Report on Schedule VI - Part 1 & 2

8/27/2010

A PROJECT REPORT ON

Indian Companies Act –

1956

“Schedule VI”

SUBMITTED BY

Ankita Banka

Anupam Gupta

Khushboo Sinha

Madhurya Deshpande

Pritam Pal

Ritu Shukla

Shreeshma Thayyil

Sudheer Nerella

IBS Mumbai

2010-2012

ACKNOWLEDGEMENT

Completing a task is never a one man effort; it is always a result of in

variable contribution of number of individuals in terms of practical

knowledge and its execution in practical systems.

We express our deep gratitude and heartfelt thanks to Mr. Anil Tilak who

has given us the opportunity to work under his guidance and for giving us

his valuable time.

Last but not the least; we would like to thank each and every person for

knowingly and unknowingly providing their help and valuable time for

making our project a great success.

August 2010

Ankita Banka

Anupam Gupta

Khushboo Sinha

Madhurya Deshpande

Pritam Pal

Ritu Shukla

Shreeshma Thayyil

Sudheer Nerella

ABSTRACTOur project report deals with the rules and regulations to be followed

during the preparation of financial statements of SMC companies. The

rules are stated in the Indian Companies act 1956, under the category

“Schedule VI”

Schedule VI explains us in details the steps to be followed in order to

prepare any financial statement be it Balance Sheet, Profit and Loss

account or Cash flow statement. This was formulated, in order to bring the

financial statements on the same level/platform, so as to make analysis

on different aspects.

Thus, here we have incorporated a brief explanation on how the financial

statements should be prepared and what all things are to be included in

every statement.

INDEX

CONTENTSPAG

E NO.

Schedule VI To The Companies Act,

1956…………………………………………………6

Concepts For The Schedule

VI……………………………………………………………..8

Method Adopted In Determining The Form Of Balance Sheet,

Statement Of Profit And Loss And Cash Flow

Statement…………………………………………………………….

9

General Instructions For Preparation Of Balance Sheet, Statement Of

Profit And Loss And Cash Flow

Statement………………………………………………………………………

11

General Instructions For Preparation Of Balance

Sheet……………………………14

General Instructions For Preparation Of Profit And Loss

Account………………...27

General Instructions For Preparation Of Cash Flow

Statement…………………….32

Part I – Balance

Sheet……………………………………………………………………...34

Part II – Profit And Loss

Account…………………………………………………………36

Part III – Cash Flow

Statement…………………………………………………………….38

Concepts For Preparation Of SARAL Schedule

VI………………………………………...42

Method Adopted In Determining The Form Of Balance Sheet And

Statement Of Profit And Loss – SARAL

Schedule………………………………………………………………

43

General Instructions For Preparation Of Balance Sheet And

Statement Of Profit And Loss – Sacral

44

Schedule.................................................................................................

.................................

General Instructions For Preparation Of Balance

Sheet……………………………………47

General Instructions For Preparation Of Statement Of Profit And

Loss…………………...52

Consolidated Financial Statements For Infosys

Technologies………………………57

Consolidated Balance

Sheet………………………………………………………...59

Consolidated Profit And Loss

Account…………………………………………….60

Schedules To The Consolidated Balance

Sheet……………………………………..62

Schedules To The Consolidated Profit And Loss

Account…………………………68

Conclusion………………………………………………………………………………

…..71

Bibliography……………………………………………………………………………

…...72

SCHEDULE VI TO THE COMPANIES

ACT, 1956

1. Schedule VI to the Companies Act, 1956 provides for the manner in

which every company shall prepare its balance sheet and profit and

loss account.

2. Various changes have taken place in the economic and regulatory

environment for companies across the world and in India.

Internationally, the observance of universally accepted reporting

norms in respect of financial information of companies is perceived

as an important measure for good corporate governance, enabling

transparency with regard to financial position of the company and

proper disclosure to shareholders. In pursuance of the policy

adopted by the Government to enable convergence with

International Financial Reporting Standards (IFRS), the Government

of India notified Companies (Accounting Standards) Rules, 2006

under the Companies Act, 1956. It is felt necessary not only to

enable proper and adequate disclosures but also to resolve any

ambiguity in application of various Rules etc. to be observed by

companies in this regard. Therefore, it is essential to harmonize and

synchronize the general disclosure requirements under Schedule VI

with those prescribed in the Accounting Standards.

3. This Ministry has also received suggestions for revision of this

Schedule for removing the requirements of disclosures no longer

considered relevant in view of the changed economic and

commercial environment for operation of companies in India and for

enabling a simplified format for reporting of financial information by

small and medium companies. The other concepts taken into

account in revision of the Schedule VI are annexed at “Part A” and

the method adopted in determining the form of balance sheet, profit

and loss account and cash flow statement is annexed at “Part B “to

this Memorandum (enclosed).

4. The Institute of Chartered Accountants of India (ICAI) and National

Advisory Committee on Accounting Standards (NACAS) were

consulted in the matter. Based on such consultation, a draft revised

Schedule VI (for companies other than Small and Medium

Companies) is annexed at “Part C” and a draft new SARAL Schedule

VI (for Small and Medium Companies) along with the concepts and

the methodology applied is annexed at “Part D” to this

Memorandum. This Memorandum along with its annexure is

available at the Ministry’s website at www.mca.gov.in.

5. Suggestions/Comments on the these Schedules along with

justification in brief may be addressed/sent latest by 22nd

December, 2008 to Shri B.N. Harish, Joint Director (Inspection) or

Shri N.K. Dua, Assistant Director, M/o Corporate Affairs, 5th Floor, A

Wing, Shastri Bhavan, New Delhi. The suggestions/comments may

also be sent through email at [email protected] or

[email protected]. It will be appreciated if the name and

address of the sender is also indicated clearly at the time of sending

suggestions/comments.

CONCEPTS FOR THE SCHEDULE VI

The Schedule VI’ to the Companies Act, 1956 has been prepared on the

following concept:

a) To have a ‘readable, useful, transparent and user friendly’ form of

Schedule VI.

b) To set out minimum disclosure requirements which are considered

essential to ensure true and fair presentation of the financial

position and financial performance of the company and

comparability both with the company’s previous periods and with

other companies.

c) The Balance Sheet and the Statement of Profit and Loss should not

be burdened with too many disclosure requirements.

d) To remove the requirements of disclosures no longer considered

relevant in view of the changed socio-economic structure and level

of development of the economy.

e) To remove disclosure requirements which are meant for statistical

purposes only e.g. Part IV of Schedule VI.

f) To have inherent flexibility for amendments and industry/sector

specific improvements from time to time and to cater to

industry/sector specific disclosure requirements.

g) To harmonize and synchronize the general disclosure requirements

with those prescribed in the Accounting Standards by removing the

existing inherent anomalies.

h) The specific disclosure requirements prescribed in the Accounting

Standards are not incorporated here so that amendment in the

Accounting Standard does not necessitate an amendment in the

form of Schedule VI.

i) To attain compatibility and convergence with the International

Accounting Standards and practices.

METHOD ADOPTED IN DETERMINING THE

FORM OF BALANCE SHEET, STATEMENT OF

PROFIT AND LOSS AND CASH FLOW

STATEMENT

I. BALANCE SHEET

1. Presentation is based upon :

(a)The balanced format in which the sum of the amounts for

liabilities and equity are added together to illustrate that assets

equal liabilities plus equity.

(b)The report form i.e. top to bottom or the vertical form.

2. Classification of assets and liabilities:

(a)Classification is based upon current and non-current

assets/liabilities method.

(b)Similar nature of assets/liabilities are grouped into line items.

II. STATEMENT OF PROFIT AND LOSS

1. Presentation is based upon:

Multiple step format i.e. Revenues from operations less cost of sales

less operating expenses add other incomes less non operating

expense less tax expense.

2. Classification of expenses is based upon:

Function of expense method-expenses are classified according to

their function as part of cost of sales, selling and marketing

expenses or administrative expenses. Expenses are reallocated

among various functions within the company.

III. CASH FLOW STATEMENT

1. Presentation is based upon:

Cash inflow and outflow format i.e. cash inflows from various

activities are grouped together and similarly cash outflows from

various activities are grouped together.

