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Good Corporate governance

Practices in Airtel
About Bharti Airtel

Bharti Airtel is one of Asia’s leading telecommunication service providers with presence in
all the 22 Telecom Circles in India and also in Sri Lanka and Bangladesh. The Company
served an aggregate of 130.69 mn customers as on March 31, 2010 in India; including 127.62
mn customers using GSM services and 3.07 mn customers using fixed line and/or broadband
(DSL) services. The Company offers an integrated suite of telecommunication services to
enterprise customers, in addition to providing national and international long distance
connectivity. The Company also deploys, owns and manages passive infrastructure for
telecommunication services through its subsidiary company, Bharti Infratel Limited, which
also owns 42% stake in Indus Towers Limited. Bharti Infratel and Indus Towers are the top
two providers of passive infrastructure services in the country.

Corporate Governance
Corporate governance involves a set of relationships between a Company’s management, its
board, its shareholders and other stakeholders. It provides structure to set the objectives, the
means to attain them and monitor the performance. It is a commitment to the business ethics
and values and not limited to compliances and transparency. Sound corporate governance
helps companies in taking informed business decisions together with earning trust of all
stakeholders.

Bharti Airtel believes in maintaining the highest standards of corporate governance

Corporate Governance Rating given to Bharti Airtel by CRISIL


CRISIL has assigned Governance and Value Creation (GVC) rating “CRISIL GVC Level 1”
to the corporate governance and value creation practices of the Company. Bharti Airtel treats
corporate governance as a process of moving upwards and aims to benchmark itself with the
best practices in India and abroad in order to maintain the highest rating

Composition of Board members


The Board comprised of sixteen members, two of whom including Chairman are whole-time
directors, six are non-executive and eight are independent non-executive directors. As per the
Company’s governance policy, the selection of a new board member is the responsibility of
the entire Board and all the appointments are made with its unanimous consent. The
appointments of such directors are also approved by the shareholders at the annual general
meeting. While the non-independent directors / shareholders’ representative directors are
appointed on the basis of the recommendation of the respective shareholders.
Company's Board has adopted a comprehensive policy on independent directors that sets out
the criteria of independence, age limits, recommended tenure, membership of committees,
remuneration and other related terms. The policy emphasises the importance of independence
and states that an independent director shall not have any kind of relationship with the
Company that could influence such directors' position as an independent director.

The Company has adopted a practice of taking self-declaration annually and at the time of
appointment from the independent directors to the effect that they qualify the test of
independence as laid down under clause 49 of the listing agreement. In addition, the
Company also ensures that the directors meet the above eligibility criteria. All such
declarations are placed before the Board for information.

Meeting of Independent Directors


All independent directors meet separately prior to the commencement of every board
meeting, on their own, (without the presence of any non-independent/executive directors or
representatives of management) to discuss and form an independent opinion on the agenda
items and other board related matters. The independent directors also meet internal and
statutory auditors periodically without the presence of management to ensure their
independence and proper discharge of duties by them.

Directors’ Remuneration
The remuneration paid to the executive directors is recommended by the HR committee and
approved by the Board of directors within the limits approved by the shareholders.

The independent non-executive directors are paid sitting fees within the limits that could be
paid without the approval of the Central Government, for attending the board/committee
meetings. Further, a commission, duly approved by the shareholders, not exceeding 1% of the
net profit of the Company calculated as per the Companies Act, 1956 is also payable to the
independent non-executive directors on annual basis.

Audit Committee

The audit committee comprises of six members, all of whom are non-executive directors and
four of whom are independent. Composition of the audit committee meets the requirements
of section 292A of the Companies Act, 1956 and clause 49 of the listing agreements.

The Company Secretary is the secretary to the Committee. The CEO (International) & Joint
Managing Director, CEO (India & South Asia), Group CFO, Chief Financial Officer,
Director - Internal Assurance, Corporate Director - Finance, statutory auditors and the
internal auditors are permanent invitees. To ensure proper internal control at each audit
committee meeting, the Committee invites the head of one of the functions to make a brief
presentation on action plans to improve the level of internal control. In addition, other senior
management members are also invited to the committee meetings to present reports on the
respective items being discussed at the meeting from time to time.
Ombudsperson Policy
The Company has adopted an Ombudsperson Policy (includes Whistle Blower Policy), which
outlines the methods and processes for stakeholders to voice genuine concerns about
unethical conduct that may be in breach of the Code of Conduct for employees. The policy
aims to ensure that genuine complainants can raise their concerns in full confidence without
any fear of retaliation or victimisation. The Ombudsperson administers a formal process to
review and investigate any concerns raised and undertakes all appropriate actions required to
resolve the reported matter. Instances of serious misconduct dealt with by the Ombudsperson
are reported to the Audit Committee. No employee of the Company has been denied access to
Ombudsperson or Audit Committee.

Adoption of International Financial Reporting Standards


In addition to the preparation of the financial statements as per I GAAP, so far the Company
has been voluntarily preparing consolidated financial statements as per US GAAP, which are
audited by Ernst & Young, Global Accountants.

Special audit of Bharti Airtel's accounts

The special audit conducted on leading telecom operator Bharti Airtel at the instance of the
government found no fraud, though it talked of some irregularities as prevalent in the
industry.

On the issue of maintenance of books of accounts, the auditors have confirmed that the
company maintained circle- -wise and service-wise accounts.

On whether the company transferred revenue from one segment to another, the auditors said
the transfer of revenue from one segment to another is not designed to take benefit of the
arbitrage that exits in the differential lincence fee that is applicable on different lincences.

The auditors have confirmed that Bharti Airtel's accounting policices and revenue
calculations are as per the licence conditions prescribed in the terms of reference of the audit.

Dividend

The Board has recommended a final dividend of Re 1 per equity share of Rs 5 each (20% of
face value) for the financial year 2009-10. The total dividend payout will amount to Rs 4,443
mn, including Rs 645 mn as tax on dividend. The payment of dividend is subject to the
approval of the shareholders in the ensuing annual general meeting of the Company.

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