(a) Pursuant to the direction of the Hon’ble High Court of Judicature at Mumbai and Option exercised by the Boards of the respective Companies, in accordance with and as per the arrangements approved by the Hon’ble High Court under different Schemes of Arrangement binding on the Company and three of its subsidiaries, namely, Reliance Communications Infrastructure Limited, Reliance Infratel Limited and Reliance Telecom Limited, expenses and/ or losses, identified by the Boards of the respective companies as being exceptional or otherwise subject to the Accounting treatment prescribed in the Schemes of Arrangement sanctioned by the Hon’ble High Court and comprising of ` 1,107 crore (Previous year ` 159 crore) of debts due including, in particular, debts due from telecom operators whose licences are under cancellation pursuant to the directions of the Hon’ble Supreme Court in its order dated February 2, 2012 in the matter of Centre for Public Interest Litigation and others vs. Union of India and others and subsidy claimed from the Government, ` 268 crore unrealised net losses, ` 951 crore regarded as an adjustment to interest cost on account of restating long term monetary items expressed in foreign currency at year end prevailing rates, as also ` 353 crore of net realised losses on settlement of items recovered and/ or discharged in foreign currency, in accordance with Para 46 A inserted into Accounting Standard (AS) 11 “The Effects of Changes in Foreign Exchange Rates” in context of unprecedented volatility in exchange rates during the year, ` 70 crore (Previous year ` 77 crore) fuel cost considered to be incremental and arising from the non availability of contracted or expected power have been met by withdrawal from corresponding General Reserves, leaving no impact on profit for the year ended March 31, 2012. Such withdrawals have been included/ reflected in the Statement of Profit and Loss. Previous year’s figures where not applicable herein are not mentioned.

While the Company has been legally advised that such inclusion in the Statement of Profit and Loss is in accordance with Revised Schedule VI of the Companies Act, 1956 the Company is also seeking clarification from ICAI that such inclusion in the Statement of Profit and Loss is not contrary to Revised Schedule VI.

Exceptional Items ` Nil (Previous year ` 5 crore) pertains to Employee Restructuring Cost reversal by Reliance Vanco Group Limited.

(b) Had such write off of expenses, losses and deferred tax (refer note no. 2.04) not been met from General Reserve, the consolidated financial statements would have reflected a loss after tax of ` 2,472 crore and the consequential effect of this on consolidated profit after tax would have been of ` 3,401 crore.

Note : 2.41

General Reserve

The Company has, from the year ended on March 31, 2008 onwards, combined the balances of General Reserve I, II and III and disclosed as General Reserve in Consolidated Accounts. General Reserve I and II were arising pursuant to the Schemes of demerger of ‘Telecommunication Undertaking’ of RIL into the Company and the Scheme of Amalgamation and Arrangement of Group Companies respectively in earlier years. General Reserve III includes the reserve arising pursuant to the Schemes of Amalgamation with erstwhile RGNL.

The Company, during the previous year, transferred ` 216 crore pursuant to Section 205A (3) of the Companies Act, 1956 and the Companies (Declaration of Dividend out of Reserves) Rules, 1975 and paid dividend out of the accumulated profits of the previous years.

Adjustment of ` 36 crore in opening profit of previous year represents accounting effect arising upon audit of its certain subsidiaries Reliance Communications (Singapore) Pte. Limited and Gateway Net Trading Pte. Limited for the year ended March 31, 2009.

Note : 2.42

1 Related Parties

As per the Accounting Standard (“AS”) 18 of “Related Party Disclosures” as referred to in Accounting Standard Rules, the disclosure of transactions with the related parties as defined therein are given below.




(ii) AAA Communication Private Limited Subsidiary of Holding Company

(iii) Reliance Capital Limited Fellow subsidiary

(iv) Reliance General Insurance Company Limited Fellow subsidiary

(v) Shri Anil D. Ambani Person having control during the year

(vi) Shri Hasit Shukla Key Managerial Personnel - Upto May 31, 2011

(vii) Shri Prakash Shenoy Key Managerial Personnel - w.e.f. June 1, 2011


F-115




Fellow Subsidiaries

Others Total


(i) Advances

Opening Balance as on April 1, 2011 - - -

` 29,60,936 (Previous year ` Nil) (-) - (-)

Add : Advances made during the year - - -

` 1,28,172 (Previous year ` 29,60,936) (-) - (-)

Less : Repayment during the year - - -

(-) - (-)

Closing Balance as on March 31, 2012 - - -

` 30,89,108 (Previous year ` 29,60,936) (-) - (-)

(ii) Sundry Debtors 2 - 2

(2) - (2)

(iii) Income

Service Income - - -

` 4,48,788 (Previous year ` 4,31,472) (-) - (-)