2. Classification of cash flows is based upon:

The indirect method, whereby net profit or loss is adjusted for the

effects of a) transactions of a non-cash nature; b) any deferrals or

accruals of past or future operating cash receipts or payments; and

c) items of income or expense associated with investing or financing

cash flows.

GENERAL INSTURCTIONS FOR PREPARATION OF

BALANCE SHEET,

STATEMENT OF PROFIT AND LOSS AND CASH FLOW

STATEMENT

I. GENERAL INSTRUCTIONS

1. This Schedule shall apply to companies other than ‘Small and

Medium Sized Company’ (SMC) as defined in Rule 2 (f) of

Companies (Accounting Standards) Rules, 2006.

2. This Schedule sets out the minimum requirements for disclosure

on the face of the Balance Sheet, the Statement of Profit and

Loss including Cash Flow Statement (hereinafter referred to as

“Financial Statements”) and Notes. Line items, sub-line items and

sub-totals shall be presented as an addition or substitution on the

face of the Financial Statements when such presentation is

relevant to an understanding of the company’s financial position

or performance or to cater to industry/sector-specific disclosure

requirements or when required for compliance with the

amendments to the Companies Act or under the Accounting

Standards.

3. Where compliance with the requirements of the Act including

Accounting Standards as applicable to the companies require any

change, including addition, amendment, substitution or deletion

in the head/sub-head or any changes interse, in the financial

statements or statements forming part thereof, the same shall be

made and the requirements of the Schedule VI shall stand

modified accordingly.

4. The disclosure requirements specified in Part I, Part II and Part III

of this Schedule are in addition to and not in substitution of the

disclosure requirements specified in the Accounting Standards

prescribed under the Companies Act, 1956. Additional disclosures

specified in the Accounting Standards shall be made in the notes

to accounts or by way of additional statement unless required to

be disclosed on the face of the Financial Statements. Similarly, all

other disclosures as required by the Companies Act shall be

made in the notes to accounts in addition to the requirements set

out in this Schedule.

5. Notes to accounts shall contain information in addition to that

presented in the Financial Statements and shall provide (a)

narrative descriptions or disaggregations of items recognized in

those statements and (b) information about items that do not

qualify for recognition in those statements.

6. Each item on the face of Balance Sheet, Statement of Profit and

Loss and Cash Flow Statement shall be cross-referenced to any

related information in the notes to accounts. In preparing the

financial statements including the notes to accounts, a balance

shall be maintained between providing excessive detail that may

not assist users of financial statements and obscuring important

information as a result of too much aggregation.

7. Depending upon the turnover of the company, the figures

appearing in the financial statements shall be rounded off as

below:

Turnover Rounding Off

I. Less Than One Hundred Crore

Rupees

To The Nearest Hundreds,

Thousands, Lakhs Or Millions, Or

Decimals Thereof.

II. One Hundred Crore Rupees Or

More

To The Nearest, Lakhs, Millions Or

Crores, Or Decimals Thereof.

8. Except in the case of the first Financial Statements laid before

the Company (after its incorporation) the corresponding amounts

(comparatives) for the immediately preceding reporting period

for all items shown in the Financial Statements including Notes

shall also be given.

9. An existing company, which was previously a non-SMC and,

subsequently becomes an SMC, shall continue to follow Schedule

VI and shall qualify for SARAL Schedule VI only if the company

remains an SMC for two consecutive reporting periods.

10. (i) For the year in which the existing SMC company becomes a

non SMC company the previous period figures of the Financial

Statements shall be reclassified according to the requirements of

the Schedule VI unless the reclassification is impracticable.

(ii) When it is impracticable to reclassify comparative amounts,

the company shall disclose:

(a)the reason for not reclassifying the amounts; and

(b)the nature of the adjustments that would have been made

if the amounts had been reclassified.

11. Cash Flow Statement as per proforma contained herein shall

form part of the Balance Sheet and Statement of Profit and Loss.

II. GENERAL INSTRUCTIONS FOR PREPARATION OF

BALANCE SHEET

For the purpose of Part I - Balance Sheet:

An asset shall be classified as current when it satisfies any of the following

criteria:

(a) it is expected to be realized in, or is intended for sale or

consumption in, the company’s normal operating cycle;

(b)it is held primarily for the purpose of being traded;

(c) it is expected to be realized within twelve months after the reporting

date;

(d)it is cash or cash equivalent unless it is restricted from being

exchanged or used to settle a liability for at least twelve months

after the reporting date.

All other assets shall be classified as non-current.

An operating cycle is the time between the acquisition of assets for

processing and their realization in cash or cash equivalents. Where the

normal operating cycle cannot be identified, it is assumed to have a

duration of 12 months.

A liability shall be classified as current when it satisfies any of the

following criteria:

(a) it is expected to be settled in the company’s normal operating cycle;


(c) it is due to be settled within twelve months after the reporting date;

(d)the company does not have an unconditional right to defer

settlement of the liability for at least twelve months after the

reporting date.

All other liabilities shall be classified as non-current.

A company shall disclose the following in the notes to accounts:

A. Share Capital

for each class of share capital :

(a) the number and amount of shares authorized;

(b) the number of shares issued, subscribed and fully paid, and

subscribed but not fully paid;

(c) par value per share;

(d) a reconciliation of the number of shares outstanding at the

beginning and at the end of the period;

(e) the rights, preferences and restrictions attaching to that class

including restrictions on the distribution of dividends and the

repayment of capital;

(f) shares in respect of each class in the company held by its holding

company or its ultimate holding company or by its subsidiaries or

associates in aggregate;

(g) shares in the company held by any shareholder holding more than

5 percent shares;

(h) shares reserved for issue under options and contracts/commitments

for the sale of shares/disinvestment, including the terms and amounts;

(i) Separate particulars for a period of five years following the year in

which the shares have been allotted/bought back, in respect of:

Aggregate number and class of shares allotted as fully paid up

pursuant to contract(s) without payment being received in cash.

Aggregate number and class of shares allotted as fully paid up by

way of bonus shares.

Aggregate number and class of shares bought back.

(j) Terms of any securities convertible into equity/preference shares

issued along with the earliest date of conversion in descending order

starting from the farthest such date.

B. Reserves and Surplus

(i) Reserves and Surplus shall be classified as:

(a)Capital Reserves;

(b)Capital Redemption Reserves;

(c) Securities Premium Reserve;

(d)Debenture Redemption Reserve;

(e)Revaluation Reserve;

(f) Revenue Reserves – (specify the nature of each reserve and the

amount in respect thereof);

(g)Surplus i.e. balance in statement of Profit & Loss disclosing

allocations and appropriations such as dividend, bonus shares

and transfer to/from reserves.

(Additions and deductions since last balance sheet to be shown under

each of the specified heads)

(ii) A reserve specifically represented by earmarked investments shall

be termed as a ‘fund’.

(iii) Debit balance of profit and loss account shall be shown as a

negative figure under the head ‘Surplus’. Similarly, the balance of

‘Reserves and Surplus’, after adjusting negative balance of surplus,

if any, shall be shown under the head ‘Reserves and Surplus’ even if

the resulting figure is in the negative.

C. Long-Term Borrowings

(i) Long-term borrowings shall be classified as:

(a)Bonds/debentures.

(b)Term loans

from banks.

from other parties.

(c) Deferred payment liabilities.

(d)Deposits.

(e)Loans and advances from related parties.

(f) Other loans and advances (specify nature).

(ii) Borrowings shall further be sub-classified as secured and unsecured.

Nature of security shall be specified separately in each case.

(iii) Where loans have been guaranteed by directors or others, a

mention thereof shall be made and also the aggregate amount of

such loans under each head.

(iv) Bonds/debentures (along with the rate of interest and particulars of

redemption or conversion, as the case may be) shall be stated in

descending order of maturity or conversion, starting from farthest

redemption or conversion date, as the case may be. Where

bonds/debentures are redeemable by installments, the date of

maturity for this purpose must be reckoned as the date on which

the first installment becomes due.

(v) Particulars of any redeemed bonds/ debentures which the company

has power to reissue.

(vi) Terms of repayment of term loans and other loans shall be stated.

(vii) Period and amount of continuing default as on the balance sheet

date in repayment of dues, providing break-up of principal and

interest shall be specified separately in each case.

D. Long-term provisions

The amounts shall be classified as:

(a)Provision for employee benefits.

(b)Others (specify nature).

