Skip to main content

Decoding Ind- AS impact on India Inc’s balance sheet

By
AUTOMOTIVE Companies made adjustments to revenue recognition. This was more visible in case of deferment of revenue of future performance obligations, or for recognition of cash/ trade discounts
ENERGY, METALS AND MINING The sector is heavily capital- intensive and exposed to the global commodity/ currency markets. Some high- value adjustments arose due to: Forex gains and losses, particularly due to change in the functional currency of the company and of its foreign operations Change in accounting policy, primarily for oil companies with respect to capitalisation of expenditure and depletion of producing assets Adjustments in fixed assets. Saw capitalisation of new assets as a result of major overhauling costs Presence of embedded finance lease arrangements. This was more visible for the power companies; Companies that had previously capitalised fixed assets on their balance sheet have de- capitalised these assets, reversed the corresponding depreciation charged and recognised finance lease receivables Accounting for service concession arrangements by some of the power companies Restatement of past business combinations, including common control acquisitions
INFORMATION TECHNOLOGY SECTOR Companies in the sector have made adjustments for share- based payments (SBP). Given that SBP is a common incentive for employees in this sector, multiple companies have made adjustments with respect to expense arising from these payments
MANUFACTURING SECTOR Sector- specific adjustments made by companies include recognition of embedded lease arrangements. This had an impact on revenue from operations and de- capitalisation of borrowing costs from inventory
TELECOMMUNICATIONS SECTOR Companies in this sector made significant adjustments with respect to Forex gains/ losses due to change in the functional currency of company’s foreign operations Restatement of past business combinations, resulting in a significant reversal of goodwill amortisation charge Discounting of asset retirement obligations previously recognised, resulting in a lower depreciation charge Adjustments related to service income
Adoption of the new accounting standard under the Ind- AS framework had an impact on some of the key financial reporting parameters of corporate India. A study by Protiviti, a risk- consulting and internal audit firm, of FY17 first- quarter results of around 125 companies shows the manufacturing and information technology sectors had to make the highest number of accounting adjustments under Ind- AS, followed by telecommunications, mining/ metals and the energy sectors. On an average, 50 per cent of the companies have made around 10 adjustments to the reported profit for the quarter ended June 30, 2015. Capital intensive sectors such as telecommunication and the metals/ mining and energy industries, contributed around 70 per cent of the total adjustments ( in absolute value). These two sectors include major business groups thathave significant global operations with a history of multiple business acquisitions, the study noted. Here are some key sector- specific takeaways:
Business Standard New Delhi,22th August 2016

Comments

Post a Comment

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...
Post a Comment
Read more

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

By
  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...
Post a Comment
Read more

Govt invites applications for RBI deputy governor's post, last date Nov 30

By
  The government has invited applications for the post of deputy governor of Reserve Bank of India from interested candidates with at least 25 years of experience and below 60 years of age as on January 15, 2025.One of the deputy governors, Michael Patra’s current term will end on January 15.According to an advertisement, candidates should have at least 25 years of work experience in Public Administration, including experience at the level of secretary or equivalent in the Government of India, or persons who have at least 25 years of work experience in an Indian or International Public Financial Institutions; or persons of exceptional merit and track record at the national or international level in the relevant field.The last date of submission of the application is November 30, 2024.   It has been clarified that the Financial Sector Regulatory Appointments Search Committee (FSRASC) – a body which will select the candidates- is free to identify and recommend any other person a...
Post a Comment
Read more