1
1
stWORKSHOP ON
ACCOUNTING STANDARDS
SEGMENT REPORTING
(AS – 17)
Organized by
Dr. Sanjiv Agarwal
All India Chartered Accountant’s Society FCA, FCS, ACIS (UK) New Delhi, 20 June,2008 Jaipur
© Sanjiv Agarwal, 2008
PREAMBLE
• Applicable w.e.f. 01.04.2001 (accounting periods commencing on or after 01.04.2001.
• Mandatory for:
– All listed companies
– Companies in process of issuing securities to be listed
– All enterprises (commercial / industrial / business) having annual turnover > Rs.50 crores
• Recommendatory for other enterprises till 31.03.2004
3
• Mandatory w.e.f. 01.04.2004 for following enterprises-
– Enterprises whose equity or debt securities are listed whether in India or outside India.
– Enterprises which are in the process of listing their equity or debt securities as evidenced by the board of directors’ resolution in this regard.
– Banks including co-operative banks.
– Financial institutions.
– Enterprises carrying on insurance business.
– All commercial, industrial and business reporting enterprises, whose turnover for the immediately preceding accounting period on the basis of audited financial statements exceeds Rs. 50 crore.
(Turnover does not include ‘other income’).
– All commercial, industrial and business reporting enterprises
having borrowings, including public deposits, in excess of Rs. 10 crore any time during the accounting period.
– Holding and subsidiary enterprises of any one of the above at any time during the accounting period.
• Deals with reporting financial information on –
– Different products / services, and
– Different geographic areas of operation
• Basic principles of the standard
– Business & geographical segments – Primary & secondary segments
– Disclosure – Reporting – Presentation
5
Segment Reporting (AS-17)
OBJECTIVE OF AS-17
To establish principles for reporting financial information about different types of products and services an enterprises produces / renders and different geographical areas in which it operates.
OBJECTIVES OF SEGMENT REPORTING
Provide information to users to better understand performance of each segment and as a whole (to know which segment earns how much)
Better assessment of risks and returns of each segment of – – Multi diversified enterprise
– Enterprise whose operations are distributed globally
– Enterprise where individual contribution / performance cannot be determined
• Informed and logical judgments by investors / management
• A tool to ensure good corporate governance
• Ensure relevance, reliability and comparability
• Resistance factors
– Fear of cut throat competitions – Compiling costs
– Fear of misinterpretation of information by investors
• Identification of segments to based on
– Holding and subsidiary relationships – Organisation structure / divisions – Individual products or services – Class of customers
– Geographical areas
– Internal reporting systems
7
SCOPE OF AS-17
• Applies to general purpose Financial Statements
• Enterprise to comply with standard fully and not selectively
• Applies to consolidated statements also
• For consolidated statements, segment reporting is necessary in consolidated financial statements only.
• Only a reporting standard.
Does not deal with accounting and valuations of segment
incomes, expenses, assets or liabilities.
MANDATORY STATUS OF AS -17
• Mandatory nature as pronounced by ICAI for level I companies
• Clause 49 of Listing Agreement - listed companies
• Section 211 (3A) of Companies Act.
Companies (Accounting Standards) Rules, 2008
Every profit and loss account and balance sheet of company shall comply with accounting standards
(not mandatory for small and medium sized companies)
• Section 217(2AA) of Companies Act.
Responsibility statement to affirm that all applicable accounting standards have been followed in the preparation of Financial statement.
• Quantitative information being given in part – II of Schedule VI of Companies Act.
9
SEGEMENT REVENUE
+ Revenue reported in profit and loss statement directly attributable to segment
+ That portion of revenue which can be allocated to segment on reasonable basis.
