Traditionally and for several decades, Indian companies have been following Indian Accounting Standards which were not in full alignment with the global financial reporting standards. With effect from financial year ended 31 March 2017 and 31 March 2018, Indian companies are required to follow Indian Accounting Standards (Ind AS), which represent the Indian converged globally followed international Financial Reporting Standards. This will align Indian financial reporting with the globally followed financial reporting standards making it easier for Indian companies to access global investors and lenders as well as facilitate mergers and acquisitions.
The transition to Ind AS is being implemented in 2 phases with first phase covering listed and unlisted companies with net worth in excess of Rs.500 crores (phase I) from financial year ended 31 March 2017. As per the estimates, approximately 350 companies/groups, covered in phase I of Ind AS roadmap, have published their financial results under Ind AS. From 1 April 2017, approximately 8,500 Indian companies, i.e., balance listed companies and unlisted companies with net worth in excess of Rs.250 crores, will be covered by Ind AS (phase II). As a result, the manner in which Ind AS has been applied by Phase I companies, its in-depth analysis and impact on different sectors as well as the MAT implications due to changes in book profits are of great relevance to Phase II companies. Towards this end, this publication provides an Ind AS technical analysis based on the 31 March 2017 annual financial results of 104 companies across 18 sectors covered in Ind AS phase I. We discuss the sector-wise impact of the Ind AS requirements vis-à-vis the previous Indian GAAP accounting considering the key Ind AS impact areas that were reported by way of profit and equity (net worth) reconciliations by these companies as well as the MAT implications. This publication would help the phase II Ind AS companies to identify Ind AS requirements that are relevant to their industry sector and evaluate various accounting policy choices available under Ind AS.