E. Short-term borrowings

(i) Short-term borrowings shall be classified as:

(a)Loans repayable on demand

from banks.

from other parties.

(b)Loans and advances from related parties.

(c) Deposits.

(d)Other loans and advances (specify nature).

(ii) Borrowings shall further be sub-classified as secured and unsecured.


(iii) Where loans have been guaranteed by directors or others, a

mention thereof shall be made and also the aggregate amount of

loans under each head.

(iv) Period and amount of continuing default as on the balance sheet

date in repayment of dues, providing break-up of principal and

interest shall be specified separately in each case.

F. Trade payables

The amounts shown under ‘Trade Payables’ shall include the amounts due

in respect of goods purchased or services received in the normal course of

business.

G. Other current liabilities


(a)Current maturities of long-term debt;

(b)Current maturities of finance lease obligations;

(c) Interest accrued but not due on borrowings;

(d)Interest accrued and due on borrowings;

(e)Income received in advance;

(f) The following amounts shall be shown separately including the

interest accrued thereon:

Unpaid dividends

Unpaid application money received for allotment of securities

and due for refund

Unpaid matured deposits

Unpaid matured debentures

(g)Other payables (specify nature);

H. Short-term provisions


(a)Provision for employee benefits.

(b)Others (specify nature).

I. Tangible assets

(i) Classification shall be given as:

(a)Land.

(b)Buildings.

(c) Plant and Equipment.

(d)Furniture and Fixtures.

(e)Vehicles.

(f) Office equipment.

(g)Others (specify nature).

(ii) Assets under lease shall be separately specified under each class of

asset.

(iii) A reconciliation of the gross and net carrying amounts of each class

of assets at the beginning and end of the reporting period showing

additions, disposals, acquisitions through business combinations

and other adjustments and the related depreciation and impairment

losses/reversals shall be disclosed separately.

J. Intangible assets

(i) Classification shall be given as:

(a)Goodwill.

(b)Brands /trademarks.

(c) Computer software.

(d)Mastheads and publishing titles.

(e)Mining rights.

(f) Copyrights, and patents and other intellectual property

(g)rights, services and operating rights.

(h)Recipes, formulae, models, designs and prototypes.

(i) Licenses and franchise.

(ii) Others (specify nature).

(iii) A reconciliation of the gross and net carrying amounts of each class

of assets at the beginning and end of the reporting period showing

additions, disposals, acquisitions through business combinations

and other adjustments and the related amortization and impairment

losses/reversals shall be disclosed separately.

K. Non-current investments

(i) Non-current investments shall be classified as:

(a)Investment property;

(b)Investments in Equity Instruments;

(c) Investments in preference shares

(d)Investments in Government or trust securities;

(e)Investments in debentures or bonds;

(f) Investments in Mutual Funds;

(g)Investments in partnerships

(h)Other non-current investments (specify nature)

(ii) Investments carried at cost should be presented separately from

those carried at other than cost and specifying the basis for

valuation thereof.

(iii) The following shall also be disclosed:

(a)Aggregate amount of quoted investments and market value

thereof;

(b)Aggregate amount of unquoted investments;

(c) Aggregate amount of partly paid-up investments;

(iv) The names of bodies corporate or other entities indicating

separately the names of:

(a)subsidiaries,

(b)associates,

(c) joint ventures, and

(d)controlled special purpose entities

in whose securities, investments have been made (including all

investments, whether existing or not, made subsequent to the date

as at which the previous balance sheet was made out) and the

nature and extent of the investment so made in each such body

corporate; provided that in the case of an investment company, that

is to say, a company whose principal business is the acquisition of

shares, stock, debentures or other securities, it shall be sufficient if

the statement shows only the investments existing on the date as at

which balance sheet has been made out. In regard to the

investments in the capital of partnership firms, the names of the

firms (with the names of all their partners, total capital and the

shares of the company in the capital and profits) shall be given in

the statement.

L. Long-term loans and advances

(i) Long-term loans and advances shall be classified as:

(a)Capital Advances;

(b)Security Deposits;

(c) To related parties: loans and advances to specify separately;

(d)Other (specify nature) loans and advances to specify separately.

(ii) The above shall also be separately sub-classified as:

(a)Secured, considered good;

(b)Unsecured, considered good;

(c) Doubtful.

(iii) Allowance for bad and doubtful loans and advances shall be

disclosed under the relevant heads separately.

M. Other non-current assets

This is an all inclusive heading which incorporates assets that do not fit

neatly into any of the other asset categories.

N. Current Investments

(i) Current investments shall be classified as:

(a)Investments in Equity Instruments;

(b)Investment in Preference Shares

(c) Investments in government or trust securities;

(d)Investments in debentures or bonds;

(e)Investments in Mutual Funds;

(f) Investment in Partnership

(g)Other investments (specify nature).

(ii) The following shall also be disclosed:

(a)Aggregate amount of quoted investments and market value

thereof;

(b)Aggregate amount of unquoted investments;

(c) Aggregate amount of partly paid-up investments.

(iii) The names of bodies corporate or other entities indicating

separately the names of:

(a)subsidiaries,

(b)associates,

(c) joint ventures, and

(d)Controlled special purpose entities

in whose securities, investments have been made including all

investments, whether existing or not, made subsequent to the date

as at which the previous balance sheet was made out and the

nature and extent of the investments so made in each such

body corporate. In regard to the investments in the capital of

partnership firms, the names of the firm (with the names of all their

partners, total capital and the shares of the company in the capital

and profits) shall be given in the statement.

O. Inventories

(i) Classification shall be made as:

(a)Raw material;

(b)Work-in-progress;

(c) Finished goods;

(d)Stock-in-trade;

(e)Stores and spares;

(f) Loose tools;

(g)Others (specify nature).

(ii) Goods-in-transit shall be disclosed under the relevant sub-head of

inventories.

P. Trade Receivables

(i) The amounts shown under ‘Trade Receivables’ shall include the

amounts due in respect of goods sold or services rendered in the

normal course of business.

(ii) Trade receivables shall also be classified as:

(a)Secured, considered good;

(b)Unsecured considered good;

(c) Doubtful.

(iii) Allowance for bad and doubtful debts shall be disclosed under the

relevant heads separately.

Q. Cash and cash equivalents

(i) Classification shall be made as:

(a)Bank balances;

(b)Cheques, drafts on hand;

(c) Cash balance;

(d)Cash equivalents – short-term, highly liquid investments that are

readily convertible into known amounts of cash and which are

subject to an insignificant risk of changes in value (specify

details);

(e)Others (specify nature).

(ii) Earmarked bank balances (e.g. unpaid dividend) shall be separately

stated.

(iii) Balance with banks to the extent held as security against the

borrowings, guarantees, other commitments shall be disclosed

separately.

(iv) Repatriation restrictions, if any, in respect of cash and bank

balances shall be separately stated.

(v) Bank deposits with more than 12 months maturity shall be disclosed

separately.

R. Short-term loans and advances

(i) Loans and advances shall be classified separately as:

(a)To subsidiaries/associates/business ventures;

(b)To others (specify nature).

(ii) The above shall also be sub-classified as:

(c) To the extent secured, considered good;

(d)Others, considered good;

(e)Doubtful.

(iii) Allowance for bad and doubtful loans and advances shall be

disclosed under the relevant heads separately.

S. Other current assets (specify nature).

T. Contingencies and commitments (to the extent not provided for)

(i) Contingencies shall be classified as:

(a)Claims against the company not acknowledged as debt;

(b)Guarantees;

(c) Other money for which the company is contingently liable

(ii) Commitments shall be classified as:

(a)Estimated amount of contracts remaining to be executed on

capital account and not provided for;

(b)Uncalled liability on shares and other investments partly paid;

(c) Other commitments (specify nature).

U. The amount of dividends proposed to be distributed to equity and

preference shares holders for the period and the related amount per

share shall be disclosed separately. Arrears of fixed cumulative

dividends on preference shares shall also be disclosed separately.

III. GENERAL INSTRUCTIONS FOR PREPARATION OF

STATEMENT OF PROFIT AND LOSS

For the purpose of Part II – Statement of Profit and Loss:

A company shall disclose the following in the notes to accounts to the

extent applicable:

A. Revenues from operations

(i) Revenue from operations shall be classified as:

(a)Sale of products;

(b)Sale of Services;

(c) Other operating revenues (specify nature);

Less:

(d)Excise duty.