+ Includes revenue from sales to external customers and transactions with other segments
– Extra ordinary items
– Interest / dividend incomes (not in case of finance company)
– Interest out of loans / advances to other segments (not in case of finance company)
– Gains on sale of investments / extinguishment of debt (not
in case of finance company)
SEGMENT EXPESNES
+ Expenses of operating activities directly attributable to segment
+ Expenses which can be allocated to segment on a reasonable basis
– Extraordinary items
– Interest on advances /loans from other segments (not in case of finance company)
– Losses on sale of investment / extinguishment of debt (not in case of finance company)
– Income tax expenses
– General administrative / head office / other expenses relating
11
Segment result
• Segment revenue less segment expenses Resulting in profit or loss
Segment Assets
• Operating assets employed by segment
– Directly attributable
– Could be allocated on reasonable basis
• Receivables, loans, investments (finance company)
• Other income producing assets
• Assets are determined after deducting related allowances / provisions being direct offsets in balance sheet.
• Excludes income tax assets
Segment Liabilities
• Operating liabilities
– Directly attributable
– Could be allocated on a reasonable basis
• Related interest bearing liabilities
• Excludes income tax liabilities
13
SEGMENT
• Segment can be
– Business segment
– Geographical segment
BUSINESS SEGMENT
• Distinguishable component of enterprise
• Engaged in providing individual product / service (or a group)
• Subject to risks and returns that are different from other business segments
Determining Factors
• Nature of product / service
• Nature of production process
• Type / class of customers for product / service
• Methods used to distribute products / provide services
15
GEOGRAPHICAL SEGMENT
• Distinguishable component of enterprise
• Engaged in providing products / services
• Within a particular economic environment
• Subject to risks and returns that are different from those
components operating in other economic environment
GEOGRAPHICAL SEGMENT
Determination Factors
• Similarity of economic and political conditions
• Relationships between operations in different geographical locations
• Proximity of operations
• Special risks associated with operations in different areas
• Exchange control regulations
• Underlying currency risks
17
REPORTABLE SEGMENT
• Either a business segment or / and a geographical segment for which segment information is required to be disclosed in financial statements
• Segment becomes reportable if –
– Revenue comprises 10% or more of total revenue, or – Its segment result (profit or loss) is 10% or more of
combined result of all segments, or
– Segment assets are 10% or more of total assets of all
segments of enterprise
SEGMENT REPORTING
• Segment revenue must equal atleast 75% of total revenue of enterprise.
• Additional segments (even contributing below 10% of revenue) may be identified to reach upto 75% threshold limit.
• Segment identified as reportable in immediately preceding year (>10%) to continue to be a reportable segment in current year, even if it is <10%.
• Previous year data to be given / for comparison from second year onwards.
• Disclosure also required for intra - segment transfers and
composition of the segment
19
SEGMENT REPORTING
How to identify a reportable segment
• Responsibility of management
• Management to use its judgment in determining the composition of business / geographical segment
• Generally internal financial reporting system also forms the basis
• Determining factors : – Risks and returns
– Internal organisation & management structure
– System of internal reporting to board / CEO in deciding
dominent source of risk and return
Influence Over Risk-Return
Location Products
Geographical Location of Product Risks Product / Area Customers Price/Demand Service
Volatility Differences
21
SEGMENT REPORTING Reporting Format
RISK TABLE
RISK/RETURN PRIMARY SECONDARY SOURCE SEGMENT SEGMENT PRODUCT OR SERVICE(1) BUSINESS GEOGRAPHIC
OPERATIONAL AREA(2) GEOGRAPHIC BUSINESS
(1) AND (2) BOTH BUSINESS GEOGRAPHIC
NONE OF(1) AND (2) MANAGEMENT’S MANAGEMENT’S CHOICE CHOICE
P R O D U C T S S E R V I C E S B U S I N E S S
S E G M E N T
L O C A T I O N O F A S S E T S
L O C A T I O N O F C U S T O M E R S G E O G R A P H I C A L
S E G M E N T P R I M A R Y S E G M E N T
F O R M A T
SEGMENT REPORTING
Disclosures in primary reporting
• Enterprise should disclose –
– Segment revenue from sales to external customers
– Segment revenue from transactions with other segments (inter segment)
– Segment result (profit or loss )
– Total carrying amount of segment results – Total amount of segment liabilities
– Additions to assets during the period (tangible and intangible) – Depreciation and amortization for the period
– Significant other non cash expenses included in segment results.
• Reconciliation between information for reportable segments and aggregate information in financial informations.
