BHARAT SANCHAR NIGAM LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2008.

SCHEDULE For the Year ended 31st March 2008 (Rs. in Lakh) 3,235,953 569,387 3,805,340 880,891 315,213 1,111,675 86,254 969,610 3,363,643 441,697 3,458 445,155 136,094 -2,171 6,448 3,700 145 300,939 30,000 52,500 67,500
25,493

For the Year ended 31st March 2007 (Rs. in Lakh) 3,461,621 509,890 3,971,511 730,897 331,169 1,091,628 77,941 914,931 3,146,566 824,945 -9,564 815,381 96,229 -19,470 -45,795 3,700 130 780,587 50,000 67,500
18,484

INCOME Income from Services Other Income EXPENDITURE Employees' Remuneration and Benefits Licence fee and Spectrum fee (Refer Note 13 on Schedule U) Administrative, Operating and Other Expenses Financial Expenses Depreciation

N O

P Q R D

Profit before Prior period items Prior period items (Net) Profit before taxation Current Tax
MAT Credit

Deferred Tax Fringe Benefit Tax Wealth Tax Profit for the year after taxation Appropriation : Interim Dividends on Equity Share Capital Proposed Dividends: - On Equity Share Capital - On Preference Share Capital Tax on Dividends Transfer to General Reserve Surplus carried to Balance Sheet Earnings Per Share (In Rs.) Basic earnings per equity share (Refer Note 18 on Schedule U)

60,188 65,258 300,939 4.44

156,117 488,486 780,587 14.03

Accounting Policies Notes to Accounts

T U

The Schedules referred to above, form an integral part of the Profit and Loss Account.

As per our report of even date For Thakur, Vaidyanath Aiyar & Co. Chartered Accountants

For and on behalf of Bharat Sanchar Nigam Limited

Kuldeep Goyal (Chairman and Managing Director)

M.P.Thakur

Partner M. No: 52473 S.D.Saxena Director (Finance)

P.K.Purwar Deputy Director General (Corporate Accounts)

Place : New Delhi Date : 25th July, 2008

H.C.Pant Company Secretary and General Manager (Legal)

BHARAT SANCHAR NIGAM LIMITED BALANCE SHEET AS AT 31ST MARCH 2008.

SCHEDULE SOURCES OF FUNDS Shareholder's Funds Capital Reserves and Surplus Loan Funds Unsecured Loans Deferred Tax Liability-Net (Refer Note 19.1 on Schedule U) Total APPLICATIONS OF FUNDS Fixed Assets Gross Block Less: Depreciation Net Block Capital Work-in-Progress Decommissioned Assets Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Other Current Asset - Accrued interest Loans and Advances Less : Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets Inter/Intra Circle Remittance (Refer Note 14 on Schedule U) Total Accounting Policies T Notes to Accounts U The Schedules referred to above, form an integral part of the Balance Sheet. As at 31st March 2008 (Rs. in Lakh) As at 31st March 2007 (Rs. in Lakh)

A B

1,250,000 7,562,825

1,250,000 7,444,802

338,887 131,053 9,282,765

554,366 124,605 9,373,773

D 12,457,823 6,987,974 5,469,849 266,562 389 5,736,800 20,000 322,006 546,551 4,055,158 137,687 744,441 5,805,843 1,739,788 606,321 2,346,109 3,459,734 66,231 9,282,765 11,864,901 6,071,511 5,793,390 256,860 6,444 6,056,694 20,000 242,847 558,066 3,745,296 114,148 714,431 5,374,788 1,667,919 514,858 2,182,777 3,192,011 105,068 9,373,773

E F G H I J K

L M

As per our report of even date For Thakur, Vaidyanath Aiyar & Co. Chartered Accountants

For and on behalf of Bharat Sanchar Nigam Limited

Kuldeep Goyal (Chairman and Managing Director)

M.P.Thakur

Partner M. No: 52473

S.D.Saxena Director (Finance)

P.K.Purwar Deputy Director General (Corporate Accounts)

Place : New Delhi Date : 25th July, 2008

H.C.Pant Company Secretary and General Manager (Legal)

BHARAT SANCHAR NIGAM LIMITED SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
As at 31st March 2008 (Rs. in Lakh) SCHEDULE A : CAPITAL (Refer Note 2.2 on Schedule U) Authorised 10,000,000,000 (P. Y.: 10,000,000,000) Equity Shares of Rs. 10/- each 7,500,000,000 (P.Y.: 7,500,000,000) Preference Shares of Rs. 10/- each As at 31st March 2007 (Rs. in Lakh)