(ii) These shall include sales or service charges to customers for the

goods and/or services provided during the period net of discounts,

allowances and returns.

B. Other income

This shall include (to be disclosed separately):

(a)Interest income;

(b)Dividend income;

(c) Rental on investment properties;

(d)Increase (decrease) in carrying amounts of investments;

(e)Gains and losses on trading derivatives;

(f) Amounts withdrawn, as no longer required, from provisions

created previously for meeting specific liabilities;

(g)Other miscellaneous income.

C. Finance Costs

Finance costs shall include interest expenses (to be disclosed separately).

D. Tax Expense- Others

Others shall be specified separately.

E. The Company shall disclose additional information on the nature of

expenses as follows:

(i) Change in inventories - Opening (less closing) inventories of finished

goods and work-in-process;

(ii) Cost of direct materials consumed arrived at by adding net

purchases (purchases less discounts, returns and allowances plus

freight-in) to beginning inventory to obtain direct materials

available. From the cost of direct materials available, the ending

inventory is deducted;

(iii) Employees Benefits expenses;

(iv) Depreciation and Amortization expenses;(v) Any item for which the

expense exceeds one percent of the revenues from operations of

the Company or Rs.10,00,000 whichever is higher, shall be shown

as a separate and distinct item and shall not be combined with any

other item.

F. Results from discontinued operations included in the statement of

profit and loss i.e. income (loss) from activities and gain (loss) from

disposal of assets/settlement of liabilities shall be disclosed separately

in the notes to accounts.

Expenses classified as Cost of Sales/Services, Selling and Marketing

expenses, Administrative expenses and other expenses shall include:

A. Cost of sales/services:

These are costs directly associated with generating revenues and shall

include:

(i) Change in inventories - Opening (less closing) inventories of finished

goods and work-in-process;

(ii) Cost of direct materials consumed arrived at by adding net

purchases (purchases less discounts, returns and allowances plus

freight-in) to beginning inventory to obtain direct materials

available. From the cost of direct materials available, the ending


(iii) Other external charges (such as the hire of plant and machinery or

the cost of casual labour used in the productive process);

(iv) Direct labour (ESOP and ESPP expenses to be disclosed separately);

(v) All direct production overheads;

(vi) Depreciation and amortization that can reasonably be allocated to

the production function;

(vii) Indirect overheads that can reasonably be allocated to the

production function;

(viii) Product development expenditure not qualifying for recognition as

an intangible asset and amortization of development expenditure

recognized as an intangible asset;

(ix) Inventory write downs/reversals;

(x) All direct overheads in providing services;

(xi) All allocable indirect overheads in providing services;

(xii) Cost of goods traded-in arrived at by adding net purchases

(purchases less discounts, returns, and allowances plus freight-in) to

beginning inventory to obtain the cost of goods available for sale.

From the cost of goods available for sale amount, the ending


(xiii) Other cost of sales.

B. Selling and marketing expenses are those expenses that are directly

related to the company’s efforts to generate sales. These items shall

include:

(a)Payroll costs of sales, marketing and distribution functions (ESOP

and ESPP expenses to be disclosed separately);

(b)Advertising;

(c) Sales persons’ travel and entertaining;

(d)Warehouse costs for finished goods;

(e)Transport costs arising on the distribution of finished goods;

(f) All costs of maintaining sales out-lets;

(g)Agents commission payable;

(h)Other selling and marketing expenses.

C. Administrative expenses are expenses related to the general

administration of the company’s operations. These items shall include:

(a)Payroll costs of office and administrative staff (ESOP and ESPP

expenses to be disclosed separately);

(b)All costs of maintaining the administration buildings;

(c) Bad debts;

(d)Professional costs;

(e)Amount paid to the auditor, whether as fees, expenses or

otherwise for services rendered:

i. As auditor;

ii. As advisor or in any other capacity in respect of:

Taxation matters;

Company law matters;

In any other manner.

(f) Directors remuneration;

(g)Insurance expense;

(h)Utilities expense;

i. Other administrative expenses.

(i) Depreciation and amortization of assets other than used in the

production process and included in cost of sales.

D. Other Expenses:

Other expenses shall include costs related to other income.

IV. GENERAL INSTRUCTION FOR THE PREPARATION OF

CASH FLOW STATEMENT

For the purpose of Part III – Cash Flow Statement

A. Operating activities

Operating activities are the principal revenue-producing activities of

the company and other activities that are not investing or financing

activities.

B. Investing activities

Investing activities are the acquisition and disposal of long-term assets

and other investments not included in cash equivalents.

C. Financing activities

Financing activities are activities that result in changes in the size and

composition of the owners’ capital (including preference share capital)

and borrowings of the company.

D. Profit from Operating Activities

The amount of profit from operating activities shall be profit before tax

and before non operating income and non-operating expenses.

E. Cash and Cash equivalents

(i) Cash shall include cash on hand and demand deposits with banks.

(ii) Cash equivalents shall include short-term, highly liquid investments

that are readily convertible into known amounts of cash and which

are subject to an insignificant risk of changes in value.

F. Foreign Exchange Gains and Losses

(i) Unrealised gains and losses arising from changes in foreign

exchange rates are to be disclosed separately.

(ii) The effect of changes in exchange rates on cash and cash

equivalents held in a foreign currency shall be disclosed as a

separate part of the reconciliation of the changes in cash and cash

equivalents during the period.

G. Cash flows arising from taxes on income should be separately disclosed

and should be classified as cash flows from operating activities unless

they can be specifically identified with financing and investing

activities. When tax cash flows are allocated over more than one class

of activity, the total amount of taxes paid shall be disclosed.

H. Decrease or increase in various types of current assets and current

liabilities under working capital changes shall be ‘net’ increase or

decrease of the concerned items.

PART I –BALANCE SHEET

Name of the Company…………………….

Balance Sheet as at ……………………… (Rupees

in…………)

Particulars

Figures

As At

The End

Of

Current

Reportin

g Period

Figures

As At

The End

Of The

Previous

Reportin

g Period

1 2 3

I. CAPITAL AND LIABILITIES

(1

)Shareholders’ Funds

A. Share Capital

B. Reserves And Surplus

(2

)Share Application Money

(3

)Non-Current Liabilities

A. Long-Term Borrowings

B. Deferred Tax Liabilities (Net)

C. Long-Term Provisions

(4

)Current Liabilities

A. Short-Term Borrowings

B. Trade Payables

C. Other Current Liabilities

D. Short-Term Provisions

TOTAL

II ASSETS

.

(1

)Non-Current Assets

A. Fixed Assets

Tangible Assets

Intangible Assets

Capital Work-In-Progress

Intangible Assets Under

Development

B. Non-Current Investments

C. Deferred Tax Assets (Net)

D. Long-Term Loans And Advances

E. Other Non-Current Assets

(2

)Current Assets

A. Current Investments

B. Inventories

C. Trade Receivables

D. Cash And Cash Equivalents

E. Short-Term Loans And Advances

F. Other Current Assets

TOTAL

See Accompanying Notes To The Financial Statements

Accounting for Managers – Schedule VI

PART II – STATEMENT OF PROFIT AND LOSS


Profit and loss statement for the year ended …………………… (Rupees

in…………)

Particulars

Figures For The Curren

t Reporti

ng Period

Figures For The Previo

us Reporti

ng Period

I. Revenues From Operations XXX XXX

II. Cost Of Sales/Services XXX XXX

III. Gross Profit (I – II) XXX XXX

IV Operating Expenses:

Selling And Marketing Expenses

XXX XXX

Administrative Expenses XXX XXX

Total Operating Expense XXX XXX

V.Results From Operating Activities (III – IV)

XXX XXX

VI.Non Operating Income/Expenses:

Gains/(Losses) On Sale Of Long- Term Investments

XXX XXX

Foreign Currency Exchange Gains/(Losses), Net

XXX XXX

Finance Cost (XXX) (XXX)

Other Income XXX XXX

Other Expenses (XXX) (XXX)

Total Non Operating Income/ Expenses:

XXX XXX

39 | P a g e


VII.