23
SEGMENT REPORTING
Secondary segment information reporting
A. Primary format : Business segment
• Segment revenue from external customers by geographical area (geographical location of customers) whose revenue from sales to external customers is 10% or more of total revenue
• Total carrying amount of segment assets by geographical location of assets
• Total cost incurred during the period to acquire segment assets, by geographical location of assets
B. Primary format : Geographical segment
For each business segment following to be disclosed-
• Segment revenue from external customers
• Total carrying amount of segment assets
• Total cost incurred during the period to acquire segment assets (tangible / intangible)
SEGMENT ACCOUNTING POLICIES
• Covers accounting polices adopted for preparing and presenting the financial statements of enterprise
• Those polices relating specifically to segment reporting
• Segment information to be in conformity with accounting policies of the enterprise as a whole
• Joint assets and liabilities should be allocated to segment IFF related revenues / expenses are also allocated to those segments
• Any change in accounting policy together with its effect on
segmental information and comparatives to be disclosed.
25
SEGMENT REPORTING
Presentation of segment reporting To be reported in the annual report
• In the main body of financial statements with appropriate explanatory disclosure
• In the foot notes / notes to accounts
• In separate schedule as an integral part of financial
statements
SEGMENT REPORTING
ICAI Suggested reporting format
SEGMENT ELIMINATIONS CONSOLIDATED
(A.B.C.) TOTAL 1 SEGMENT REVENUE
- EXTERNAL SALES
- INTER-SEGMENT SALES
_________________________________________________________
TOTAL REVENUE
_________________________________________________________
2 SEGMENT RESULT - COMMON EXPENSES - COMMON INCOMES
- EXTRAORDINARY ITEMS
_________________________________________________________
3 NET PROFIT
27
SEGMENT REPORTING
Segment Eliminations Consolidated (A.B.C.) Total
4 Segment Assets Common Assets
Total Assets
5 Segment liabilities - Common liabilities
Total Liabilities
6 Capital expenditure 7 Depreciation
8 Other non-cash Expenditure 9 Reconciliation
Accounting Standards Interpretations on Segment Reporting
ASI 20 August 2005.
• In case of enterprise which has one business segment and one geographic segment as per definition in AS-17, segment information as per AS 17 is not required to be disclosed.
• Fact that there is only one business segment and one
geographical segment should be disclosed by way of note as a
reason for non provision of segment information .
29
Accounting Standards Interpretations on Segment Reporting
ASI 22 March 2004.(based on GC 14/2002 of October 2002.)
• Interest expense against overdraft/ operating liabilities identified to a particular segment – not to be included as segment expenses unless-
• Operations of segment are primarily of financial nature.
• Interest is included as a part of cost of inventories (see below)
• Interest expenses if part of cost of inventories (AS-2) or part of cost of asset (AS 16) and such inventories from part of segment asset of a particular segment- interest to be
considered as segment expense (see above).
Segment Reporting under Listing Agreement
Clause 41 Submission and disclosure of interim and annual financial results
• To be prepared in accordance with accounting standards and uniform accounting policies / practices adopted for all periods
• If company has more then are reportable primarily segment as per AS-17, it shall also submit quarterly or annual segment information as part of financial results in prescribed format .
• Segment revenue, segment results and capital employed
(segment assets- segment liabilities ) to be reported for each
reportable primary segment identified as per AS 17
31
Segment Reporting under Listing Agreement
Clause 49 Corporate governance
• Audit committee of board shall mandatorily reviews inter alia, management discussion and analysis (MDA) on financial conditions and results of operations.
• As a part of director’s report or as an addition thereto, a management discussion and analysis report should form part of annual report to the shareholders.
