AFSA

Term Project
Analysis of Accounting Policies of Companies
Group 9, Batch 1
Industry: Ceramics Abhinav Goel 20PGDMBFS02
Somany Ceramics Ltd Harsh Gupta 20PGDMBFS14
Kajaria Ceramics Limited
NITCO Limited Shakti Kumar B 20PGDMBFS40

Tushant Dawar 20PGDMBFS48

Yash Bengani 20PGDMBFS52

 Question 1
Somany Ltd - Recognized Investment at fair as well as
amortized cost. Their investment is a passive investment.
Kajaria Ltd - Recognized Investment at fair value and passive
investment.
NITCO- Recognized Investment at fair as well as amortized
cost and equity method.
 Question 2- Subsidiaries
Somany Kajaria

NITCO
 Question 3
NITCO-The NCI is mentioned in the Consolidated Financial Statement as a
separate entry under Equities & Capital.

Kajaria- non-controlling interests are adjusted to reflect the changes in their relative
interests in the subsidiary where changes in the Group’s ownership interest in a
subsidiary does not result in the Group losing control of the subsidiary.

Somany-The NCI is mentioned in the Consolidated Balance Sheet as a separate

entry under Equity & Liabilities
 Question 4
In which of the consolidated financial statements, gains and losses
on foreign currency translations are reported?

In all the three companies gains and losses on foreign currency

translations in Profit And Loss Statement.
 Question 5
Using the disclosure of gains and losses on foreign currency translations,
comment on which method is being used by the companies to calculate the
foreign currency translation gains or losses?In which of the consolidated
financial statements, gains and losses on foreign currency translations are
reported?
Transactions in foreign currencies are recorded by the company at their respective functional currency
at the exchange rates prevailing at the date of the transaction first qualifies for recognition.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the
exchange rates at the date of initial transactions. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value is determined.

Hence the companies follows Temporal Method.

 Question 6
Comment on the reporting and disclosure of deferred taxes by the companies.
Mention the items that led to deferred tax assets or liabilities for your companies?
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the
balance sheet and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are recognised for all taxable temporary differences.
Deferred tax assets are recognised for all deductible temporary differences to the extent it is probable that
taxable profits will be available against which those deductible temporary differences can be utilised.

Somany Ceramics Kajaria NITCO

Deferred Tax Asset Accrued Expenses Provisions for employee None

benefit obligations

Deferred Tax PPE, Intangible PPE None

Liability Assets
 Question 7
Impact of Ind-AS 116 on Balance Sheet &
Income Statement
Somany Ceramics:
Kajaria Cements Limited
The Group has adopted Ind AS 116 “Leases”, effective annual
reporting period beginning April 1, 2019. The Group has not
restated comparative information and there is no cumulative
effect of initially applying this standard on opening balance of
retained earnings as on April 1, 2019.
NITCO Limited
The company has used the practical expedients
permitted by the standard:
● Applying a single discount rate to a portfolio of
leases with reasonably similar characteristics
● Accounting for operating leases with a remaining
lease term of less than 12 months or with minimal
rent payments as short-term leases
● In case of Leases which are having no lock in
period or lease are cancellable with short notice by
either party or lessee are not treated as lease for
the purpose of IND AS 116.
● For short-term & low value leases, the
Company recognizes lease payments as
operating expense on a straight-line basis over
the term of the lease.
● The ROU assets are initially recognized at
cost, (initial amount of lease liability adjusted
for lease payments + initial direct costs - lease
incentives)
● ROU assets are depreciated from the
commencement date on a straight-line basis
over the shorter of the lease term and useful
life of the underlying asset.
● The lease liability is initially measured at
amortized cost at the present value of the
future lease payments.
 Question 8

Comment on the reporting and disclosure of

long-term borrowings by the companies
Somany Ceramics Ltd NITCO Limited

During FY 2017-18, the debt of the Company was

restructured to a sustainable level to ensure
continuity of business resulting in long-term growth
beneficial for all stakeholders. Pursuant to the
same the restructuring was implemented as per
which loans have been converted into term loans.

The Company is negotiating a similar settlement

agreement with other lender(s), Pending
negotiations no further adjustments have been
made.
Kajaria Ceramics Ltd
 Question 9
For the companies assigned to your group, do you observe any
difference in any of the above accounting policies and disclosures
across the companies, over two years.
Somany Ceramics Ltd & NITCO Limited
The Group has consistently applied accounting policies except where a newly issued accounting standards is initially
adopted or a revision to an existing accounting standard required a change in the accounting policy hitherto in use.
Kajaria Cements Ltd

There were significant changes to contract assets and liabilities which have been
highlighted in the notes to financial statements
THANK YOU