(i) Advances

Balance as on April 1, 2011 1 - 1

(1) - (1)

Add: Advances made during the year 3 - 3

(3) - (3)

Less: Repayment during the year 4 - 4

(3) - (3)

Balance as on March 31, 2012 - - -

(1) - (1)

(ii) Sundry Debtors 3 - 3

(2) - (2)

(iii) Sundry Creditors 1 - 1

(-) - (-)

(iv) Income

Service Income - - -

` Nil (Previous year ` 32,050) (-) - (-)

(v) General and Administrative Expenses 2 - 2

(-) - (-)


Shri Anil D. Ambani - Sitting fees - - -

` 2,60,000 (Previous year ` 2,00,000) - (-) (-)



Shri Hasit Shukla ` 6,58,398 [excluding ` 11,37,167, being paid in excess under the Act, shown as recoverable (Previous year ` 24,00,000)]

- - -

Shri Prakash Shenoy ` 21,56,178 (Previous year ` Nil) - - -

- (-) (-)


F-116


Note : 2.43


The Company operates two Employee Stock Option Plans; ESOS Plan 2008 and ESOS Plan 2009, which cover eligible employees of the Company and its Subsidiaries. ESOS Plans are administered through an ESOS Trust. The Vesting of the Options is on the expiry of one year from the date of Grant as per Plan under the respective ESOS(s). In respect of Options granted, the accounting value of Options (based on market price of the share on the date of the grant of the Option) is accounted as deferred employee compensation, which is amortised on a straight line basis over the Vesting Period. Each Option entitles the holder thereof to apply for and be allotted/ transferred one equity share of the Company of ` 5 each upon payment of the Exercise Price during the Exercise Period. The maximum Exercise Period is 10 years from the date of Grant of Options.

The Company has established a Trust for the implementation and management of ESOS for the benefit of its present and future employees. Advance of ` 389 crore (Previous year ` 389 crore) has been granted to the Trust. ` 391 crore (Previous year ` 391 crore) has been utilised by the Trust for purchasing 2.13 crore (Previous year 2.13 crore) equity shares during the period upto March 31, 2012.

Amounts earlier charged in respect of surrendered Options under ESOS Plan 2008 amounting to ` 5 crore (previous year ` 7 crore) was reversed and reflected under employees cost in Statement of Profit and Loss. No amount is chargeable in respect of Options granted under ESOS Plan 2009.



Number of Options

Weighted average exercise

price [`]

Number of Options

Weighted average exercise

price [`]

Number of Options Outstanding at the beginning of the year 8,75,253 396 63,34,253 206

Number of Options granted Nil - Nil -

Total number of Options surrendered - - 2,44,000 -

Number of Options vested during the year 8,75,253 396 63,34,253 206

Total number of Options exercised Nil - Nil -

Total number of Options forfeited/ lapsed 3,06,059 298 24,22,039 206

Number of Options outstanding at the end of the year 5,69,194 448 39,12,214 206

If the entity would have estimated fair value computed on the basis of Black-Scholes pricing model, the compensation cost for the year ended March 31, 2012 for ESOS Plan 2008 and ESOS Plan 2009 would have been ` 5 crore and ` 12 crore respectively. The key assumptions used to estimate the fair value of Options are given below.






Price of the underlying share in market at the time of grant of Option ` 541 ` 174

Note : 2.44

Export Commitments

The Company and its subsidiaries have obtained licenses/ authorisations under the Export Promotion Capital Goods (EPCG) Scheme for importing capital goods at a concessional rate of customs duty against submission of bonds. Under the terms of the respective licenses/ authorisations, the Company and its subsidiaries are required to export goods of FOB value equivalent to or more than, eight times the amount of duty saved in respect of such licenses/ authorisations, where export obligation has been refixed by the Order of Director General Foreign Trade, Ministry of Commerce and Industry, Government of India, as applicable. Balance export obligations outstanding as on March 31, 2012 in case of the Company and its subsidiaries namely; RCIL and RITL under the aforesaid licenses/ authorisations is ` 334 crore, ` 619 crore and ` 2,030 crore respectively (Previous year ` 334 crore, ` 632 crore and ` 7,126 crore respectively).


F-117


Note : 2.45

Joint Venture

Reliance Communications Infrastructure Limited (RCIL), a Subsidiary of the Company has entered into a joint venture (JV) with 33% interest. The detail of the said JV are as under.

Name of the Joint Venture : Alcatel-Lucent Managed Solutions India Private Limited

Name of the Other Venturer : Alcatel-Lucent India Limited

Percentage of Interest of RCIL : 33%

Percentage of Interest of other venturers : 67%

Aggregate amount related to interest in JV (` in Crore)

As atMarch 31, 2012

As atMarch 31, 2011

- Assets 271 207

- Liabilities 196 128

- Income 314 270

- Expenses 279 215

Note : 2.46

Employee Benefits

Gratuity: In accordance with the applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Plan) for all its employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on respective employees last drawn salary and for the years of employment with the Company.

