Revenue Recognition and

Going Concern of
United Breweries Limited
And
Bharti Airtel Limited

Submitted To Submitted By

Dr. Imlak Shaikh Devanshu Agarwal

Revenue Recognition of United Breweries Limited
• Principal vs. Agent Consideration: The company is considered the principal in most revenue arrangements, taking
on pricing latitude and inventory and credit risks. However, in certain contract manufacturing arrangements, it
may act as an agent.
• Inclusion of Taxes: Excise duty is included in revenue as it is considered a liability of the manufacturer and part of
the production cost. Conversely, sales tax/VAT and GST are collected on behalf of the government and thus
excluded from revenue.
• Sale of Products: Revenue from product sales is recognized at the point in time when control is transferred to the
customer, net of returns, allowances, and discounts. Variable considerations such as discounts and incentives are
estimated at contract inception.
• Sale of Services: Royalty income from licensing agreements for the use of intellectual property is recognized on an
accrual basis, in accordance with agreement terms, as sales occur and when the related performance obligation is
satisfied.
• Contract Manufacturing Units (CMUs): The company evaluates its arrangements with CMUs to determine if it acts
as a principal or an agent, affecting how revenue is recognized. As a principal, revenue is recognized at the gross
amount; as an agent, revenue is recognized at the net amount eligible under the contract.
• Interest and Dividends: Interest income is recognized using the effective interest rate method and included under
"other income." Dividend income is recognized when the right to receive payment is established, typically at
shareholder approval.
Revenue Recognition of Bharti Airtel Limited
• Assessment of Control: For transactions involving intermediaries, the Group evaluates its role in fulfilling performance
obligations and controlling the promised service before its transfer to customers. Revenue is recognized based on the Group's
entitlement from intermediaries, considering whether the Group or the intermediary acts as the principal.
• Distinct Performance Obligations: Revenue is recognized as each distinct performance obligation within a contract is satisfied.
The policy details various revenue streams including service revenues (comprising usage, subscription, and customer onboarding
charges for telecommunications and DTH services, among others), equipment sales, interest income, and dividends.
• Service Revenues: These are recognized over time as services are provided, with specific methods for telecommunication
services, customer onboarding, and interconnection/roaming charges. The Group also recognizes revenue from rental and
energy services on a monthly basis as per contractual terms.
• Multiple Element Arrangements: For contracts involving multiple products or services, distinct performance obligations are
identified and accounted for separately. The total consideration is allocated based on the standalone selling prices of each
obligation.
• Equipment Sales: Revenue from the sale of telecommunication equipment and accessories is recognized at the point of control
transfer to the customer. In multiple-element arrangements where equipment sale is not a distinct obligation, revenue is
recognized over the customer relationship period.
• Interest and Dividend Income: Recognized using the Effective Interest Rate (EIR) method and when the right to receive payment
is established, respectively.
• Contract Costs: Costs to obtain or fulfill a contract, such as intermediary commissions, are deferred and recognized over the
average expected customer life if this period is longer than 12 months.
Going Concern of United Breweries Limited

• Competition Commission of India (CCI) Order: The CCI imposed a penalty of Rs.751.83 Crores on the company
for an alleged contravention. Although the National Company Law Appellate Tribunal (NCLAT) dismissed the
company's appeal, the Supreme Court stayed the NCLAT Order, allowing the company's appeal to proceed. The
company has complied with the requirement to deposit 20% of the penalty.
• Bihar Industrial Area Development Authority (BIADA) Land Allotment: BIADA's cancellation of a 42-acre land
lease to the company was challenged, and the High Court ordered a status quo, asking the company to commit
to starting commercial production. The company has provided such an undertaking, and the matter is pending
in the High Court.

Despite these issues, the company and its directors affirm that these do not affect its ability to continue as a
going concern. The directors have confirmed adherence to applicable accounting standards, proper maintenance
of accounting records, implementation of adequate internal controls, and compliance with legal provisions,
ensuring the company's ongoing operational viability. The financial statements have been prepared on a going
concern basis, reflecting the management and governance bodies' expectation that the company will continue
its operations into the foreseeable future.
Going Concern of Bharti Airtel Limited
• Auditor's and Management's Responsibilities: Both the auditors and the company's management have undertaken
thorough assessments to ensure the accuracy and fairness of the financial statements. The management is responsible
for maintaining adequate accounting records, safeguarding assets, preventing fraud, and ensuring the company operates
on a going concern basis.
• Significant Legal and Regulatory Matters: The company has faced scrutiny from regulatory bodies, such as the
Competition Commission of India (CCI) and the Bihar Industrial Area Development Authority (BIADA), leading to financial
penalties and legal challenges. However, these issues have been addressed through appeals and compliance measures,
indicating proactive management actions to mitigate risks.
• Financial Health and Going Concern: Despite the challenges, the company's financial statements have been prepared on
a going concern basis. This decision is supported by the company's management and auditors, who have not identified
any material uncertainties that would cast significant doubt on the company's ability to continue as a going concern. The
auditors have also confirmed that the financial statements give a true and fair view of the company's financial position
and performance.
• Internal Controls and Compliance: The company has demonstrated adequate internal financial controls and compliance
with accounting standards and legal requirements. This includes proper recognition of revenue, assessment of deferred
tax assets, and provisions for contingencies related to legal and regulatory matters.

In summary, despite facing certain regulatory challenges and legal proceedings, the company has taken necessary steps to
address these issues and has maintained a stable financial position. The preparation of financial statements on a going
concern basis, coupled with the absence of material uncertainties related to the company's ability to continue operations,
indicates a positive outlook for the company's future operations.