1,000,000 750,000 1,750,000

1,000,000 750,000 1,750,000

Issued, Subscribed and Paid Up 5,000,000,000 (P. Y. : 5,000,000,000) Equity Shares of Rs 10/- each fully paid up 7,500,000,000 (P. Y. : 7,500,000,000) 9% Non- Cumulative Preference Shares of Rs 10/- each fully paid up

500,000 750,000 1,250,000

500,000 750,000 1,250,000

Notes: Out of the above Equity shares 4,999,998,400 Equity shares of Rs. 10/- each (P.Y. : 4,999,998,400) and 7,500,000,000 Preference Shares of Rs. 10/- each P.Y. : 7,500,000,000) were allotted as fully paid up for consideration other than cash As at 31st March 2008 (Rs. in Lakh) SCHEDULE B : RESERVES AND SURPLUS Capital Reserves As per last Balance Sheet Add: Assets recognised Less: Liabilities identified & transferred to liabilites (Refer Note 2.2 on Schedule U) General Reserves As per last Balance Sheet less: Utilised for Staff Gratuity Provision for earlier periods Add: Carried from P&L Account As at 31st March 2007 (Rs. in Lakh)

4,046,428 71 5,981

4,040,518

4,046,428

404,595 1,513 60,188

463,270

404,595

Contingency Reserves Surplus: Profit and Loss Account As per last Balance Sheet Add: Carried from P&L account Total

200,000

200,000

2,793,779 65,258

2,859,037 7,562,825

2,793,779 7,444,802

BHARAT SANCHAR NIGAM LIMITED SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
As at 31st March 2008 (Rs. in Lakh) SCHEDULE C : UNSECURED LOANS Loan from Govt. of India (Non refundable & non interest bearing ) 15 Year Government of India Loan (Refer Note 3 on Schedule U) Interest accrued and due on the above Govt. loan (Refer Note 3 on Schedule U) Deferred Payment Liabilities Total As at 31st March 2007 (Rs. in Lakh)

72,000 266,830

72,000 300,000 182,309

57 338,887

57 554,366

Note : 1. Deferred payment liabilities represent arrangement mainly with cable suppliers with interest ranging from 12% to 15% p.a. payable over a period of 5 to 7 years. 2. Amount of deferred payment liability was due for payment in earlier years, however, since the party has filed a civil suit in the court, neither interest has been provided for, nor payment has been made.

BHARAT SANCHAR NIGAM LIMITED SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
As at 31st March 2008 (Rs. in Lakh) SCHEDULE E: CAPITAL WORK-IN-PROGRESS (Refer Note 2.1 & 5 on Schedule U) Land Buildings Apparatus and Plants Cables Subscriber Installations Lines and Wires Electrical Fittings and Appliances Computers Masts and Arials Installation Test Equipments Office Machinery and Equipments Furniture and fittings Motor Vehicle and Launches Overheads awaiting allocation on the above components Less: Provision for Impairment in pending projects etc. Total 101 16,465 86,454 99,541 4,581 1,725 15,024 16,340 27,701 828 73 57 966 269,856 3,294 266,562 As at 31st March 2008 (Rs. in Lakh) SCHEDULE F: DECOMMISSIONED ASSETS Decommissioned Assets Less : Provision for diminition in the value of decommissioned assets Total 52,681 52,292 389 36,089 29,645 6,444 1 20,336 89,162 106,361 3,988 2,583 16,315 270 20,170 489 156 90 10 1,175 261,106 4,246 256,860 As at 31st March 2007 (Rs. in Lakh) As at 31st March 2007 (Rs. in Lakh)

As at 31st March 2008 (Rs. in Lakh) SCHEDULE G : INVESTMENTS (At cost) (Long Term , Unquoted, Non-trade) 20,000,000 (P. Y. 20,000,000) 7% Redeemable Cumulative Preference Shares of Rs. 100/- each Fully Paid in ITI Limited (A Government of India owned company). Total

As at 31st March 2007 (Rs. in Lakh)

