The special auditor appointed by the Department of Telecommunications (DoT) to look into the alleged evasion of licence fees by Vodafone-Essar has found an additional liability of Rs 188 crore on the company. The liability, detected by SK Mehta and Co, is based on the terms of reference given by DoT.
However, according to a company spokesperson, the liability of Rs 188 crore for the years 2006-07 and 2007-08 would be covered under an earlier ruling by the Telecom Disputes Settlement And Appellate Tribunal (TDSAT). In August 2007, the TDSAT said in a judgment that licence fee is only applicable on actual realised revenues in the accounts of a company from the areas of licensed activity.
The spokesperson further added there was no diversion of revenues to the non-licensed segments. He informed the auditor has put the Rs 188-crore impact on four such non-licensed categories — discounts to distributors (Rs 93 crore), self-side expenses reimbursement (Rs 32 crore), interest imputed on interest-free loan (Rs 21 crore) and write-back of debentures (Rs 26 crore).
The remaining amount (Rs 16 crore) is on account of forex issues, the spokesperson said.
In a statement, CEO Marten Pieters said: “Vodafone-Essar follows the highest standards of accounting discipline and compliance norms, including international accounting standards. The special audit has rightly observed that our revenue accounting practices are in line with the accounting standards. There was no instance of any diversion of revenues to non-licence fee categories.”
He further added that, of the 20 terms of reference under the scope of audit, “the special auditors have tabulated additional licence fee impact on a few items. We have already accounted for these items clearly based on established accounting standards, prevalent industry practices and relevant TDSAT rulings. We are confident that there is no additional fee liability for the period under audit”.
With the latest report, DoT has received all the four special audit it had ordered of Reliance Communications, Bharti Airtel, Idea Cellular and Vodafone-Essar.
