The Accounting Standards Committee of the Securities and Exchange Board of India (Sebi), headed by Y H Malegam, has recommended that segmental reporting would be applicable to listed companies from the current fiscal. It has also said that dotcom companies should not be valued in the traditional way but information should be available for investors to take informed investment decision.
Under segmental reporting, companies will be required to furnish segment-wise revenues, results, capital employed in the quarterly financial unaudited results, with effect from the quarter ending on September 30, 2001. They will also be required to comply with the standards on accounting for taxes on income from the next quarter onwards. Earnings per share will also be calculated as per the new accounting standards with effect from the next quarter.
Companies will have to publish consolidated financial statements in their annual reports and will have the option to publish consolidated quarterly financial results in addition to their unaudited results of the parent company. Related party disclosures will also have to be made by companies.
Since traditional valuation methods would not be applicable to dotcom companies "in view of their uncertain revenue streams and unpredictable and rapidly changing business models," it was felt by the committee that instead of prescribing valuation modes, "sufficient amount of information should be made available to the investors to take well informed investment decision."
The dotcom companies will be required to disclose all relevant qualitative and quantitative business information. These companies will also have to adhere to the guidance note on accounting by dotcom companies issued by the Institute of Chartered Accountants of India (ICAI).