20,000 20,000

20,000 20,000

BHARAT SANCHAR NIGAM LIMITED SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
As at 31st March 2008 (Rs. in Lakh) SCHEDULE H : INVENTORIES (Refer item 7 of Schedule T and Note 6 on Schedule U) Building materials Lines and Wires Cables Apparatus and Plants Telephone and Telex Instruments Telegraph and Telex Spares Broad Band Equipments Satellite Based Broadband Equipments Raw material (at Factory) Finished goods (at Factory) Finished Stock (at various Circles) Stores Excess/(Short) in Inventory Account 344 14,696 132,359 120,566 19,257 150 10,218 414 12,572 952 15,348 20,189 150 347,215 25,209 322,006 As at 31st March 2008 (Rs. in Lakh) SCHEDULE I : SUNDRY DEBTORS (Refer Note 7 on Schedule U) Debtors Less: Provision for Doubtful debts (Refer accounting policy 2 (a) of Schedule T) Accrued Revenue (Bills not raised) Total 762,157 427,771 334,386 212,165 546,551 767,664 447,033 320,631 237,435 558,066 466 16,354 106,839 83,342 19,268 149 1,168 227 11,108 1,078 15,932 13,016 2,186 271,133 28,286 242,847 As at 31st March 2007 (Rs. in Lakh) As at 31st March 2007 (Rs. in Lakh)

Less: Provision for obsolete inventory/short inventory Total

As at 31st March 2008 (Rs. in Lakh) SCHEDULE J : CASH AND BANK BALANCES (Refer Note 10 on Schedule U) Cash and Cheques in hand Balances with Scheduled banks - Current Account - Deposit Account Total

As at 31st March 2007 (Rs. in Lakh)

2,569 147,508 3,905,081 4,055,158

2,704 147,251 3,595,341 3,745,296

BHARAT SANCHAR NIGAM LIMITED SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
As at 31st March 2008 (Rs. in Lakh) SCHEDULE : K - LOANS AND ADVANCES (Refer Note 8 on Schedule U) Unsecured, considered good unless otherwise stated) Advances recoverable in Cash or in kind or for value to be received Capital Advance Amount recoverable from DoT on Current Account Claims recoverable from other Government departments Claims recoverable from other Government companies Claims recoverable from U.S.O. Admnistrator Claims recoverable from others Claims recoverable towards defence telecom projects (Net of advances) Advance Income Tax (Net of provision for tax Rs. 568331 Lakh ( P.Y. Rs. 432,233 lakh) Advance Fringe Benefit Tax (Net of provision for FBT Rs. 11500 lakh (P.Y. Rs. 7,800 lakh) MAT credit receivable Excise Duty, Cenvat & Service Tax Recoverable Sales Tax Recoverable Less: Provision for doubtful items Total As at 31st March 2007 (Rs. in Lakh)

135,497 26,079 96,946 8,339 247,290 36,772 9,141 54,262 178,779 3,698 21,641 49,243 7,887 875,574 131,133 744,441 As at 31st March 2008 (Rs. in Lakh)

196,971 33,584 95,954 10,649 202,268 64,920 11,924 8,327 143,968 2,655 19,470 29,088 6,164 825,942 111,511 714,431 As at 31st March 2007 (Rs. in Lakh)

SCHEDULE : L - CURRENT LIABILITIES Sundry Creditors (including Rs. 5864 lacs dues to MSME'S) (P.Y. not ascertained) (Refer note no. 25 (d) on Schedule U) Advances received from Customers and others Deposits from Customers and others Income received in advance against services Claims payable to DoT Claims payable to departments of Govt. of India Claims payable to Government companies Licence Fee, Spectrum charges and Transponder charges payable (Refer Note 13 on Schedule U) Excise Duty payable Payable for revised wages Salary & Incentive payable to employees Payable to SAARC Countries (Refer Note 12.3 & 12.4 on Schedule U) Liabilities for services Liabilities for Construction account Claims Payable for USO Tower Other Provisions for expenses Other liabilities Interest accrued but not due on Deposits Total 606,327 597,419

32,802 582,676 48,569 37,610 19,176 79,094 4,662 141 121,318 83,679 251 63,730 1,128 80 41,780 13,524 3,241 1,739,788

24,176 613,555 39,027 48,521 12,469 68,584 40,644 3 18,930 84,692 569 62,649 37,154 16,252 3,275 1,667,919

BHARAT SANCHAR NIGAM LIMITED SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
As at 31st March 2008 (Rs. in Lakh) SCHEDULE : M - PROVISIONS Provision for Wealth Tax Provision for Tax on Dividend Proposed Dividend Provision for phased out assets Provision for Leave Encashment Provision for Gratuity laibility (Refer Note 11.3 on Schedule U) Total 415 20,395 120,000 461,007 4,504 606,321 413 11,472 67,500 10,523 422,839 2,111 514,858 As at 31st March 2007 (Rs. in Lakh)

