The decline of Rs 13,680 crore, on average, over the reported numbers for the same year under the earlier accounting standard, Indian GAAP, is shown in a study by accountants Grant Thornton India. The net worth of these companies has, however, improved by 1.7 per cent, on average, said to reflect the net result of certain accounting policy choices made by these companies upon transition to Ind-AS.
"Though different sectors of the economy have reported varied impacts due to transition to Ind-AS, it is important to read the message underlying these reported numbers. What is important is the accounting policy choices made, the reasons behind these choices and important judgment and estimates applied by their management," said Siddharth Talwar, partner, Grant Thornton India.
Companies in the construction, engineering and infrastructure sectors were hit the most, with profit down 117.5 per cent. Profit in the manufacturing sector, a little more than 40 per cent of the 500-plus companies covered, dipped 42 per cent. Entities in logistics, telecom and real estate, however, showed a positive impact on profit.
While fair valuation of financial instruments and property, plant and equipment (PPE), and intangible assets had increased the net worth substantially, the recognition of revenue from contracts with customers in line with IndAS had a negative impact. Adjustments in the area of financial instruments have positively impacted the net worth by 1.8 per cent. For PPE and intangible assets, the adjustments upon IndAS transition boosted the net worth for these companies by 4.1 per cent.