• MDA should include discussion on segment wise or product
wise performance
WHAT WILL NON-COMPLIANCE RESULT IN
• Statement may be construed as not giving a true and fair view
• Auditors may quality their report or disclose the fact of non-compliance of AS
• Contravention of listing agreement (in case of listed
company)
33
Segments Reporting by Banks as Suggested by RBI (Applicable upto March, 2007)
Business Segments - Treasury
- Banking Operations - Residual Operations Geographic Segments
- Domestic
- International
Segment Reporting by Banks
(Applicable w.e.f. March 2008)
Reportable business segments (in all, four)
• Treasury
• Corporate / wholesale banking (new)
• Retail banking (New)
• Other banking operations
• Additional segment, if any, as per AS-17 criteria
Reportable geographic segments
• Domestic
35
Segment Reporting by Banks
• Two new business segments-
Retail and wholesale banking
• Additional segments if any, to be identified and reported as per AS-17
• Segment reporting format to be modified accordingly
• 2008 being first year of reporting under new format, previous
year figures not required to be disclosed.
• Treasury segment
– to report entire investment portfolio
– having loans to be considered as retail only
• Retail banking
– to include exposures fulfilling four fold criteria of orientation (individual, small business), product (term loan, revolving credit etc.), granularity (<0.2% of overall retail portfolio) and low value of individual exposure (Rs. 5 crores).
• Corporate / wholesale banking
– to cover corporates and non-corporates (firms, trusts, government entities, statutory bodies
– includes those not included in retail category
• Other banking business
– covers all other banking operations not covered in other categories.
– covers other residual operations including para banking
37
SEGMENT REPORTING
Compliance with AS-17
• While reporting for first time, previous year figures need not be disclosed
• Enterprise not falling in specified categories not required to comply with AS-17
• When enterprise ceases to be in specified categories, AS-17 to be complied with for two consecutive years thereafter
• Enterprise exempt from disclosure to disclose the fact.
• AS-17 does not apply to level 2 and level 3 enterprises
• Where there is neither more than one business segment nor geographical segment, information as per AS-17 is not required to be disclosed
• Transfer within the enterprise (inter divisional transfer) cannot be considered as revenue (AS-9) since in case of inter divisional transfer, risks and rewards remain within the enterprise and there is no consideration from point of view of enterprise as a whole. As per AS-9, this revenue does not meet the revenue recognition criteria.
Check List for Compliance with AS-17
1. (a) Is the company a Level I enterprise as per the criteria for classification of on enterprise
(b) If yes, is segment reporting made in financial statements?
2. Is the financial reporting to the BOD?CEO based on:
(a) Products or Service ? or (b) Geographic areas?
3. If answer is 2(a), is
(a) Primary reporting by products or services? and (b) Secondary reporting by geographical segment?
4. If answer is 2(b) is:
39
Check List for Compliance with AS-17
5. If answer to (2) is not obtained, whether the enterprise determines the risk and returns more related to
(a) Products and Services? Or
(b) Geographic arrears in which it operates?
6. Having identified segment reporting into business or geographical segment, are the following identified thereafter?
(a) Segments where revenue is 10% or more both from internal and external sales.
(b) Segments where profit or loss is 10% or more of combined results of the segment in relation to profit or loss whichever is greater in absolute amount
(c ) Segment where assets are 10% or more of the total assets of all segments
Check List for Compliance with AS-17
7. (a) Do all the reportable segment put together constitute more than 75%of the total enterprise revenues?
(b) If no, has management identified additional segment/s even if that segment do not meet 1 0% criteria, such that at least 75% of total enterprise revenue is reported in reportable segment?
8. Are the disclosure of the reportable segments made in compliance with the requirement of AS-17?
41
Segment Reporting Issues
• Whether more than one type of product can be included in single business segment - Yes
• Can geographical segment exist within same country - Yes
• Should manufacturing and trading activities be considered as separate segments - Yes, depending upon criteria
• Should land used by two business segments be allocated as segment asset to each segment - Common
• Whether segments for AS-17 and clause 49 be different - Ideally no but may differ.
• Can segment reporting be avoided if enterprise feels that such reporting would be detrimental to enterprise’s interests - No.