BHARAT SANCHAR NIGAM LIMITED SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
For the Year ended 31st March 2008 (Rs. in Lakh) SCHEDULE : N - INCOME FROM SERVICES Telephones (other than WLL) Cellular Wireless in Local Loop (WLL) Income from Broad Band Services Circuits Value Added Services Installation / Reconnection Charges Surcharge on delayed payments Telegraph & Telex Receipt from other operators Other Services Total 1,266,837 1,057,889 61,796 91,596 75,732 53,881 40,924 16,759 1,836 565,562 3,141 3,235,953 For the Year ended 31st March 2008 (Rs. in Lakh) SCHEDULE : O - OTHER INCOME Reimbursement for VPT & R-DEL from Universal Service Fund Interest - On deposits in Banks * - Others Profit on sale of Assets Liquidated Damages Excess provision written back Rent of Staff Quarters Sale of Scrap Others including sale of Directories, Publications, Forms, Waste Paper etc. Foreign Exchange Fluctuation Gain/(Loss) (Net) Total * Includes TDS: Rs. 81445.97 lakh, P.Y. 1,579.62 lakh 46,721 400,428 2,895 2,002 13,026 80,829 1,247 5,405 16,177 657 569,387 171,915 278,849 2,275 800 17,773 21,676 1,236 4,233 11,080 53 509,890 1,660,499 926,463 56,805 51,384 51,268 41,364 32,812 19,857 1,896 614,619 4,654 3,461,621 For the Year ended 31st March 2007 (Rs. in Lakh) For the Year ended 31st March 2007 (Rs. in Lakh)

BHARAT SANCHAR NIGAM LIMITED SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
For the Year ended 31st March 2008 (Rs. in Lakh) SCHEDULE : P - EMPLOYEES REMUNERATION AND BENEFITS Salaries, Wages, Incentives & Allowances Leave Encashment (including provisions) Pension Contribution (Refer Note 11 on schedule U) Contribution to Employees' Providend Fund and Gratuity (incl. provisions) Leave Salary Contribution Medical Expenses Staff Welfare Expenses Less: Allocated to Capital Work-in-Progress/W.I.P. Total 726,121 55,776 82,115 7,166 636 41,683 2,546 916,043 35,152 880,891 For the Year ended 31st March 2008 (Rs. in Lakh) SCHEDULE : Q - ADMINISTRATIVE, OPERATING AND OTHER EXPENSES Rent Rates and Taxes Power and Fuel Insurance Repairs and Maintenance -Buildings -Plant and Machinery -Cables - Others Professional and Consultancy charges Printing and Stationery Lease Rent Commission on Franchise Services Transponder Charges Bank charges Advertisement Travel Expenses Postage & Courier Charges Security Services Vehicle Running Expenses (Including hired vehicles) IUC payable to other service providers W/off & Losses other than Bad debts Bad-Debt Provision other than services Expenditure on Services and other expenses Bad-Debt actually written off Provision for doubtful debts and disputed bills Loss/(Profit) from Factories (Refer Note 6.2 on Schedule U) Loss/(Profit) from Construction/Telecom services projects Less: Allocated to Capital Project Works/W.I.P. Total 24,347 5,667 160,661 251 28,075 64,420 37,557 4,024 3,503 12,311 772 168,216 8,920 1,078 2,379 15,307 10,831 28,930 19,679 315,589 42,781 7,708 80,326 28,145 47,899 (1,546) (81) 1,117,749 6,074 1,111,675 22,402 5,019 152,250 264 26,544 65,532 32,352 4,838 3,181 13,372 538 197,371 7,417 1,719 1,947 15,315 12,854 24,351 18,707 268,494 35,340 3,972 63,180 123,904 (2,510) (6) 1,098,347 6,719 1,091,628 638,056 33,023 53,185 5,471 227 36,450 2,993 769,405 38,508 730,897 For the Year ended 31st March 2007 (Rs. in Lakh) For the Year ended 31st March 2007 (Rs. in Lakh)

BHARAT SANCHAR NIGAM LIMITED SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
For the Year ended 31st March 2008 (Rs. in Lakh) SCHEDULE : R - FINANCIAL EXPENSES For the Year ended 31st March 2007 (Rs. in Lakh)

Interest on Government Loan Interest on Subscribers Deposit Interest-Others Total