Income Before Income Tax (V + VI)

XXX XXX

VIII Tax Expense:

Current Income TaxXXX

XXX

Deferred Income TaxXXX

XXX

OthersXXX

XXX

IX. Profit For The Period (VI – VII)

IX. Profit For The Period (VI – VII) XXX XXX

X. Earnings Per Equity Share:

Basic XXX XXX

Diluted XXX XXX

See Accompanying Notes To The Financial Statements

40 | P a g e


PART III – CASH FLOW STATEMENT


Cash flow statement for the year ended ………………………

Particulars

Figures

For The

Current

Reportin

g Period

Figures

For The

Previous

Reportin

g Period

I. CASH INFLOWS

(

1

)

From Operating Activities

(A) Profit/Loss From Operating Activities

Adjustments:

Depreciation And Amortization

Shares Compensation Expenses

(Gain)/Loss On Sale Of Fixed Assets

Assets Written Off

Provision/ (Reversal) For Doubtful Debts

And Advances

Other Provisions

(B) Working Capital Changes:

Decrease In Inventories

Decrease In Trade Receivables

Decrease In Short-Term Loans And

Advances

Decrease In Other Current Assets

Increase In Trade Payables

Increase In Other Current Liabilities

Increase In Short Term Provisions

Total Of (1)

41 | P a g e


(2

)From Investing Activities

Proceeds From Sale Of Fixed Assets

Proceeds From Sale Of Investments

Realization Of Long-Term Loans And

Advances From Subsidiaries/Associates/

Business Ventures

Decrease In Other Long-Term Loans And

Advances

Decrease In Other Non-Current Assets

Dividend Received

Interest Received

Other Income

Total Of (2)

(3

)From Financing Activities

Proceeds From Issue Of Share Capital

Share Application Money Pending Allotment

Proceeds From Long-Term Borrowings

Proceeds From Short-Term Borrowings

Total Of (3)

Total Cash Inflows (1+2+3)

II. CASH OUTFLOWS

(

1

)

From Operating activities

(A) Profit/Loss From Operating Activities

Adjustments:

Depreciation And Amortization

Share Compensation Expenses

(Loss)/Gain On Sale Of Fixed Assets

Assets Written Off

42 | P a g e


(Provision)/Reversal For Doubtful Debts

And Advances

Other Provisions

(B) Working Capital Changes:

Increase In Inventories

Increase In Trade Receivables

Increase In Short-Term Loans And

Advances

Increase In Other Current Assets

Decrease In Trade Payables

Decrease In Other Current Liabilities

Decrease In Short Term Provisions

(C) Direct Taxes Paid (Net Of Refunds)

Total Of (1)

(

2

)

From Investing Activities

Purchase Of Tangible Assets/Capital

Work-In-Progress

Purchase Of Intangible Assets/Assets

Under Development

Purchase Of Investments

Investment In Subsidiaries/Associates/

Business Ventures

Payment Of Long-Term Loans And

Advances To

Subsidiaries/Associates/Business

Ventures

Increase In Other Long-Term Loans And

Advances

Increase In Other Non-Current Assets

Total Of (2)

43 | P a g e


(3)

From Financing Activities

Repayment Of Long-Term Borrowings

Repayment Of Short-Term Borrowings

Dividends Paid (Including Distribution Tax)

Interest And Other Finance Costs

Share Issue Expenses

Total Of (3)

Total Cash Outflows (1+2+3)

IIINet (Decrease)/Increase In Cash And Cash Equivalents

From Operating Activities

From Investing Activities

From Financing Activities

Total (A)

Add: Cash And Cash Equivalents At The Beginning Of The Period (B)

IV Cash And Cash Equivalents At The End Of The Period (A+B)

44 | P a g e


CONCEPTS FOR PREPARATION OF SARAL

SCHEDULE VI

The ‘SARAL Schedule VI’ to the Companies Act, 1956 has been prepared

on the following concept:

(a)To have a ‘simple and user friendly’ form of Schedule VI for Small

and Medium Sized Companies (SMC).

(b)The Balance Sheet and the Statement of Profit and Loss of SMC’s

should not be burdened with too many disclosure requirements.

(c) To set out minimum disclosure requirements which are considered

essential to ensure true and fair presentation of the financial

position and financial performance of the company and

comparability both with the company’s previous periods and with

other companies.

(d)To attain compatibility and convergence with the International

Accounting Standards and practices.

(e)It is generally assumed that SMC’s

(i) Will not have particularly complex transactions;

(ii) Do not have public accountability;

(iii) Do not hold assets in a fiduciary capacity for a broad group of

outsiders;

(iv) Accountability is limited to owners and government

authorities/agencies.

(v) The ‘users’ and ‘information needs’ of the users of financial

statements of SMC’s are limited.

45 | P a g e


METHOD ADOPTED IN DETERMINING THE

FORM OF BALANCE SHEET AND STATEMENT OF

PROFIT AND LOSS

I. BALANCE SHEET

1) Presentation is based upon:

(a)The balanced format in which the sum of the amounts for

liabilities and equity are added together to illustrate that assets

equal liabilities plus equity.

(b)The report form i.e. top to bottom or the vertical form.

2) Classification of assets and liabilities:

(c) Classification is based upon current and non-current

assets/liabilities method.

(d)Similar nature of assets/liabilities are grouped into line items.

II. STATEMENT OF PROFIT AND LOSS

1) Presentation is based upon:

Single step format i.e. Aggregate revenues less aggregate expenses

method.

2) Classification of expenses is based upon:

Nature of expense method-expenses are aggregated according to

their nature and are not reallocated among various functions within

the company.

46 | P a g e


SARAL SCHEDULE VI

GENERAL INSTURCTIONS FOR PREPARATION OF

BALANCE SHEET

AND STATEMENT OF PROFIT AND LOSS

I. GENERAL INSTRUCTIONS

1. This Schedule shall apply to ‘Small and Medium Sized Companies’

(SMC) as defined in Rule 2 (f) of Companies (Accounting Standards)

Rules, 2006 i.e. which fulfill and satisfy the conditions mentioned

hereunder as at the end of the relevant reporting period :

(i) whose equity or debt securities are not listed or are not in the

process of listing on any stock exchange, whether in India or

outside India;

(ii) which is not a bank, financial institution or an insurance

company;

(iii) whose turnover (excluding other income) does not exceed rupees

fifty crore in the immediately preceding reporting period;

(iv) which does not have borrowings (including public deposits) in

excess of rupees ten crore at any time during the immediately

preceding reporting period; and

(v) which is not a holding or subsidiary company of a company which

is not a small and medium-sized company.

2. This Schedule sets out the minimum requirements for disclosure on the

face of the balance sheet and the statement of profit and loss

(hereinafter referred to as “Financial Statements”) and Notes. Line

items, sub-line items and sub-totals shall be presented as an addition

or substitution on the face of the Financial Statements when such

presentation is relevant to an understanding of the company’s financial

position or performance or to cater to industry/sector-specific

47 | P a g e


disclosure requirements or when required for compliance with the

amendments to the Companies Act or under the Accounting Standards.

3. Where compliance with the requirements of the Act including

Accounting Standards as applicable to the companies require any

change, including addition, amendment, substitution or deletion in the

head/sub-head or any changes interse, in the financial statements or

statements forming part thereof, the same shall be made and the

requirements of the Schedule VI shall stand modified accordingly.

4. The disclosure requirements specified in Part I and Part II of this

Schedule are in addition to and not in substitution of the disclosure

requirements specified in the Accounting Standards prescribed under

the Companies Act, 1956. Additional disclosures specified in the

Accounting Standards shall be made in the Notes to Accounts or by

way of additional statement unless required to be disclosed on the face

of the Financial Statements. Similarly, all other disclosures as required

by the Companies Act shall be made in the notes to accounts in

addition to the requirements set out in this Schedule.

5. Notes to accounts shall contain information in addition to that

presented in the Financial Statements and shall provide

(a)narrative descriptions or disaggregations of items recognized in

those statements and

(b)information about items that do not qualify for recognition in

those statements. Each item on face of the Balance Sheet and

Statement of Profit and Loss shall be cross-referenced to any

related information in the notes to accounts. In preparing the

financial statements including notes to accounts, a balance shall

be maintained between providing excessive detail that may not

assist users of financial statements and obscuring important

information as a result of too much aggregation.

6. Rounding off is permissible to the nearest hundreds or thousands, or

decimals thereof.

