NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES

SCHOOL OF BUSINESS MANAGEMENT

Individual Project
Financial Accounting and Management Accounting,
FTMBA, Trimester 1, 2020-21
To study the application of Indian Accounting Standards by 3 Indian companies

SUBMITTED BY:

DIVISION H, GROUP IV
SUDDHASHEEL GUHA MAZUMDER (H019)

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Contents
Introduction .................................................................................................................................. 3
Application of Ind-AS.................................................................................................................. 3
Maruti Suzuki (FY 2019-20) .................................................................................................... 3
Company Analysis ............................................................................................................... 3
Commentary on Financial Statements ................................................................................. 3
Infosys (FY 2019-20) ............................................................................................................... 3
Company Analysis ............................................................................................................... 3
Commentary on Financial Statements ................................................................................. 4
Interglobal Aviation Limited (FY 2019-20)............................................................................. 4
Company Analysis ............................................................................................................... 4
Commentary on Financial Statements ................................................................................. 4

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Introduction
Accounting is the process of recording financial transactions pertaining to a business entity.
The financial statements recorded at the end of the accounting period, are basically a report
card for the company. So, it is important that they are regulated and do not contain any
misleading information. Indian Accounting Standard (Ind-AS) is the Accounting standard
adopted by companies in India and issued under the supervision of Accounting Standards
Board (ASB is a committee under Institute of Chartered Accountants of India).

Application of Ind-AS
Maruti Suzuki (FY 2019-20)
Company Analysis
• The total revenue was Rs 790314 million as against Rs 885813 million in the previous
year showing a decrease of 10.78%.
• The profit after tax (PAT) stood at Rs 56506 million against Rs 75006million in the
previous year showing a decrease of 24.66%.
• No amount was carried to General Reserve and a dividend of Rs. 60/per share was
provided.
• As per MD&A, the slowdown in consumption in this sector is due to inadequate credit
availability and downturn of financial sector as well as the pandemic brought production
toa standstill.
Commentary on Financial Statements
• Notes on PP&E:
o Immovable properties having carrying
value of INR 21 million are not yet
registered in the name of the Company,
hence have not been recorded.
o Plant and Machinery includes a Gas Turbine jointly owned by the Company with
its group companies and other companies (pro-rata cost amounting to ` 374 million,
carrying amount as at 31.03.2020 is Nil (as at 31.03.19 is Nil).
o In accordance with Ind AS 116 adopted by the company on April 1, 2019,
Leasehold Land (prepaid leases) have been transferred to right-of-use assets (INR
9 Million).
• Revenue Recognition: Effective April 1, 2018 the company had adopted Ind AS 115
“Revenue from Contracts with Customers”. The initial affect is negligible; however, the
Company recognizes revenue when the amount of revenue and its related cost can be
reliably measured and it is probable that future economic benefits will flow to the entity.

Infosys (FY 2019-20)

Company Analysis
• During fiscal 2020, Infosys continued to invest in enhancing our digital capabilities and
offerings that enable our clients to embrace digital technologies for their business
transformation, resulting in over 39% of the revenue coming from digital services and
solutions.
• On a consolidated basis, the balance in retained earnings as at March 31, 2020 was Rs
56,309 crore, as compared to Rs 57,566 crore in the previous year.
• Special Economic Zone Re-Investment Reserve: This reserve is utilized by the
Company for acquiring new plant and machinery for the purpose of its business. During
the year, a net amount of Rs 1,428 crore and Rs 1,500 crore was transferred to it.
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• Cash and Cash equivalents: On a standalone basis, balance in current and deposit
accounts stood at Rs. 8,048 crores as at March 31, 2020, as compared to Rs. 10,957 crores
as at March 31, 2019.
Commentary on Financial Statements
• Effective April 1, 2019, the Group has adopted Ind AS 116,
Leases and applied it to all lease contracts existing on April
1, 2019, using the modified retrospective method, and has
taken the cumulative adjustment to retained earnings on the
date of initial application.
• Ind AS 116 resulted in an increase in cash inflows from
operating activities and an increase in cash outflows from financing activities on account
of lease payments.

Interglobal Aviation Limited (FY 2019-20)

Company Analysis
• After rapid expansion over the last decade when Indian aviation registered a Compound
Annual Growth Rate of around 13.6% in domestic demand, it slowed down to 5% in
2019.
• The total income for FY 2020 was Rs. 372,915.10 million, higher by 25.05% over
previous year’s income of Rs. 298,213.70 million.
• Considering the cash flow position and the loss accrued due to the pandemic posted for
FY 2020, the Board of Indigo has not recommended any dividend on the equity shares of
Indigo.
Commentary on Financial Statements
In preparing the standalone Ind AS financial statements, the
entity’s management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the
going concern basis of accounting unless management either
intends to liquidate the Company or to cease operations, or has
no realistic alternative but to do so.
• The Standalone Cash Flow Statement has been prepared in accordance with
‘Indirect method’ as set out in Ind AS – 7 ’Statement of Cash Flows’.
• Depreciation on assets held as right of use assets is charged to Standalone Statement
of Profit and Loss on a straight-line method basis from commencement date to the
earlier of the end of the lease term, except for leased aircraft previously classified
as finance leases under Ind AS 17 where depreciation is charged on useful life of
right of use assets.
• Ind AS 12 – Income Taxes: The amendment relating to income tax consequences
of dividend clarify that an entity shall recognize the income tax consequences of
dividends in profit or loss, and in other income or equity according to where the
entity originally recognized those past transactions.

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• The major impact of adopting Ind AS 116 on the Standalone Statement of Profit
and Loss for the year ended 31 March 2020 is as follows:
1. Depreciation and amortization expenses has increased by Rs. 31,182.50.
2. Finance costs has increased due to interest accrued on outstanding lease
liabilities amounting to Rs. 12,677.43.
3. Loss of Rs. 15,296.92 has been recognized in ‘Foreign exchange (gain)/ loss
(net)’ on account of revaluation of lease liabilities denominated in foreign
currency.
4. Aircraft and engine rentals (net) and other rentals has decreased by Rs.
43,222.68 respectively, due to recognition of operating lease as ROU assets
and corresponding lease liabilities.
• The impact, net of tax, of transition to Ind AS 115 on retained earnings
(cumulative effect of contracts other than completed contracts) as on 1 April 2018
is Rs. 24.55. It represents:
1. Recognition of revenue for ancillary services such as modification charges,
convenience charges, etc. relating to air transport services upon flown basis
which were earlier recognized as revenue on rendering of the said service
under Ind AS 18 on the basis of transaction date
2. Recognizing the expected breakage amount as revenue in proportion to the
pattern of rights exercised by the passengers which were recognized on flown
basis under Ind AS 18.