The following table set out the status of the Gratuity Plan as required under Accounting Standard (“AS”) 15 (Revised) “Employee Benefits” (Revised).

(` in Crore)

Gratuity Leave Encashment


March 31,2012

March 31,2011

March 31,2012

March 31,2011





Actuarial (gain)/ loss (4) - (2) 18

Benefits paid (10) (8) (28) (35)


Defined benefit obligation liability as at the balance sheet is wholly funded by the Company


Plan assets at beginning of the year, at fair value 32 36 - -


Actuarial (gain)/ loss (2) - - -

Contributions 8 1 28 35

Benefits (10) (8) (28) (35)

Plan assets at year end, at fair value 31 32 - -


F-118


(` in Crore)

Gratuity Leave Encashment


March 31,2012

March 31,2011

March 31,2012

March 31,2011


Fair value of plan assets at the end of the year 31 32 - -

Present value of the defined benefit obligations at the end of the year 34 38 67 87





Expected return on plan assets (3) (3) - -

Actuarial (gain)/ loss (2) 1 (2) 18

Net Gratuity Cost 5 9 6 28


On Plan Liabilities (Gain)/Loss 3 3 N.A N.A

On Plan Assets Gain / (Loss) (1) (1) N.A N.A




(viii) Assumptions

Interest rate 8.50% 8.20% 8.50% 8.20%

Estimated return on plan assets 8.50% 8.20% 8.50% 8.20%


The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

(ix) Particulars of the amounts for the year and previous years

Gratuityfor the year ended March 31,

2012 2011 2010 2009 2008



Excess of (obligation over plan assets)/ plan assets over obligation

4 6 (1) 10 1

The expected contribution is based on the same assumptions used to measure the company’s gratuity obligations as of March 31, 2012.

Provident Fund : The guidance on Implementing (“AS”) 15 “Employee Benefits” (revised 2005) issued by the ICAI states that the benefits involving employer established Provident Fund, which require interest shortfalls to be recompensed are to be considered as/ in defined benefit plans. The employee and employer each make monthly contribution to the plan equal to 12% of the covered employee’s salary. Contributions are made to the trust established by the Company. During the year ended March 31, 2012, the Actuarial Society of India issued the final guidance for measurement of provident fund liabilities. As at March 31, 2012, Fair value of plan assets is ` 311 crore, the present value of defined benefit obligation is ` 313 crore. Accordingly, based on such actuarial valuation, the Company has charged ` 2 crore (Previous year ` Nil), being shortfall in interest, during the year. For the year ended March 31, 2012, the Company has contributed ̀ 23 crore (Previous year ̀ 26 crore) towards Provident Fund. The Employee Benefits as disclosed herein pertain to the Company and its significant subsidiaries.

The assumptions made for the above are Discount rate of 8.50%, average remaining tenure of Investment Portfolio is 7 years and guaranteed rate of return is 8.25%.


F-119


Note : 2.47


The Company has reorganised its business operations during the year and combined Global and Enterprise Business as a single operating unit. In order to represent the business operation on the lines of reorganisation, a combined Global Enterprise Business Unit (GEBU) segment is disclosed.

The Company has restructured/ identified three reportable segments viz. Wireless, GEBU, and Others, taking into account the nature of services provided, the differing risks and returns and the internal business reporting systems. The accounting policies adopted for segment reporting are in line with the accounting policy of the Company with following additional policies for segment reporting.

(a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as “Unallocable”.

(b) Segment assets and liabilities represent the assets and liabilities in respective segments. Tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as “Unallocable”.



Segment Revenue

External Revenue 13,562 6,080 740 - - 20,382

14,847 7,313 1,009 - - 23,169

Inter Segment Revenue 4,134 3,338 360 - (7,832) -

2,800 4,315 460 - (7,575) -

Net Revenue 17,696 9,418 1,100 - (7,832) 20,382

17,647 11,628 1,469 - (7,575) 23,169

Segment Result before Exceptional and non recurring items, interest & taxes

2,431 1,093 (1,012) - - 2,512

3,159 494 (1,008) - - 2,645

Less: Finance Expense - - - 1,630 - 1,630

- - - 1,133 - 1,133

Segment Result before Exceptional and non recurring items, taxes

2,431 1,093 (1,012) (1,630) - 882

3,159 494 (1,008) (1,133) - 1,512

Recurring items - - - - - -

- - - (5) - (5)

Less: Provision for Taxation - - - (106) - (106)