84,521 1,626 107 86,254

75,976 1,809 156 77,941

For the Year ended 31st March 2008 (Rs. in Lakh) SCHEDULE : S - PRIOR PERIOD ITEMS Income Income from Services
USO Subsidy

For the Year ended 31st March 2007 (Rs. in Lakh)

Excess income booked earlier now reversed Total Expenditure Salaries and Staff Expenses Rent, Rates & Taxes Power and Fuel Interconnect Usage Charges (IUC) Other services Depreciation (Refer note 4 of Schedule D) Interest Expenditure booked earlier now reversed Repairs Total Net

8,052 8425 (1,614) 14,863

10,609 0 (7,034) 3,575

291 193 23 838 5,098 5,106 175 (319) 11,405 3,458

364 184 23 (1,137) 4,023 8,288 25 1,368 13,139 (9,564)

BHARAT SANCHAR NIGAM LIMITED SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS
SCHEDULE D: FIXED ASSETS (Refer Note 2.1 and 5 on Schedule U) Gross Block Additions Deletions During the year Depreciation For the year Deductions/ (Refer note 4 adjustments & 7) Closing Balance Closing at 31st March 2008 Balance as at 31st March 2008 (Rs. in lakhs) Closing Balance as at 31st March 2007

Particulars

Opening Balance as at 1st April 2007

Closing Opening Balance Balance as at as at 31st 1st April 2007 March 2008

TANGIBLES Lands Buildings Apparatus & Plants Motor Vehicle & Launches Cables Lines & Wires Subscriber Installations Installation Test Equipments Masts & Aerials Office Machinery & Equipments Electrical Fittings Furniture & Fixtures Computers INTANGIBLES Licence Fees Softwares Total Previous Year

115618 662586 4446844 15260 5068422 550394 330451 34280 240608 16958 252600 16233 97884 2500 14263 11,864,901 11,169,203

1696 29452 335420 1186 191495 5163 50686 5310 49695 1487 34362 2282 8039 0 539 716,812 814,209

834 1764 79882 666 8294 10412 11898 1545 5316 410 611 70 2188 0 0 123,890 118,511

116480 690274 4702382 15780 5251623 545145 369239 38045 284987 18035 286351 18445 103735 2500 14802 12,457,823 11,864,901

908 159483 2242079 11194 2902560 309481 138010 16798 81478 7851 114576 8790 75125 521 2657 6,071,511 5,150,354

264 27095 355892 1162 346782 33539 141365 2658 27166 1449 24136 1849 10202 125 1760 975,444 924,113

-346 101 38560 534 1843 6100 7747 606 2114 241 -85 29 1537 0 0 58,981 2,956

1518 186477 2559411 11822 3247499 336920 271628 18850 106530 9059 138797 10610 83790 646 4417 6,987,974 6,071,511

114962 503797 2142971 3958 2004124 208225 97611 19195 178457 8976 147554 7835 19945 1854 10385 5,469,849 5,793,390

114710 503103 2204765 4066 2165862 240913 192441 17482 159130 9107 138024 7443 22759 1979 11606 5,793,390 6,018,849

Notes:1. In some cases, the title deeds of land purchased/acquired on leasehold/freehold from various authorities, are yet to be executed. 2. Land includes leasehold land to the extent identified by twenty five circles (P.Y.nine circles) amounting to Rs.13,619 lakh (P.Y. Rs.2,961 lakh). 3. Additions to the fixed assets include assets identified and taken over/reduced by the company in the current year, relating to DOT as on 01.10.2000 Rs.1,224 Lakh (P.Y. Rs.1,104 lakh) 4. The depreciation during the year includes Rs. 5,106 lakh (P.Y. Rs.8,288 lakh) realating to prior period and the same has been included as prior period adjustment in P&L A/c. 5. Additions in Gross Block include Rs. 41,226 Lakh (P.Y. Rs. 45,227 lakh) of establishment & admnistrative expenses capitalised. 6. Depreciation during the year includes Rs.NIL (P.Y. Rs. 6,798 lakh) for permanent imapirment of Apparatus & Plants Rs.NIL (P.Y. Rs. 5,057 lakh), Subscriber Installations Rs.NIL (P.Y.Rs.1,684 lakh) and Installation Test Equipments Rs. NIL (P.Y.Rs.57 lakh). 7. Depreciation for the year includes Rs. 727 lakh (P.Y. Rs.893 lakh) which has been capitalised.