TeleVentures Ltd has clarified to the BSE on the report
aired by a TV channel on December 27, 2005, pointing
out the difference arising out of "restatement"
of its results under US GAAP for and up to year ended
March 31, 2004, based on the audit reports and material
on the Bharti website for the past few months.
has stated that the differences were purely non-cash
and technical in nature as they pertained to a switch
over from the Indian accounting norms to the more stringent
US GAAP norms as a prelude to its proposed ADR issue,
which was subsequently cancelled. The company has reiterated
that there is "no bearing on operational performance
or cash flow of the company either in (the) past or
on an ongoing basis." Reproduced below is the verbatim
the company go into the specific questions raised and
its response / clarifications thereto, it may be pertinent
to point out the background which led to these changes.
Till 2004, the company used to prepare and present it''s
accounts under IFRS, in addition to the statutory IGAAP
accounts. These IFRS results also reflected the reconciliation
of net income / loss and total shareholders equity to
Early this year, as is publicly known, the company planned
a sponsored ADR for US Listing. As a part of preparation
for the same, company decided to move to US GAAP, which
is the most stringent and preferred accounting standard
The company subsequently dropped the ADR plan due to
lack of sponsorship by its principal shareholders, but
decided to anyway shift to US GAAP in line with its
commitment to highest standards of corporate governance,
disclosures and transparency.
The group had not previously issued complete US GAAP
financial statements and thus the "restatement"
and the reconciliation are between the US GAAP audited
results and the above stated reconciliation between
IFRS and US GAAP. In essence the complete US GAAP financial
statements have been issued for the first time in July
The difference between the two are comprised of the
following two categories of adjustments:
· The adoption of ''purchase accounting'' in accordance
with statement of Financial Accounting Standard (FAS)
141 - Business Combinations and FAS 142 - Goodwill and
Intangible Assets. Historically, the group had accounted
for various business acquisitions at book values with
excess of purchase consideration over book value of
net assets being treated as goodwill. This fact was
duly disclosed in the previous audit report. FAS141
and 142 require the business acquisitions to be accounted
at "fair values". This is purely technical
since it is well know that all acquisitions of operations
made by the Company have been at very favourable valuations.
Adjustments on account of different treatment for certain
other items under US GAAP. These related to items like
revenue recognition and activation costs, fair valuation
of shares issues, ESOP accounting etc.
The company, in keeping with its tradition of highest
standards of transparency, decided to reconcile these
audited figures with the IFRS reconciled US GAAP figures
earlier. The full report and explanations were also
posted on the Company''s website and have been in public
domain since last several months. The company, in it''s
earning call held on July 27, 2005, also upfront informed
the investors about shift to US GAAP and about posting
details on the website.
The overall effect on the shareholders equity upto March
31, 2004 on account of all the above adjustments is
approx. Rs9,150 million. Of this approx. Rs8,000 million
pertains to business combination, goodwill and deferred
tax adjustments and the balance pertains to various
items under the other category of adjustments mentioned
following questions / doubts were raised by the channel
in their telecast. The company''s response to each follows
after the question.
the ADR issue was dropped because of these changes?
The ADR plan was dropped only due to lack of sponsorship
from principal shareholders. The above changes had nothing
to do with that decision.
there is any change in Indian GAAP results?
There is no change in our results under India GAAP which
is the only mandatory GAAP for our company under the
the company "forgot" to account for these
We hope that the explanations and clarifications provided
above would make it amply clear that there was no element
of forgetfulness or negligence and that the changes
arose purely on account of technicalities of treatment
under different standards.
conclude, the Company would like to categorically state
differences were purely non-cash and technical in nature
and have no bearing on operational performance or cash
flow of the company either in past or on an ongoing