Its stock price rose 3.3 per cent, following Bharti Airtel’s announcement of a 21 per cent rise in the company’s net profit, to Rs 2,239 crore, for the quarter ended March 31, 2009 over the same quarter in the previous year. But those numbers are relevant to US accounting standards, not Indian.
As per Indian generally accepted accounting principles (GAAP), the company’s profits for the quarter rose by less than 8 per cent to Rs 2,048 crore. The difference between US GAAP and Indian GAAP: Rs 191 crore — the US GAAP net profit is about 9 per cent higher than Indian GAAP.
Which number is the market taking a view on? “Indian GAAP is just a statutory requirement,” said a senior official at Bharti. “The market only watches and reacts to US GAAP figures.”
Not so, said two competitors. “Only Indian GAAP works in India,” said the head of a public sector telecom firm. “US GAAP does not mean anything for the Indian market,” said the head of a private telecom firm.
The truth probably lies somewhere in between. Airtel’s foreign investors add up to 42.6 per cent — 20.7 per cent as foreign promoters and 21.9 per cent foreign institutional investors.