Indian Companies Act –

1956 “Schedule VI”

 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
 ABSTRACT
Our 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
PAGE
CONTENTS
NO.
Schedule VI To The Companies Act,
6
1956…………………………………………………
Concepts For The Schedule
8
VI……………………………………………………………..
Method Adopted In Determining The Form Of Balance Sheet, Statement Of Profit And
Loss And Cash Flow 9
Statement…………………………………………………………….
General Instructions For Preparation Of Balance Sheet, Statement Of Profit And Loss
And Cash Flow 11
Statement………………………………………………………………………
 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
42
VI………………………………………...
Method Adopted In Determining The Form Of Balance Sheet And Statement Of Profit
And Loss – SARAL 43
Schedule………………………………………………………………
General Instructions For Preparation Of Balance Sheet And Statement Of Profit And
Loss – Sacral
44
Schedule................................................................................................................................
..
General Instructions For Preparation Of Balance
47
Sheet……………………………………
General Instructions For Preparation Of Statement Of Profit And
52
Loss…………………...
 Consolidated Financial Statements For Infosys 57
 Technologies………………………

 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
bn.harish@mca.gov.in or narendra.dua@mca.gov.in. 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

To The Nearest Hundreds, Thousands,

I. Less Than One Hundred Crore
Lakhs Or Millions, Or Decimals
Rupees
Thereof.

To The Nearest, Lakhs, Millions Or

II. One Hundred Crore Rupees Or More
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;

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

(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. 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 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

The amounts shall be classified as:

(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

The amounts shall be classified as:

(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 inventory is deducted;

(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 inventory is deducted;
 (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…………)
Figures As
Figures As
At The End
At The End
Of The
Particulars Of Current
Previous
Reporting
Reporting
Period
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

Name of the Company…………………….
Profit and loss statement for the year ended …………………… (Rupees in…………)

Figures Figures
For The For The
Particulars Current Previous
Reportin Reportin
g Period g 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

Results From Operating Activities (III

V. XXX XXX
– IV)

VI. Non Operating Income/Expenses:

 Gains/(Losses) On Sale Of Long-

XXX XXX
Term Investments

 Foreign Currency Exchange

XXX XXX
Gains/(Losses), Net

 Finance Cost (XXX) (XXX)

 Other Income XXX XXX

 Other Expenses (XXX) (XXX)

Total Non Operating Income/

XXX XXX
Expenses:

VII
Income Before Income Tax (V + VI) XXX XXX
.

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VII
Tax Expense:
I

XX
 Current Income Tax XXX
X

XX
 Deferred Income Tax XXX
X

XX
 Others XXX
X

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

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PART III – CASH FLOW STATEMENT

Name of the Company…………………….
Cash flow statement for the year ended ………………………
Figures Figures
For The For The
Particulars Current Previous
Reporting Reporting
Period 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)
(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

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 Accounting for Managers – Schedule VI

 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

 (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

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)
 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)

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(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)

Net (Decrease)/Increase In Cash And Cash

III
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)

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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.

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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.

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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
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,
45 | P a g e
 Accounting for Managers – Schedule VI

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.

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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.

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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;

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

(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.

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

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. Nature of

security shall be specified separately in each case.

D. Long-term provisions

Long-term provisions shall include provision for employee benefits and others.

49 | P a g e
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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. Nature of

security 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

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;

(g) Investment in Partnership

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

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(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).

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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.

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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:

(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.

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PART I - BALANCE SHEET

Name of the Company…………………….

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

Figures As At Figures As At
The End Of The End Of
Particulars Current The Previous
Reporting Reporting
Period 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

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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

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PART II – STATEMENT OF PROFIT AND LOSS

Name of the Company…………………….

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

Figures For Figures For

The Current The Previous
Particulars
Reporting Reporting
Period 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 Know-
How/License Fee
J. Research And Development
Expenses
K. Commission And Brokerage On
Sales

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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)

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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.

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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

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CONSOLIDATED BALANCE SHEET

As at March 31, in
Rs.  crore
Schedule 2010 2009
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
Share capital 1 286 286
Reserves and surplus 2 22,763 17,968
23,049 18,254
DEFERRED TAX LIABILITIES 5 232 37
MINORITY INTEREST - -
23,281 18,291
APPLICATION OF FUNDS
FIXED ASSETS 3
Original cost 7,839 7,093
Less: Accumulated depreciation and amortization 2,893 2,416
Net book value 4,946 4,677
Add: Capital work-in-progress 409 677
5,355 5,354
INVESTMENTS 4 3,712 -
DEFERRED TAX ASSETS 5 432 163
CURRENT ASSETS, LOANS AND ADVANCES
Sundry debtors 6 3,494 3,672
Cash and bank balances 7 10,556 9,695
Loans and advances 8 4,187 3,279
18,237 16,646
LESS: CURRENT LIABILITIES AND PROVISIONS
Current liabilities 9 2,343 2,004
Provisions 10 2,112 1,868
NET CURRENT ASSETS 13,782 12,774
23,281 18,291
SIGNIFICANT ACCOUNTING POLICIES AND 24
NOTES ON ACCOUNTS

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 Accounting for Managers – Schedule VI