Segment Reporting Issues
• When there is only one business/ geographic segment, is segment reporting required - No , but this fact should be disclosed
• In case of NBFC’s, whether interest expenses should be reported under segment - yes, being of financial nature (AS1 22)
• Should segment performance disclosed in management discussion and analysis statement be same as per AS 17 disclosure- Not
necessary but desirable
43
Table 3: Segment Report- A comparison
SL PARTICULA
R USGAAP UKGAAP IAS INDIAN AS
1 Regulation SFAS-131(FASB) UK
Companies Act SSAP 25
IAS's
International Accounting Standard
(Revised) IAS-14
ICAI's Accounting Standard AS-17
2 Year 1998 1990 1997 (original 1981) 2001
3 Segment Operating segment
is a distinct revenue producing
component for which internal financial data is produced
Products segment is distinguishable component providing separate product/servic e
Groups of related products/ services or by type of customers to whom they are provided
Business segment is distinguishable component providing any product/services or group thereof.
Geographical segment is distinguishable component with relation to particular economic
environment
4. Decision Management Management Management Management
5. Basis or
Classification Organization structure, revenue sources, nature of activities; information presented to board.
Organisation of activities, contribution to business of revenue sources, nature of activities material
components, rate of return, potential for growth.
Revenue nature of
business, future potential, product similarities/
differences, market risk importance of segment to entity.
Nature of
products / services, production process, class of products, eco-political condition, special risks, proximity of operations.
6. Mandatory
Classification 10% revenue, operating profit or identifiable assets75% of total revenue to be segmented
10% of turnover, results or net assetsIf associated firm contributes 20% or more of assets, its
aggregate/ net results also to be segmented.
10% of revenue, result or assets. If reportable segment are less than 75%
of total revenue, general description of balance to be given.
10% of revenue, result of assets if reportable
segments are less than 75% of total revenues,
additional segments to be identified segments to be identified even if such
segments are below 10% limit
45
7. Disclosure
Requirements Nature and identification of products, method used to allocate costs, tax effects, areas of operation, interest (income and expense )
extraordinary items, identifiable assets, caped, turnover depreciation and amortization
Turnover profit before tax, minority interests and
extraordinary items, net assets,
regulatory characteristics, if any.
Revenue, result, interest and dividend income segment assets and liabilities, related contingencies and commitments, capex towards segment assets, depreciation and amortization, significant non- cash items, extraordinary items.
•Revenue, result and liabilities
•Segment CAPEX during the year.
•Depreciation and amortization.
•Significant non-cost expense.
•Reconciliation between the information disclosed for reportable segments and the aggregated information in the financial statements
8. Disclosure in Annual Report Annual Report Annual Report Annual Report
9. Accounting
Policy Internal Financial Reporting Policies which may differ from consolidated GAAP
Consolidated
GAAP Plicies Accounting Policies as adopted by entries and specifies
segment policies.
SEGMENT REPORTING
Segment Classification by Selected Indian Companies
ACC (B)- Cement, ready mix concrete Ambuja Cement (B)-Cement (single)
Bajaj Auto (B) – Automotive, Insurance, Investment & Others Birla 3M (B) – Industrial Markets, Automotive & Specialists
Market; Electrical & Telecom, Electronic Markets, Health Care Market; Traffic & Safety Markets;
Consumers & Office, Construction Markets;
Others.
Container Corporation
of India (G) - Exim, Domestic
CMC Ltd (B) Customers Services, System
Integration, Indonet, education & Training
47
SEGMENT REPORTING
Dabur India (B) - FMCG Business, Pharmaceuticals, Ayurvedic Specialties, others.
Dabur Pharma Ltd.(B) - Formulations, bulk drug
Eicher (B) - Tractors, Gears, Two Wheelers
Godrej Industries (B) - Chemicals, Foods, Estate, Finance and investments, Others
Grasim (B) - Fibre & pulp, cement, sponge iron, chemical, textile, others
SEGMENT REPORTING
Gujarat Mineral Development
Corporation (G) - Head Office, Ahmedabad Lignite Project, Panandhro Lignite Project, Rajpardi Fluortspar Project, Kadipani Power Project, Nani Chher Leasing Business, H. O.
Other Projects.
