In this article we will discuss about the segmental disclosures by Indian companies.
The Indian Companies Act, 1956 has provision for disclosures of some segmental (product) information in published annual reports such as sales (quantity and values), production (quantity and values), stocks (quantity and values), and purchases (quantity and values).
Besides, information about licensed capacity and installed capacity for every product is also to be given in the annual reports.
It has been found that many diversified Indian companies develop segment information for their managerial planning, control and decision-making such as income statement, sales or other gross revenue, cost of goods sold, gross margin on sales, segmented contribution margin, selling expenses, administrative expenses, segmented net profit before tax, segmented balance sheet.
It has also been found that 33% of diversified companies in India prepare income statement based on organisational divisions or geographical markets in addition to complete income statement for each product.
Accounting Standard 17 Segment Reporting is mandatory in respect of companies who are listed on the stock exchange or who are in the process of issuing equity or debt securities and will be accordingly listed on the stock exchanges in India. Therefore, Indian companies are giving segmental information in compliance with AS-17 Segment Reporting issued by ICAI.
To illustrate segmental disclosure practices in India, an example is given here of Ballarpur Industries Limited, and Cranes Software International Ltd., for segmental disclosures made by them (Fig. 13.1, Fig. 13.2 respectively).