Dear Sir/ Madam, As you are aware, India is converging with International Financial Reporting Standard (IFRS) from

1 April 2011. In this process, it has been decided to issue IFRS converged standards (to be known as Ind-AS); rather than, full adoption of IFRS as issued by International Accounting Standard Board (IASB). Recently, the Institute of Chartered Accountants of India (ICAI) submitted a set of the near final Ind-AS standards to the National Advisory Committee on Accounting Standards (NACAS). These standards contain a number of changes from the IFRS. This along with the practice and regulatory related differences that may emerge will not allow Indian companies to make a statement of compliance with IFRS on the Ind-AS financial statements. In preparing the near final drafts of Ind-AS, a consultative process involving standard setters, regulatory agencies and industry association was followed. As IFRS financial statements are predominantly for the use of providers of finance and risk capital, we believe that more importance should be given to their point of view rather than only of preparers of financial statements. Keeping the above in view, Ernst & Young India is conducting a survey of those involved in providing finance and risk capital and other allied entities such as investor analysts and research agencies. The main objective of the survey is to provide an aggregated response on whether IndAS standards should or should not depart from IFRS. The survey comprises of 10 questions which are self explanatory and should not take more than 15-20 minutes to complete. We believe that, your response to this survey is very important and your inputs would be of great value to the standard setters and policy makers in India, in drafting future accounting standards. The responses to this survey will only be presented in our survey report in an aggregated form and no individual response will be disclosed publicly. We will also send you a detailed report of the survey results. We enclose herewith a questionnaire for the survey, which can be e-mailed to technical.assurance@in.ey.com If you need any information/clarification, you may get in touch with Keyur Dave at keyur.dave@in.ey.com

Thank you in advance for your time. Sincerely

Ernst & Young Pvt. Ltd.

Conversion approach
1. Adoption of IFRS vs. convergence with IFRS In India we are currently following a convergence to IFRS model, as opposed to adoption of IFRS as issued by the IASB. The current version of the Indian converged accounting standards (Ind-AS) contain certain significant deviations from IFRS which if notified are likely to result in non-compliance with IFRS. As a user of financial statements, which one will be your preferred approach? Full adoption of IFRS as issued by IASB, without any change Convergence model with only few changes made to IFRS, in the rarest of rare circumstances Convergence model with significant and numerous deviation from IFRS to suit various Indian industry requirements

First time adoption of Ind-AS

2. Comparative Information IND-AS 101 (first time adoption) does not require the presentation of comparative information in the first set of financial statement prepared as per Ind-AS vis--vis mandatory presentation of comparatives required by IFRS1. As a user of financial statement, what is your preference with regarding presentation of comparative information in the first Ind-AS financial statements? Comparatives should be mandatory Comparatives should be optional No need for comparatives 3. Changes in first time adoption exemptions Ind-AS 101 makes several changes in exemptions/ relaxations vis--vis IFRS 1. For example, it allows a first-time adopter to continue with its previous GAAP carrying value, for all of its property, plant and equipment. What is your view on the changes in first time adoption exemptions? No additional changes should be allowed in Ind-AS 101 as compared to IFRS1 Additional exemptions/relaxations should be provided

IFRS convergence an investors perspective

Pag e |2

Key deviations & modifications

4. Revenue recognition from real estate sales Under IFRS, IFRIC 15 will require many real estate companies to recognize revenue from real estate sales, for example; flat sale, on completion of construction, as the sale agreement does not meet the criteria of continuous transfer of risk and rewards. However, as IFRIC 15 is not adopted in Ind-AS; real estate companies will follow the percentage of completion method. In your view, what is an appropriate method for revenue recognition for real estate sales? IFRIC 15 criteria (essentially completed contract method) Percentage of completion method An option for companies to choose either of the two models to be applied consistently 5. Fair value model for investment property IAS 40 provides an option to apply either the cost model or the fair value model for measurement of investment property. In the cost model, an investment property is measured at cost less depreciation and impairment. The fair value model requires investment property to be measured at fair value at each reporting date and any gain/loss is recognized in profit or loss. Ernst & Young recently conducted a survey on IFRS financial statements of 30 global real estate companies. Out of these 30 companies, 27 have used the fair value model. However, Ind-AS mandates the use of cost model only. According to you, what is an appropriate basis for measurement of investment property? Cost model Fair value model An option for companies to choose either of the two models to be applied consistently 6. Exchange difference arising on long-term foreign currency monetary items IFRS requires any exchange difference arising on translation of monetary items to be recognized in profit or loss for the period. However, in Ind-AS, companies have been given an option (that cannot be revoked later) whereby they can choose to defer any exchange difference arising on long-term foreign currency monetary items in a separate equity account. This amount will be transferred to profit or loss over the tenure of the related item, in an appropriate manner. What in your view is the right approach? Recognition of all exchange differences in the profit or loss immediately Deferment of exchange differences arising on long-term foreign currency monetary items in equity, for transfer to profit or loss over the life of the item, in an appropriate manner An option for companies to choose either of the two models to be applied consistently
IFRS convergence an investors perspective Pag e |3

7.