Hindustan Uniliver (B) - Soaps & detergents, personal products,
beverages, foods, ice cream, exports, others
49
SEGMENT REPORTING
Huges Software (B) - Telecom, BPO Indian Rayon &
Ind. Ltd. (B) - Garments, rayon yarn, carbon black, insulators, spun yarn & fabrics, others
IDBI Bank Ltd. (B) - Corporate, retail, treasury Indian Hotels (B) - Hotels, Air Catering
Infosys Technologies
Ltd (B)- Financial Service, Manufacting, Telecom, Retail, others
(G)- North America , Europe, India, Rest of World Mukta Arts (B) - Film Division; Equipment Division; Others Nestle India Ltd (B)- Food (Single)
ND TV Ltd (B)- Single business segment
SEGMENT REPORTING
ITC Ltd (B) FMCG – cigarettes/ Others,
Hotels; Agri Business; Paperboards, paper &
packaging J S W Steels Ltd. (B)- Steel, Power
Max India (B) - Bulk Drugs; Speciality Plastic Products;
HealthCare, Business Investment.
MMTC (G) - Exports; Imports; Domestic
ONGC (B) - Offshore, Onshore, Joint Venture, Unallocated Reliance Industries
Ltd (B)- Petrochemicals , Refining, Oil, Gas, others
51
SEGMENT REPORTING
Pentameida
Graphics (B) - Sales & Services-
Films (3D Animation, Visual Effects);
T.V. (2D Animation, Special Effects);
Interactive Multimedia (CD, CBT, Internet)
Pfizer Ltd. (B)- Pharmaceuticals, animal health, services (clinical developments)
Shree Cement (B) Cement (Single)
Siemens Ltd. (B) - Information & communication, automation &
drives, industrial solutions & services, power, transport, health care and other services,
building technologies, real estate
SEGMENT REPORTING
Tata Steels (B)- Steel, ferro alloys , minerals, others (tubes &
bearings)
TCS (B) Consultancy, software
Wipro Ltd. (B) Global IT services & products, India & Asia pacific IT services & products, consumer care &
lighting, others
(G) India, USA, rest of world.
Zee Telefilms (B)- Broadcasting & content, access, education, films productions distribution
53
SEGMENT REPORTING
Policies / Notes on Segment Information
Infosys Technologies Ltd.Principal Segments – Financial Services, Manufacturing, Telecom, Retail, Others
• The Company’s operations predominantly relate to providing information technology (IT) services to customers operating in various industry segments. Accordingly, IT service revenues represented along industry classes comprise the primary basis of segment information set out above
.
Segmental Capital employed
• Fixed assets used in the company’s business or liabilities contracted have not been identified to any of the report able segments, as the fixed assets and liabilities contracted are used interchangeably between segments. Accordingly, no disclosures relating to total segment assets and liabilities are made.
SEGMENT REPORTING
Birla 3M Ltd,
Principal Segments –
• Industrial Markets
• Automotive & Specialty Material Markets
• Electrical, Telecom & Electronic Markets
• Health Care Markets
• Traffic & Safety Markets
• Consumer, Office & Construction Markets
* Segments have been identified in line with the accounting standard on segment reporting (AS-17), taking into account the organisation structure as well as the differential risks and returns of these segments.
* Segment revenue, results and capital employed figures include the respective amounts identifiable to each of the segment. Other unallocable expenditure includes expenses incurred on common services provided to the segments which are not directly identifiable to the individual segments as well as
55
SEGMENT REPORTING
AZTEC Software & Technology Services Ltd.
Principal Segments: US, Others
• The company’s operation relates to providing services to the customers operating in different geographical locations. Accordingly, the company has identified geographical segmentation as the basis of primary segmental information and the same is represented as above.
• Fixed assets used in the company’s business cannot be specifically identified with any of the reportable segments, as these are used interchangeably between segments. Management believes that it is currently not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation of the available data is not possible with any reasonable degree of accuracy.
SEGMENT REPORTING
ITC Limited
The Business groups comprise the following:
FMCG: Cigarettes- Cigarettes & Smoking mixtures.
Others - Branded Garments, Greeting Cards, Stationery &
Gifts, Packaged Foods (Staples, Confectionery, Snack Foods and Ready to Eat Food) and Agarbattis and Matches sourced from the small scale sector.
Hotels - Hoteliering.
Paperboards,m paper & Packaging – Paperboards, Paper including Specialty Paper and Packaging
Agri Business - Agri commodities such as rice, soya, wheat, coffee and leaf tobacco.