48 | P a g e


49 | P a g e


7. Except in the case of the first Financial Statements laid before the

Company (after its incorporation) the corresponding amounts

(comparatives) for the immediately preceding reporting period for all

items shown in the Financial Statements including Notes shall also be

given.

8. For the first year in which the Balance Financial Statements are drawn

in accordance with the SARAL Schedule VI, the previous period figures

shall be reclassified according to the requirements of the SARAL

Schedule VI unless the reclassification is impracticable. When it is

impracticable to reclassify comparative amounts, a company shall

disclose:

(a)the reason for not reclassifying the amounts; and

(b)the nature of the adjustments that would have been made if the

amounts had been reclassified.

9. An existing company, which was previously a non-SMC and,

subsequently becomes an SMC, shall continue to follow Schedule VI

and shall qualify for SARAL Schedule VI only if the company remains an

SMC for two consecutive reporting periods.

10. An SMC may voluntarily elect to prepare and present disclosures as

per the Main Schedule VI instead of the SARAL Schedule VI by

disclosing the same in the Notes to accounts.

50 | P a g e


II. GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE

SHEET

For the purpose of Part I - Balance Sheet:

An asset shall be classified as current when it satisfies any of the following

criteria:

(a) it is expected to be realized in, or is intended for sale or

consumption in, the company’s normal operating cycle;


(c) it is expected to be realized within twelve months after the reporting

date;

(d)it is cash or cash equivalent unless it is restricted from being

exchanged or used to settle a liability for at least twelve months

after the reporting date.

All other assets shall be classified as non-current.

An operating cycle is the time between the acquisition of assets for

processing and their realization in cash or cash equivalents. Where the

normal operating cycle cannot be identified, it is assumed to have a

duration of 12 months.

A liability shall be classified as current when it satisfies any of the

following criteria:

(a) it is expected to be settled in the company’s normal operating cycle;


(c) it is due to be settled within twelve months after the reporting date;

(d)the company does not have an unconditional right to defer

settlement of the liability for at least twelve months after the

reporting date.

(e)All other liabilities shall be classified as non-current.

51 | P a g e



A. Share Capital

Share Capital shall be classified as:

(a)Equity paid-up capital;

(b)Preference paid-up capital;

(c) Shares in respect of each class in the company held by its holding

company or the ultimate holding company or by its subsidiaries or

associates in aggregate shall be disclosed under each class of

shares separately.

B. Reserves and Surplus

(i) Reserves and Surplus shall be classified as:

(a)Capital Reserves;

(b)Revenue Reserves;

(c) Revaluation Reserve;

(d)Surplus i.e. balance in statement of Profit & Loss disclosing

allocations and appropriations such as dividend, bonus shares

and transfer to/from reserves.

(ii) Reserves and Surplus shall be shown after deducting debit balance

of profit and loss account even if the resulting figure is in the

negative.

C. Long-term borrowings

(i) These shall be classified as from banks, deposits, debentures and

others;

(ii) These shall further be sub-classified as secured and unsecured.


D. Long-term provisions

Long-term provisions shall include provision for employee benefits and

others.

52 | P a g e


53 | P a g e


E. Short-term borrowings

(i) These shall be classified as from banks, deposits and others;

(ii) These shall further be sub-classified as secured and unsecured.


F. Trade payables

The amounts shown under ‘Trade Payables’ shall include the amounts due

in respect of goods purchased or services received in the normal course of

business.

G. Other current liabilities

Other current liabilities shall include current maturities of long-term debt

and finance lease obligations, interest accrued but not due on borrowings,

Interest accrued and due on borrowings, income received in advance and

others.

H. Short-term provisions

Short-term provisions shall include provision for employee benefits and

others.

I. Fixed Assets

Fixed assets shall be disclosed at net carrying amounts i.e. original cost

less accumulated depreciation, amortization and impairment.

J. Non-current investments

(i) Non-current investments shall be classified as:

(a)Investment property;

(b)Investments in Equity Instruments;

(c) Investment in Preference Shares

(d)Investments in Government or trust securities;

(e)Investments in debentures or bonds;

(f) Investments in Mutual Funds;

54 | P a g e


(g)Investment in Partnership

(h)Other non-current investments (specify nature)

(ii) Investment carried at cost should be presented separately from

those carried at other than cost and specifying the basis for

valuation thereof.

K. Long-term loans and advances

(i) Long-term Loans and Advances shall include capital advances,

security deposits and others.

(ii) The amounts shall be shown net of allowance for bad and doubtful

loans and advances.

L. Current investments

Current investments shall include investments held for trading and others.

M. Inventories

Inventories shall include raw material, work-in-progress, finished goods,

stock-in-trade, stores and spares, loose tools, goods-in-transit and others.

N. Trade receivables

(i) The amounts shown under ‘Trade Receivables’ shall include the

amounts due in respect of goods sold or services rendered in the

normal course of business.

(ii) The amounts shall be shown net of allowance for bad and doubtful

debts.

O. Cash and cash equivalents

(i) Cash shall include cash balance, cheques/drafts in hand and

balances with banks in current accounts.

(ii) Cash equivalents shall include short-term, highly liquid investments

that are readily convertible into known amounts of cash and which

are subject to an insignificant risk of changes in value (specify

details).

55 | P a g e


56 | P a g e


P. Short-term loans and advances

The amounts shall be shown net of allowance for bad and doubtful loans

and advances.

Q. Contingencies and commitments (to the extent not provided for)

(i) Contingencies shall be classified as:

(a)Claims against the company not acknowledged as debt.

(b)Guarantees.

(c) Other money for which the company is contingently liable

(ii) Commitments shall be classified as:

(d)Estimated amount of contracts remaining to be executed on

capital account and not provided for.

(e)Uncalled liability on shares partly paid.

(f) Other commitments.

R. The amount of dividends proposed to be distributed to equity and

Preference Share holders for the period and the related amount per

share shall be disclosed separately. Arrears of fixed cumulative

dividends on preference shares shall also be disclosed separately.

57 | P a g e


III. GENERAL INSTRUCTIONS FOR PREPARATION OF

STATEMENT OF PROFIT AND LOSS

For the purpose of Part II – Statement of Profit and Loss:


(i) The amount of total excise duty/service tax for the year deducted

from ‘Sales and Services from operations’ shall be disclosed

separately.

(ii) Any item for which the expense exceed one percent of the revenues

from operations of the Company or Rs.50,000, whichever is higher,

shall be shown as a separate and distinct item on the face of

statement of profit and loss against an appropriate account head as

a sub-line item and shall not be combined with any other item.

(iii) Results from discontinued operations included in the statement of

profit and loss i.e. income (loss) from activities and gain (loss) from

disposal of assets/settlement of liabilities shall be disclosed

separately in the notes to accounts.

58 | P a g e


PART I - BALANCE SHEET


Balance Sheet as at ……………………… (Rupees in…………)

Particulars

Figures As At The End Of Current Reporting

Period

Figures As At The End

Of The Previous

Reporting Period

1 2 3

I. Capital And Liabilities

(1)

Shareholders’ Funds

A. Share Capital

B. Reserves And Surplus

(2)

Share Application Money

(3)

Non-Current Liabilities

A. Long-Term Borrowings

B. Deferred Tax Liabilities (Net)

C. Long-Term Provisions

(4)

Current Liabilities

A. Short-Term Borrowings

B. Trade Payables

C. Other Current Liabilities

D. Short-Term Provisions

Total

59 | P a g e


II. Assets

(1)

Non-Current Assets

A. Fixed Assets

B. Tangible Assets

C. Intangible Assets

D. Capital Work-In-Progress

E. Intangible Assets Under Development

F. Non-Current Investments

G. Deferred Tax Assets (Net)

H. Long-Term Loans And Advances

I. Other Non-Current Assets

(2)

Current Assets

A. Current Investments

B. Inventories

C. Trade Receivables

D. Cash And Cash Equivalents

E. Short-Term Loans And Advances

F. Other Current Assets

Total

60 | P a g e


PART II – STATEMENT OF PROFIT AND LOSS


Profit and loss statement for the year ended ………………… (Rupees

in…………)

Particulars

Figures For

The Current

Reporting

Period

Figures For

The

Previous

Reporting

Period

1 2 3

I. Revenue

A. Sales And Services From

Operations (Net Of Discounts,

Returns, Duties, Taxes And

Allowances)

