sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« ICAI »
 Launch of 1st Batch of Educational Course by ICAI Registered Valuers Organsiation (ICAI RVO) at ICAI Bhawan, Sector- 62, Noida from 2nd June, 2018 to 24th June, 2018.
 Application Form for the Information Systems Audit (ISA) Assessment Test - June, 2018.
 Information System Audit - Assessment Test (ISA - AT), June 2018
 FAQs on SA 570 (Revised), ‘Going Concern’ (Applicable for audits of financial year 2017-18)
  Exposure Draft of Standard on Internal Audit (SIA), Planning the Internal Audit Assignment (Comments to be received by June 15, 2018)
 Four Weeks Residential Programme to be held from 4th June, 2018 to 1st July, 2018 at Centre of Excellence, Jaipur for Men Participants only.
 Inputs/ Suggestions Invited on Draft Revised Syllabus for the Post Qualification Course on Information Systems Audit formulated by Digital Accounting and Assurance Board of ICAI latest by 31st May, 2018.
 Exposure Draft of Accounting Standard (AS) 109, Financial Instruments (Comments to be received by June 30, 2018)
 Register for Exclusive First Batch of Spanish Language (60 Hours) for ICAI Members and Students at Delhi and Mumbai - 4th June 2018 - Last Date of Enrolment is 21st May 2018
 FAQ on accounting treatment of increase in liability due to enhancement of the gratuity ceiling.
 SAFA accepts recommendation of the ICAI for forming SAFA Women Empowerment Committee and replicating the digital initiatives of ICAI.

ICAI balm for FCCB headache
March, 05th 2009

Accounting regulator may allow companies to amortise MTM losses.

In a major relief, Indian companies may be allowed amortisation of mark-to-market (MTM) losses on foreign currency convertible bonds (FCCBs) over the period of their maturity, as the Indian currency is hovering around its historic low.

The new norms may even allow companies to write back some of the MTM losses that they have booked in the last three quarters of the current financial year.

The Institute of Chartered Accountants of India, the industry body regulating chartered accountants, has formed a committee to study representations made by Indian companies in this regard and is expected to change the norms within a week.

When contacted, ICAI President Uttam Prakash Agarwal said, We have received representations on the basis of which we have formed a group to make recommendations. I am expecting this in a day or two, based on which we may make changes, he said.

According to an analysts estimate, around 185 companies issued FCCBs worth $20 billion from 2004-05 to 2007-08. Out of this, about $15 billion are still outstanding while the balance got converted into equity. Most of the FCCBs are due for payment in the next two to three years.

Companies such as JSW Steel, Tata Steel and Suzlon Energy, which have outstanding FCCBs, have respectively booked Rs 815 crore, Rs 775 crore and 741 crore MTM losses in the nine months of the current financial year. The losses also include other MTM losses such as those on hedging. Tata Motors, Jubilant Orgnosys, Mahindra & Mahindra are other FCCB-issuing companies which have booked MTM losses in these nine months.

In the current quarter, the rupee has depreciated by 5.6 per cent against the US currency. At today's closing price of 51.55 today, the currency has depreciated by 28.5 per cent in the current financial year.

According to AS 11 (Accounting Standard 11) of Indian accounting standards, companies have to book the notional loss due to depreciation of the rupee on both the principal amount as well as the yield to maturity (YTM) for their outstanding FCCBs. The total notional loss is booked in the profit and loss account at the end of every quarter regardless of the period of the maturity for such FCCBs.

If accountancy standards get changed before the end of current quarter, which we hope will happen, the mark- to-market losses can be spread over the maturity period for FCCBs, said Prabal Banerji, group chief financial officer, Hinduja Group that owns Ashok Leyland, Indias second largest commercial vehicle maker.

In my personal opinion if AS 11 gets changed then companies would also be able to write back extra mark-to- market losses booked in the previous quarter of the current financial year, he said.

With the slump in the stock markets, companies dont expect their FCCBs to be converted into equity as their stocks are available at a much lower price than the conversion price fixed at the time of issuing the FCCBs.

The mounting pressure of repayment of FCCB debt prompted the Reserve Bank of India to allow companies to buy back their outstanding FCCBs up to $50 million. However, companies have not been able to utilise this window completely due to the difficulty in finding sellers at right price. The window gets closed on March 31, but so far only $150 million worth of FCCBs have been repurchased.

An investment banker said some companies were waiting for clarity on the accountancy guidelines for amortising the mark-to-mark losses on FCCBs as it would help them in repurchasing the FCCBs.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Bath SEO Company Birmingham SEO Company Bradford SEO Company Brighton and Hove SEO Company Bristol SEO Company Cambridge SEO Company Canterbury SEO Company Carlisle SEO Company Chester SEO Company Chichester SEO Company Coventry SEO Compan

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions