No wrong in accounts: Bharti

Posted on | December 29, 2005 |

Seeking to put a lid over the controversy involving its accounting practice, Bharti Tele-Ventures has asserted that it had done no wrong in adopting international accounting system GAAP. Media reports stated that post corrections Bharti’s losses for the three years (ending 2004) were Rs 2002 crore as against Rs 221 crore profit stated by it earlier.

As a part of preparation for its sponsored ADR last year, Bharti had adopted US GAAP, which is the preferred accounting standard internationally. However, the ADR plan was subsequently dropped due to lack of sponsorship.

Bharti has said the additional losses of Rs 2,200 crore for the three years ending FY04, reported by a TV news channel, were non-cash and only technical in nature. The losses arose as the firm shifted from International Financial Reporting Standards (IFRS) (practised in India) to US GAAP in ‘04. Bharti’s stock on Wednesday dipped 2.25% to close at Rs 342.25 following the reports.

“The differences (in accounting system in India and GAAP) were purely non-cash and technical in nature and have no bearing on operational performance or cash flow of the company,”

In a boost to Bharti, Vodafone came out in support saying they had prior knowledge of Bharti’s account. Stung by the criticism that virtually tantamounts to accusing the company of fudging accounts, the company came out with a detailed explanation on the accounting methods adopted by it to assuage any fears.

“The overall effect on the shareholders equity up to March 31, 2004 on account of all the adjustments is approximately Rs 915 crore. Of this, approximately Rs 800 crore pertains to business combination, goodwill and deferred tax adjustments and the balance pertains to various items under the other category of adjustments mentioned above,” it said.

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