- - - 12 - 12

Segment Result after Tax 2,431 1,093 (1,012) (1,524) - 988

3,159 494 (1,008) (1,140) - 1,505

Other Information

Segment Assets 69,059 19,243 4,604 25,382 (26,882) 91,406

65,315 17,307 4,573 31,742 (25,336) 93,601

Segment Liabilities 12,707 9,030 856 5,033 (11,840) 15,786

11,649 6,671 595 4,474 (9,428) 13,961

Other Corporate Assets - - - 1,284 - 1,284

- - - 1,122 - 1,122

Other Corporate Liabilities - - - 39,323 - 39,323

- - - 39,438 - 39,438


F-120



Capital Expenditure 2,735 2,996 117 - - 5,848

9,190 475 295 - - 9,960

Depreciation 2,303 1,199 476 - - 3,978

2,037 3,982 485 - - 6,504


- The Wireless segment includes wireless operations of the Company, Reliance Communications Infrastructure Limited, Reliance Telecom Limited, Reliance Infratel Limited, Alcatel-Lucent Managed Solutions India Private Limited and the retail operations of Reliance Communications UK Limited, Reliance Communications International Inc., Reliance Communications Canada Inc., Reliance Communications (Australia) Pty. Limited, Reliance Communications (New Zealand) Pte. Limited.

- The GEBU segment includes Broadband operations, National Long Distance and International Long Distance operations, of the Company and the wholesale operations of its subsidiaries viz. Reliance Globalcom BV and its subsidiaries. Reliance Communications Infrastructure Limited and Reliance WiMax Limited.

- The businesses, which were not reportable segments during the year, have been grouped under the “Others” segment. This mainly comprises of the customer care activities of Reliance Webstore Limited, Facility Usage activities of Reliance Infocomm Infrastructure Private Limited and DTH activities of Reliance Communications Infrastructure Limited and Reliance Big TV Limited.


The secondary segment relates to geographical segments viz. Operations within India and outside India.(` in Crore)

Within India Outside India Total

1. Segment Revenue - External Turnover 15,171 5,211 20,382

15,312 7,857 23,169

2. Segment Assets 76,098 15,308 91,406

80,366 13,235 93,601

3. Segment Liability 11,847 3,939 15,786

10,743 3,218 13,961

4. Segment - Capital expenditure 4,611 1,237 5,848

9,488 472 9,960


- The “Within India” segment includes the operations of the Company and its subsidiaries in India.

- The “Outside India” segment includes the operations of the Company’s subsidiaries viz. Reliance Globalcom BV and its subsidiaries.




Mumbai May 26, 2012



J. Ramachandran


Deepak Shourie

A. K. Purwar


(` in Crore)


F-121

REGISTERED OFFICE OF THE ISSUER

Reliance Communications LimitedH Block, 1st Floor, Dhirubhai Ambani Knowledge City

Navi, Mumbai 400 710Maharashtra, India

AUDITORS

BSR & Co. LLP, Chartered AccountantsLodha Excelus, 1st Floor,Apollo Mills Compound

N.M. Joshi Marg, Mahalakshmi,Mumbai 400 011

Maharashtra, India

Chaturvedi & Shah, Chartered Accountants714-715, Tulsiani Chambers,

212, Nariman PointMumbai 400 011

Maharashtra, India

TRUSTEE, PRINCIPAL PAYING AGENT AND PAYING AGENT

Standard Chartered Bank5th Floor, 1 Basinghall Avenue

London, EC2V 5DDUnited Kingdom

REGISTRAR AND TRANSFER AGENT

Standard Chartered BankStandard Chartered Bank @ Changi

7 Changi Business Park CrescentLevel 3 — Corporate Agency & Trust

Singapore 486028

LEGAL ADVISORS

To the Issueras to English law

To the Issueras to Indian law

To the Joint Lead Managersas to English law

To the Joint Lead Managersas to Indian law

Jones Day138 Market Street

Level 28, CapitaGreenSingapore, 048946

Talwar Thakore &Associates3rd Floor,

Kalpataru Heritage127, M. G. Road

Mumbai - 400 001Maharashtra, India

Clifford Chance Pte Ltd12 Marina Boulevard25th Floor, Tower 3

Marina BayFinancial Centre

Singapore 018982

J. Sagar AssociatesVakils House,

18 Sprott Road,Ballard Estate

Mumbai - 400 001India

Reliance Communications Limited(Indian Corporate Identification No. L45309MH2004PLC147531)

(Incorporated in India with limited liability)

US$300,000,000 6.5 per cent. Senior Secured Notes due 2020

Joint Global Coordinators, Joint Book Runners and Joint Lead Managers

DBS Bank Ltd. Standard Chartered Bank