B. Other Income

Total (I)

II. Expenses

A. Cost Of Raw Material

Consumed/Goods Sold

B. Changes In Inventories Of

Finished Goods

C. And Work-In-Progress

D. Consumption Of Stores And

Spare Parts

E. Energy Costs

F. External Job Work Charges

G. Employee Benefits Expense

H. Repairs & Maintenance

I. Royalty/Technical

61 | P a g e


Know-How/License Fee

J. Research And Development

Expenses

K. Commission And Brokerage On

Sales

L. Finance Costs

M. Depreciation, Amortization &

Impairment

N. Other Expenses

Total (II)

III. Profit/(Loss) Before Tax (I - II)

Total (III)

IV. Tax Expense

A. Current Income Tax

B. Deferred Income Tax

C. Others

Total (IV)

V.Net Profit/(Loss) for the year (III-

IV)

62 | P a g e


CONSOLIDATED FINANCIAL STATEMENTS

FOR INFOSYS TECHNOLOGIES

Auditors' report

To the Board of Directors of Infosys Technologies Limited

We have audited the attached consolidated Balance Sheet of Infosys

Technologies Limited (‘the Company’) and its subsidiaries (collectively

referred to as ‘the Infosys Group’) as at 31 March, 2010, the consolidated

Profit and Loss Account of the Infosys Group and the consolidated Cash

Flow statement of the Infosys Group for the year ended on that date,

annexed thereto. These financial statements are the responsibility of the

Company's management. Our responsibility is to express an opinion on

these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards

generally accepted in India. Those standards require that we plan and

perform the audit to obtain reasonable assurance about whether the

financial statements are free of material misstatements. An audit includes

examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing

the accounting principles used and significant estimates made by the

Management, as well as evaluating the overall financial statement

presentation. We believe that our audit provides a reasonable basis for

our opinion.

We report that the consolidated financial statements have been prepared

by the Company's management in accordance with the requirements of

Accounting Standard (AS) 21, Consolidated Financial Statements

prescribed by the Companies (Accounting Standards) Rules, 2006.

63 | P a g e


In our opinion and to the best of our information and according to the

explanations given to us, the consolidated financial statements give a true

and fair view in conformity with the accounting principles generally

accepted in India:

a) in the case of the consolidated Balance Sheet, of the state of affairs

of the Infosys Group as at 31 March, 2010;

b) in the case of the consolidated Profit and Loss account, of the profit

of the Infosys Group for the year ended on that date; and

c) in the case of the consolidated Cash Flow statement, of the cash

flows of the Infosys Group for the year ended on that date.

For B S R & Co.

Chartered Accountants

Firm registration number : 101248W

Natrajan Ramkrishna

Partner

Membership no. : 32815

Bangalore

13 April, 2010

64 | P a g e


CONSOLIDATED BALANCE SHEET

As at March 31, in

Rs. crore

Schedule

2010 2009

SOURCES OF FUNDSSHAREHOLDERS' FUNDSShare capital 1 286 286Reserves and surplus 2 22,763 17,968

23,049 18,254DEFERRED TAX LIABILITIES 5 232 37MINORITY INTEREST - -

23,281 18,291APPLICATION OF FUNDSFIXED ASSETS 3Original cost 7,839 7,093Less: Accumulated depreciation and amortization

2,893 2,416

Net book value 4,946 4,677Add: Capital work-in-progress 409 677

5,355 5,354INVESTMENTS 4 3,712 -DEFERRED TAX ASSETS 5 432 163CURRENT ASSETS, LOANS AND ADVANCESSundry debtors 6 3,494 3,672Cash and bank balances 7 10,556 9,695Loans and advances 8 4,187 3,279

18,237 16,646LESS: CURRENT LIABILITIES AND PROVISIONSCurrent liabilities 9 2,343 2,004Provisions 10 2,112 1,868NET CURRENT ASSETS 13,782 12,774

23,281 18,291SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

24

65 | P a g e


CONSOLIDATED PROFIT AND LOSS ACCOUNT

For the year ended March 31, in Rs. crore, except per share data

Schedule

2010 2009

Income from software services, products and business process management

22742 21693

Software development and business process management expenses

11 12071 11765

GROSS PROFIT 10671 9928Selling and marketing expenses 12

131184 1104

General and administration expenses 1626 16292810 2733

OPERATING PROFIT BEFORE DEPRECIATION AND MINORITY INTEREST

7861 7195

Depreciation 905 761OPERATING PROFIT BEFORE MINORITY INTEREST

14 6956 6434

Other income, net 934 475Provision for investments -9 2NET PROFIT BEFORE TAX, MINORITY INTEREST AND EXCEPTIONAL ITEM

15 7899 6907

Provision for taxation (refer to Note 24.2.8)

1681 919

NET PROFIT AFTER TAX AND BEFORE MINORITY INTEREST ANDEXCEPTIONAL ITEM 6218 5988Income from sale of investments, net of taxes (refer to Note 24.2.22)

48 -

NET PROFIT AFTER TAX, EXCEPTIONAL ITEM AND BEFORE MINORITY INTEREST

6266 5988

Minority interest -NET PROFIT AFTER TAX, EXCEPTIONAL ITEM AND MINORITY INTEREST

6266 5988

Balance brought forward 10560 6828Less: Residual dividend paid - 1Dividend tax on the above - -

10560 6827AMOUNT AVAILABLE FOR APPROPRIATION

16826 12815

66 | P a g e


Interim dividend 573 572Final dividend 861 773Total dividend 1434 1345Dividend tax 240 228Amount transferred to general reserve

780 682

Amount transferred to capital reserve 48 -Balance in Profit and Loss account 14324 10560

16826 12815EARNINGS PER SHAREEquity shares of par value Rs. 5/- eachBefore exceptional itemBasic 109 105Diluted 109 104After exceptional itemBasic 110 105Diluted 110 104Number of shares used in computing earnings per share(1)Basic 57,04,75,

92357,24,90,

211Diluted 57,11,16,

03157,34,63,

181SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

24

Note : The schedules referred to above form an integral part of the consolidated Profit and Loss account.

67 | P a g e


SCHEDULES TO THE CONSOLIDATED BALANCE SHEET

As at March 31, 2010 20091 SHARE CAPITALAuthorized

Equity shares, Rs. 5/- par value60,00,00,000 (60,00,00,000) equityshares 300 300

Issued, Subscribed and Paid UpEquity shares, Rs. 5/- par value(1) 287 28657,38,25,192 (57,28,30,043) equityshares fully paid up

Less: 28,33,600 shares held by controlled trusts

1 -

286 286[Of the above, 53,53,35,478 (53,53,35,478) equity shares, fully paid up have been issued as bonus shares by capitalization of the general reserve]

As at March 31, 2010 20092 RESERVES AND SURPLUSCapital reserve

6 6

Add : Transfer from Profit and Lossaccount

48 -

54

6

Foreign currency translation reserve 47

- 7

Share premium account – As at April 1, 2,925

2,851

Add : Share premium arising onconsolidation of controlled trusts

4 -

Receipts on exercise of employeestock options

88

64Income tax benefit arising fromexercise of stock options

10

10 3, 2,

68 | P a g e


027 925General reserve – As at April 1, 4,

484 3,

802Add : Transfer from Profit and Lossaccount

780

682 5,

264 4,

484Balance in Profit and Loss account 14,

324 10,

560Add : Corpus of the controlled trusts

47 -

14,371

10,560

22,763

17,968

3 FIXED ASSETS in Rs. crore, except as otherwise stated

Particulars Original cost Depreciation and amortization Net book value

As at

Ad

dit

ions

/ A

dju

stm

ent

s

Dele

tions

/ R

eti

rem

en

t /

As at As at

For

the y

ear

Dele

tions

/ A

dju

stm

ent As at As at As at

April 1,

March 31,

April 1,

March 31,

March 31,

March 31,

2009 2010 2009 2010 2010 2009

Goodwill 689 227 - 916 - - - - 916 689

Land : Freehold 172 6 - 149 - - - - 178 172

Leasehold 113 36 - 149 - - - - 149 113

Buildings(1) 2,913 387 - 3,300 535 210 - 745 2,555 2,378

Plant and machinery(2) 1,183 213 133 1,263 521 259 13

2 648 615 662

Computer equipment(2) 1,233 204 186 1,251 960 272 18

6 1,046 205 273

Furniture and fixtures(2) 720 99 109 710 359 151 10

7 403 307 361

Leasehold improvements 54 2 1 55 28 12 3 37 18 26

Vehicles 4 1 - 5 1 1 - 2 3 3

Intellectual property rights 12 - - 12 12 - - 12 - -

7,093 1,175 429 7,839 2,416 905 428 2,893 4,946 4,677

Previous year 5,439 1,999 345 7,093 1,986 761 331 2,416 4,677

(1) Buildings include Rs. 250/- being the value of 5 shares of Rs. 50/- each in Mittal Towers Premises Co-operative Society Limited.(2) During the years ended March 31, 2010 and March 31, 2009, certain assets which were old and not in use having gross book value of Rs. 387 crore and Rs. 344 crore respectively, (net book value nil) were retired.