Branded Garments, Greeting Cards, Stationery & Gifts, Packaged foods (Staples, confectionery, snack foods and ready to eat food) and Agarbattis
57
SEGMENT REPORTING
Dabur India Ltd.
The company’s business is currently divided into three business segments namely:
• FMCG business comprising personal care and health care products such as hair care, oral care, tonics, digestives, child care and Ayurvedic medicines and other products. Ayurvedic Veterinary medicines, Guar Gum etc.
• Pharmaceuticals business comprising allopathic, Oncology Formulations, and Bulk Drugs.
• Foods business comprising Juices & Vegetable Pastes.
SEGMENT REPORTING
Raymond Ltd.
Details of products included in each of the segments are given below:
• Textile includes fabrics, rugs, blankets, shawls, furnishing fabrics, designer wear and merchandising items like shirting and garments.
• Files include engineers’ files and rasps. H. S. S. twist drills and bars and rods (HRS).
• Denim includes denim fabric and cotton yarn.
• Others include aviation.
59
Bharat Petroleum Corp. Ltd.
The corporation operates in a single segment viz, downstream petroleum sector. As such reporting is done on single segment basis.
Shipping Corporation of India Ltd.
Segment definitions – liner segment includes break bulk and container transport. Bulk segment includes tankers (both crude and product), dry bulk carriers, gas carriers and phosphoric acid carriers. Others include offshore vessels, passenger vessels and services and ships managed on behalf of other organisations and corporate operations. Interest expense and interest income are shown separately.
The capital employed indicated under the segments represents the components directly identifiable to the particular segment. The un- allocable capital employed includes other fixed assets (excluding vessels and containers),
SEGMENT REPORTING
Escorts Ltd.
• Business segments have been defined as below:
– Agri Machinery products: agricultural tractors, harvester combines and their parts
– Auto Ancillary products: shock absorbers, telescopic front forks and struts
– Railway equipment: shock absorbers, couplers and brake blocks – Traded products: agricultural commodities
• The segment wise revenue, results and capital employed figures relate to the respective amounts directly identifiable to each of the segments.
Un-allocable expenditure includes expenses incurred on common services at the corporate office and relate to the company as a whole.
Un-allocable income of corporate office comprises dividend income and other incomes.
SEGMENT REPORTING
61
SEGMENT REPORTING
Larsen & Toubro Limited
• Segments have been identified considering the return/ risk profiles of the businesses, their organisational structure and the management reporting systems.
• Segment definitions: Engineering & construction comprises execution of engineering and construction projects to provide solutions in civil, mechanical, electrical and instrumentation engineering (on turnkey basis or otherwise) to core sectors / infrastructure industries. Electrical & electronics includes manufacture and sale of low voltage switchgear/ control gear, petroleum dispensing pumps and systems, electronic energy meters/ protection systems, control and automation products and medical equipment. Others include ready mix concrete, property development, glass container business, marketing of welding electrodes and construction equipment.
• Segment revenue comprises sales & other income allocable specifically to a segment. Un-allocable expenditure includes mainly expenses incurred on common services provided to segments and corporate expenses. Un-allocable income includes dividends. Corporate assets mainly include investments in subsidiary and associate companies and bond issue proceeds held in deposit accounts.
SEGMENT REPORTING
Tata Consultancy Services Ltd
• The Company has identified geographic segments as its primary and industry segments as its secondary segment.
• Geographic segments of the company are America, Europe, India and others.
• Secondary segments of the company are Banking, Financial Services and Insurance (BFSI), which are considered as single segment, Manufacturing, Retail and Distribution, Telecom and Others. Others comprise transportation, life sciences and healthcare, energy and utilities, e- governance, media and entertainment, travel and hospitality services and sale of products, etc.
63
SEGMENT REPORTING
• Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses incurred in India on behalf of other segments and not directly identified to each reportable segment have been allocated to each segment on the basis of associated revenues of each segment. All other expenses which are not attributed or allocable to segments have been disclosed as unallocable expenses.
• Assets and liabilities that are directly attributable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assts have not been allocated between segments as these are used interchangeably between segments.
