India Inc adheres to new accounting format

Some smaller firms missed deadline citing practical difficulties

Most listed companies that are part of the BSE 500 index managed to file results for the quarter ended June under the new Indian Accounting Standard or Ind-AS, the extended deadline for which ended on Thursday. However, some outside the top 500 failed to file their numbers within the stipulated deadline citing “practical difficulties”.

Starting with the June quarter, all listed companies, with the exception of some in the banking, financial services and insurance (BFSI) space, had to provide financial statements under the Ind-AS format. Ind-AS, a fair valuation-based method, is in consonance with the globally adopted International Financial Reporting Standards (IFRS) format. Ind-AS changes the way companies report revenue, valuation of financial instruments and joint ventures, among others.

Companies have to file their quarterly results within 45 days. However, the Securities and Exchange Board of India (Sebi) had provided an extra month to file results under Ind-AS format for the June and September quarters. Hence, companies had time till September 15 and December 15 as against the normal deadline of August 15 and November 15, respectively.

Most bluechip companies didn’t require the relaxation in deadline and filed results under the new format on time, analysis of Capitaline data shows. Meanwhile, a fifth of BSE 500 companies, particularly in the public sector space, filed their numbers just ahead of the extended deadline. About two dozen companies filed results in the three days of this week.

“At the start of the quarter, there were concerns whether India Inc would be able to adopt Ind-AS but things look largely settled. Companies have missed the deadline, but they are few,” said Ashish Gupta, director, Grant Thornton Advisory.

Surana Industries is one such company that has missed the deadline. It cited “practical difficulties in implementing the Ind-AS” in an exchange filing. “Ind-As is not a simple transition. It’s a whole accounting transition, which involves making intelligent choices. You have to prepare well in advance,” said Gupta.

Rating agency Icra says the new format has had a huge impact on operating income and net profits. “Around 53 per cent firms have reported a decline in operating income (net of excise) under Ind-AS... Icra observes that the change in calculation of deferred tax and the adoption of fair valuation of financial instruments has had the biggest impact on the net profits of companies,” it said in a note.

Both listed and unlisted companies have been provided a road map for implementation of Ind-AS by the Ministry of Corporate Affairs (MCA).  The new format was made mandatory from 2016-17 for companies with net worth of over Rs 500 crore. Listed and unlisted companies with net worth less than Rs 250 crore will have to implement it from 2017-18. MCA allowed voluntary adoption of Ind-AS starting 2015-16.