Notes to the Financial Statements

1. Revenue

The significant categories under which revenue is recognised is as follows:

Group Company

---------------- ---------------- ---------------- ----------------       1999 1998 1999 1998     Rs.million Rs.million Rs.million Rs.million     ---------------- ---------------- ---------------- ----------------     Release of deferred connection charges (note 16) 537 479 537 479   Rental income 1,260 731 1,260 731     Domestic call revenue 7,298 4,820 7,298 4,820     Receipts from other network operators - domestic 190 179 190 179     International call revenue 2,075 2,153 2,075 2,153     Receipts from other network operators - international 741 642 741 642     International settlements (in payments) [note(a)] 5,764 7,691 5,764 7,691     Telex, data transmission and other telephony services 416 387 416 387     ---------------- ---------------- ---------------- ----------------     18,281 17,082 18,281 17,082     ---------------- ---------------- ---------------- ----------------     (a) The Company is experiencing a reduction in international settlements. The Directors are of the view that some international     calls are by passing the SLTL gateway for such reduction in revenue to occur. This issue has been referred to the     Telecommunication Regulatory Commission.                           2. Operating Costs             The significant categories of operating costs are as follows:                                        Group                 Company       ---------------- ---------------- ---------------- ----------------       1999 1998 1999 1998       Rs.million Rs.million Rs.million Rs.million       ---------------- ---------------- ---------------- ----------------     Staff costs (note 3) 2,313 2,088 2,313 2,088     Depreciation of tangible fixed assets (note 8) 5,003 4,795 5,001 4,793     Payments to international network operators 2,251 2,206 2,251 2,206     Auditors’ remuneration 3 3 3 3     Repairs and maintenance 735 817 735 817     Electricity 229 205 229 205     Bad debt/Stock provisions 421 723 421 723     Net foreign exchange gains on operating activities (100) (503) (100) (503)     Payments to NTT Communications Corporation [note(a)] 451 463 451 463     GST expense 478 - 478 -     Travelling, administration and other operating expenses 1,436 1,274 1,411 1,252     ---------------- ---------------- ---------------- ----------------     13,220 12,071 13,193 12,047     ---------------- ---------------- ---------------- ----------------     (a) Represents amounts payable to NTT Communications Corporation on account of re-engineering expenses, salaries and     expenditure of seconded experts and management fees (refer note 26)

<< >>

Notes to the Financial Statements                               Page   1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

         On-Line Annual Report by Smart Media Productions