SEGMENT REPORTING
Reliance Industries Limited
• The company has identified three reportable segments viz.
Petrochemicals, Refining and Oil & Gas. Segments have been identified and reportable taking into account nature of producers and services. the differing risks and returns and the internal business reporting systems.
The accounting polices adopted for segments reporting are in line with the accounting polices of the company with following additional polices for segments reporting.
• Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segments. Revenue and expenses, which relate to enterprise as a whole and are not allocable to a segment to a reasonable basis, have been disclosed as "Unallocable".
• Segment assets and segment liabilities respective segment. Investments tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocable".
• As per Accounting Standard (AS) 17"Segemnt reporting", the company has reported segment information on consolidated basis including
65
SEGMENT REPORTING
The reportable segments are further described below:
– The Petrochemicals segment includes production and marketing operations of petrochemical products namely, high and low density Polyethylene, Polypropylene, Polyvinyl chloride, poly butadiene rubber, polyester fiber, purified terephthalic acid, paraxylene, ethylene glycol, olefins, aromatics, butadiene, linear alkyl benzene, polyethylene terephthalate, acrylonitrile and caustic soda.
– The Refining segment includes production and marketing operations of petroleum products.
– The Oil and Gas segment includes exploration, development and production of crude oil and nature gas.
– The businesses, which were not reportable segments during the year, have been grouped under the "Other" segment. This mainly comprises of:
• Textile
• Retail business
• SEZ development
SEGMENT REPORTING
GTL Infrastructure Ltd
• Business Segment: The company is in the business of providing shareable infrastructure facilities on “build, own and operate” basis for a diverse range of customers operating in various industries. The company has considered. “Shared User Infrastructure” as one business segment for disclosure in the context of Accounting standard 17 issued by the institute of Chartered Accountants of India.
• Geographic Segment: During the year, the company provides its facilities only in India and not in any other country. The conditions prevailing in India being uniform, no separate geographical disclosure is considered necessary .
67
SEGMENT REPORTING
Nicholas Piramal India Limited
• The Company is mainly engaged in pharmaceutical business (mainly consisting of manufacturing and sale of won and traded bulk drugs and formulations which is considered the primary reportable business segment as per Accounting Standard (AS-17) “Segment Reporting” issued the Institute of Chartered Accountants of India. The secondary segment based on geographical segmentation are considered to be business outside India and within India.
SEGMENT REPORTING
Nestle
• Segment Reporting
• Based on the guiding principles given in Accounting Standard on
"Segment Reporting ' [(AS-17) issued by the Institute of Chartered Accountants of India], the company's primary business segment is Food.
The business incorporates product groups viz milk products and nutrition, beverages, prepared dishes and cooking aids, chocolates and confectionery, which mainly have similar risks and returns. As the company's business activity fails within a single primary business segment, the disclosure requirements of AS-17 in this regard are not applicable.
69
SEGMENT REPORTING
Hindustan Unilever Limited
• The company has considered business segment as the primary segment for disclosure. The products included in each of the reported domestic
business segments are as follows:
• Soaps and Detergents include soaps, detergent bars, detergent powders, detergent liquids. scourers, etc.
• Personal Products include products in the categories of oral care, skin, skin care (excluding soaps), hair care, deodorants. talcum powder, colour cosmetics, etc.
• Beverages include tea and coffee. .
• Foods include branded staples (atta, salt. bread. etc.), culinary products (tomato based products, fruit based products, soups. etc.)
• Ice Creams include Ice creams and frozen desserts.
• Others include Chemicals, agri seeds, property development, water business, ayush services etc.
SEGMENT REPORTING
Segment revenue relating to each of the above domestic business segments includes Income from services provided. where applicable. In addition, the company's exports business segment includes sales of marine products, castor, etc. as well as sales of soaps and detergents, personal products.
beverages and foods, etc. by the exports division.
• The above business segments have been identified considering' a) the nature of products and services
b) the differing risks and returns c) the organisation structure, and
d) the internal financial reporting systems
• Revenue. results, assets and liabilities of the erstwhile subsidiary modern food industries (India) limited. which amalgamated with the company, are
71