Foreign currency convertible bonds (FCCBs) IFRS requires FCCBs to be treated as combination of financial liability and derivative. While the liability component is measured at amortized cost, the derivative component will be measured at fair value through profit or loss at each reporting date. However, Ind-AS has been modified in a manner that the derivative component will be treated as a fixed equity component. Thus, there is no need for the derivative component to be measured at a fair value. In your view, what is an appropriate treatment for FCCBs? Liability with conversion option as a derivative Liability with conversion option as fixed equity

8.

Recognition of rate regulated assets or liabilities Under the current IFRS framework, rate regulated adjustments do not meet the definition of an asset/ liability, and therefore are not recognized. IASB is working on a project to determine an appropriate treatment for such adjustments. Though Ind-AS does not contain any specific guidance on this aspect, the current practice under Indian GAAP is to recognize rate regulated adjustments as assets/liabilities. What is your view on recognition of these adjustments? Till the IASB finalizes its project on rate regulated adjustments, companies should adhere to the current IFRS framework. Companies should be allowed to carry Indian GAAP practices under Ind-AS.

9.

Financial liability designated at fair value through profit or loss (FVPL) Ind-AS 39 requires that in determining the fair value of a financial liability designated as FVPL, any change in fair value consequent to changes in the companys own credit risk should be ignored. In contrast, IAS 39 requires all changes in fair values of such liabilities to be recognized in profit or loss. In your view, how should the fair value of a financial liability designated at FVPL be measured? Ignore changes in the fair value arising from changes in own credit risk Changes in the fair value should include impact of changes in own credit risk On the lines of IFRS 9, recognize changes in the fair value arising from changes in own credit risk directly in equity

10.

Analyses of expenses in profit and loss account: IAS 1 requires a company to present an analysis of expenses recognized in profit or loss using a classification based on either their nature or their function within the company. However, Ind-AS mandates only the nature-wise classification of expenses. What is your view on classification? Nature-wise classification is appropriate Function-wise classification is appropriate An option for companies to choose either of the two classifications to be applied consistently
IFRS convergence an investors perspective Pag e |4

Our offices
Ahmedabad 2nd Floor, Shivalik Ishaan Near CN Vidhyalaya, Ambawadi, Ahmedabad - 380 015 Tel: + 91 79 6608 3800 Fax: + 91 79 6608 3900 Bengaluru "UB City", Canberra Block 12th & 13th floor No.24, Vittal Mallya Road Bengaluru - 560 001 Tel: + 91 80 4027 5000, + 91 80 6727 5000 Fax: + 91 80 2210 6000 (12th Floor) Fax: + 91 80 2224 0695 (13th Floor) Chennai TPL House, 2nd floor No 3, Cenotaph Road Teynampet Chennai - 600 018 Tel: + 91 44 4219 4400 + 91 44 6632 8400 Fax: + 91 44 2431 1450 Hyderabad 205, 2nd floor Ashoka Bhoopal Chambers Sardar Patel Road Secunderabad - 500 003 Tel: + 91 40 6627 4000 Fax: + 91 40 2789 8851 Oval Office, 18, iLabs Centre, Hitech City, Madhapur, Hyderabad 500 081. Tel: + 91 40 6736 2000 Fax: + 91 40 6736 2200 Kolkata 22, Camac Street Block C, 3rd floor Kolkata - 700 016 Tel: + 91 33 6615 3400 Fax: + 91 33 2281 7750 Mumbai 6th floor & 18th floor, Express Towers, Nariman Point Mumbai - 400 021 Tel: + 91 22 6657 9200 (6th floor) Fax: + 91 22 2287 6401 Tel: + 91 22 6665 5000 (18th floor) Fax: + 91 22 2282 6000 Jalan Mill Compound 95, Ganpatrao Kadam Marg, Lower Parel Mumbai - 400 013 Tel: + 91 22 4035 6300 Fax: + 91 22 4035 6400 5th Floor, Block B-2 Nirlon Knowledge Park Off. Western Express Highway, Goregaon (E) Mumbai - 400 063 Tel: + 91 22 6749 8000 Fax: + 91 22 6749 8200 NCR 6th floor, HT House 18-20 Kasturba Gandhi Marg New Delhi 110 001 Tel: + 91 11 4363 3000 Fax: + 91 11 4363 3200 4th & 5th Floor, Plot No 2B, Tower 2, Sector 126, NOIDA - 201 304 Gautam Budh Nagar, U.P. Tel: + 91 120 671 7000 Fax: + 91 120 671 7171 Golf View Corporate Tower B Near DLF Golf Course, Sector 42 Gurgaon 122 002 Tel: + 91 124 464 4000 Fax: + 91 124 464 4050 Pune C-401, 4th floor Panchshil Tech Park Yerwada (Near Don Bosco School) Pune - 411 006 Tel: + 91 20 6603 6000 Fax: + 91 20 6601 5900