69 | P a g e


As at March 31, 2010 20094 INVESTMENTS (1)

Long-term investments - at costTrade (unquoted)

Other investments 7 12Less: Provision made for investments 3 12

4 -Current investments - at the lower ofcost and fair valueNon-trade (unquoted)Liquid mutual fund units 2,518 -Certificates of deposit(2) 1,190 -

3,708 -3,712 -

Aggregate amount of unquoted investments

3,712 -

As at March 31, 2010 20095 DEFERRED TAXES Deferred tax assets

Fixed assets 217 129 Sundry debtors 28 8 Others 187 26

432 163 Deferred tax liabilities

Branch profit tax 232 37232 37

As at March 31, 2010 20096 SUNDRY DEBTORS Debts outstanding for a period exceeding six months Unsecured

Considered good - - Considered doubtful 81 40

Other debts Unsecured Considered good (1) 3,494 3,672 Considered doubtful 21 66

3,596 3,778

70 | P a g e


Less : Provision for doubtful debts 102 1063,494 3,672

(1) Includes dues from companies where directors are interested 11 8

71 | P a g e


As at March 31, 2010 20097 CASH AND BANK BALANCESCash on hand - -Balances with scheduled banksIn current accounts 175 124In deposit accounts 9092 8551Balances with non-scheduled banksIn deposit accounts 336 232In current accounts 953 788

10556 9695(2) Includes balance held by controlled trusts (refer toNote 24.2.21.b) 48 -(3) Includes balance in unclaimed dividend account(refer to Note 24.2.21.a) 2 2

As at March 31, 2010 20098 LOANS AND ADVANCESUnsecured, considered goodAdvances

Prepaid expenses 39 35For supply of goods and rendering ofservices 19 15Advance to gratuity trust / providentfund trust 4 1Withholding and other taxesreceivable 343 167Others 26 8

431 226Unbilled revenues 841 750Advance income taxes 667 274MAT credit entitlement(refer to Note 24.2.8) 42 284Interest accrued and not due 9 6Loans and advances to employees

Housing and other loans 38 43Salary advances 73 74

Electricity and other deposits 63 37Rental deposits 36 34Deposits with financial institutions(refer to Note 24.2.9)(1) 1892 1551Mark-to-market gain on forward andoptions contracts 95 -

72 | P a g e


4187 3279Unsecured, considered doubtfulLoans and advances to employees 3 3

4190 3282Less : Provision for doubtful loans andadvances to employees 3 3

4187 3279(1) Includes balance held by controlled trusts (refer toNote 24.2.21.b) 21 -

As at March 31, 2010 20099 CURRENT LIABILITIESSundry creditorsGoods and services 10 27Accrued salaries and benefitsSalaries 55 71Bonus and incentives 594 472For other liabilitiesProvision for expenses 645 666Retention monies 72 55Withholding and other taxes payable 250 218Mark-to-market loss on forward andoptions contracts - 114Payable for acquisition of business 68 3Gratuity obligation – unamortizedamount 26 29Others 8 11

1728 1666Advances received from clients 8 5Payable by controlled trusts 74 -Unearned revenue 531 331Unclaimed dividend(1) 2 2

2343 2004

73 | P a g e


As at March 31, 2010 200910 PROVISIONSProposed dividend 861 773Provision for

Tax on dividend 143 131Income taxes 724 581Un-availed leave 302 291Post-sales client support andwarranties 82 92

2112 1868

74 | P a g e


SCHEDULES TO THE CONSOLIDATED PROFIT AND

LOSS ACCOUNT

in Rs. crore, except as otherwise stated

For the Year ended March 31 2,010 2,00611 SOFTWARE DEVELOPMENT ANDBUSINESS PROCESS MANAGEMENTEXPENSESSalaries And Bonus Including OverseasStaff Expenses 10,319 9,650Overseas Group Health Insurance 146 142Contribution To Provident And Other Funds 281 245Staff Welfare 44 72Overseas Travel Expenses 488 609Technical Sub-Contractors 372 396Software PackagesFor Own Use 336 320For Service Delivery To Clients 17 41Communication Expenses 83 94Rent 73 71Computer Maintenance 29 25Consumables 25 22Provision For Post-Sales Client Support AndWarranties (2) 39Miscellaneous Expenses 40 39

12,071 11,765

For The Year Ended March 31 2,010 2,00612 SELLING AND MARKETINGEXPENSESSalaries And Bonus Including OverseasStaff Expenses

922

819Overseas Group Health Insurance

6

6Contribution To Provident And Other

4

3FundsStaff Welfare 2 4

2

4Overseas Travel Expenses

99

110Travelling And Conveyance

7

5

75 | P a g e


Brand Building 57

62

Commission Charges 16

11

Professional Charges 23

22

Rent 15

16

Marketing Expenses 15

20

Telephone Charges 11

14

Printing And Stationery 1

1

Advertisements - 2

Sales Promotion 1

2

Communication Expenses 3

4

Miscellaneous Expenses 2

3

1,184

1,104

For the Year ended March 31, 2010 2009

2010 2009

13 GENERAL AND ADMINISTRATIONEXPENSESSalaries and bonus including overseasstaff expenses

515

444Overseas group health insurance

5

3Contribution to provident and otherfunds

21

17Overseas travel expenses

23

29Traveling and conveyance

75

92Telephone charges

128

160Professional charges

255

237Power and fuel

145

147Office maintenance

165

168

76 | P a g e


Guesthouse maintenance 4

5

Insurance charges 31

26

Printing and stationery 11

12

Rates and taxes 31

34

Donations 44

21

Rent 37

27

Advertisements 3

4

Professional membership and seminarparticipation fees

9

10Repairs to building

34

33Repairs to plant and machinery

32

22Postage and courier

12

11Books and periodicals

4

3Recruitment and training

2

6Provision for bad and doubtful debts -

75Provision for doubtful loans andadvances

1

1Commission to non-whole-timeDirectors

6

6Auditor's remunerationStatutory audit fees

2

2Bank charges and commission

2

3Freight charges

1

1Research grants

23

20Miscellaneous expenses

5

10 1,

626 1,

629

77 | P a g e



2010 2009

14 OTHER INCOME, NET 2010 2009Interest received on deposits with banksand others(1)

775

871Dividend received on investmentin liquid mutual funds (non-tradeunquoted)

106

5Miscellaneous income, net(refer to Note 24.2.10)

23

38Gains / (losses) on foreign currency

30-

439

934

475(1) Includes tax deducted at source

97

184


2010 2009

15 PROVISION FOR TAXATION 2010 2009Income taxes(1) 2,

059 1,

035MAT credit entitlement -

307-

109Deferred taxes -

71- 7

1,681

919

78 | P a g e


CONCLUSION

Thus, the report summarizes the Schedule VI Act of the Indian Companies

Act, 1956. With this report we understand the rules and regulations to be

followed by a SMC, while preparing their financial statements.

79 | P a g e


BIBLIOGRAPHY

Annual Report 2009-10 – Infosys Technologies

www.google.co.in

www.icai.org

www.caclubindia.com

80 | P a g e

http://www.caclubindia.com/

http://www.icai.org/

http://www.google.co.in/

Report on Schedule VI - Part 1 & 2

Documents

statement of profit

preparation of statement

preparation of profit

consolidated balance

form of balance sheet

consolidated profit

y y y y y

loss sacral schedule