CONSOLIDATED PROFIT AND LOSS ACCOUNT

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

Schedul 2010 2009

e
Income from software services, products and 22742 21693
business process management
Software development and business process 11 12071 11765
management expenses
GROSS PROFIT 10671 9928
Selling and marketing expenses 12 13 1184 1104
General and administration expenses 1626 1629
2810 2733
OPERATING PROFIT BEFORE 7861 7195
DEPRECIATION AND MINORITY
INTEREST
Depreciation 905 761
OPERATING PROFIT BEFORE MINORITY 14 6956 6434
INTEREST
Other income, net 934 475
Provision for investments -9 2
NET PROFIT BEFORE TAX, MINORITY 15 7899 6907
INTEREST AND EXCEPTIONAL ITEM
Provision for taxation (refer to Note 24.2.8) 1681 919
NET PROFIT AFTER TAX AND BEFORE
MINORITY INTEREST AND
EXCEPTIONAL ITEM 6218 5988
Income from sale of investments, net of taxes 48 -
(refer to Note 24.2.22)
NET PROFIT AFTER TAX, EXCEPTIONAL 6266 5988
ITEM AND BEFORE MINORITY INTEREST
Minority interest -
NET PROFIT AFTER TAX, EXCEPTIONAL 6266 5988
ITEM AND MINORITY INTEREST
Balance brought forward 10560 6828
Less: Residual dividend paid - 1
Dividend tax on the above - -
10560 6827
AMOUNT AVAILABLE FOR 16826 12815
APPROPRIATION
Interim dividend 573 572
Final dividend 861 773
Total dividend 1434 1345

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Dividend tax 240 228

Amount transferred to general reserve 780 682
Amount transferred to capital reserve 48 -
Balance in Profit and Loss account 14324 10560
16826 12815
EARNINGS PER SHARE
Equity shares of par value Rs. 5/- each
Before exceptional item
Basic 109 105
Diluted 109 104
After exceptional item
Basic 110 105
Diluted 110 104
Number of shares used in computing earnings
per share(1)
Basic 57,04,75,92 57,24,90,21
3 1
Diluted 57,11,16,03 57,34,63,18
1 1
SIGNIFICANT ACCOUNTING POLICIES 24
AND NOTES ON ACCOUNTS

Note : The schedules referred to above form an integral part of the

consolidated Profit and Loss account.

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 Accounting for Managers – Schedule VI

SCHEDULES TO THE CONSOLIDATED BALANCE SHEET

As at March 31, 2010 2009
1 SHARE CAPITAL
Authorized
Equity shares, Rs. 5/- par value
60,00,00,000 (60,00,00,000) equity
shares 300 300
Issued, Subscribed and Paid Up
Equity shares, Rs. 5/- par value(1) 287 286
57,38,25,192 (57,28,30,043) equity
shares 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 2009

2 RESERVES AND SURPLUS
Capital reserve
6 6
Add : Transfer from Profit and Loss
account 4 -
8
5
4 6
Foreign currency translation reserve 4 -
7 7
Share premium account – As at April 1, 2,92 2,85
5 1
Add : Share premium arising on
consolidation of controlled trusts -
4
Receipts on exercise of employee
stock options 8 6
8 4
Income tax benefit arising from
exercise of stock options 1 1
0 0
3,02 2,92
7 5
General reserve – As at April 1, 4,48 3,80

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4 2
Add : Transfer from Profit and Loss
account 78 68
0 2
5,26 4,48
4 4
Balance in Profit and Loss account 14,32 10,56
4 0
Add : Corpus of the controlled trusts 4 -
7
14,37 10,56
1 0
22,76 17,96
3 8

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

Particulars Original cost Depreciation and amortization Net book value
AdjustmentsDeletions / Retirement /

As at As at As at As at As at As at
April March April March March March
Additions / Adjustments

Deletions / Adjustments

1, 31, 1, 31, 31, 31,

For the year

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 1,263 521 259 132 648 615 662
Computer equipment(2) 1,233 204 186 1,251 960 272 186 1,046 205 273
Furniture and fixtures(2) 720 99 109 710 359 151 107 403 307 361
Leasehold
54 2 1 55 28 12 3 37 18 26
improvements
Vehicles 4 1 - 5 1 1 - 2 3 3
Intellectual property
12 - - 12 12 - - 12 - -
rights
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.

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As at March 31, 2010 2009

4 INVESTMENTS (1)
Long-term investments - at cost
Trade (unquoted)
Other investments 7 12
Less: Provision made for investments 3 12
4 -
Current investments - at the lower of
cost and fair value
Non-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 2009

5 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 37
232 37

As at March 31, 2010 2009

6 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

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 Accounting for Managers – Schedule VI

Less : Provision for doubtful debts 102 106

3,494 3,672
(1) Includes dues from companies where directors
are
interested 11 8

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 Accounting for Managers – Schedule VI

As at March 31, 2010 2009

7 CASH AND BANK BALANCES
Cash on hand - -
Balances with scheduled banks
In current accounts 175 124
In deposit accounts 9092 8551
Balances with non-scheduled banks
In deposit accounts 336 232
In current accounts 953 788
10556 9695
(2) Includes balance held by controlled trusts (refer to
Note 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 2009

8 LOANS AND ADVANCES
Unsecured, considered good
Advances
Prepaid expenses 39 35
For supply of goods and rendering of
services 19 15
Advance to gratuity trust / provident
fund trust 4 1
Withholding and other taxes
receivable 343 167
Others 26 8
431 226
Unbilled revenues 841 750
Advance income taxes 667 274
MAT credit entitlement
(refer to Note 24.2.8) 42 284
Interest accrued and not due 9 6
Loans and advances to employees
Housing and other loans 38 43
Salary advances 73 74
Electricity and other deposits 63 37
Rental deposits 36 34
Deposits with financial institutions
(refer to Note 24.2.9)(1) 1892 1551
Mark-to-market gain on forward and
options contracts 95 -
4187 3279

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Unsecured, considered doubtful

Loans and advances to employees 3 3
4190 3282
Less : Provision for doubtful loans and
advances to employees 3 3
4187 3279
(1) Includes balance held by controlled trusts (refer to
Note 24.2.21.b) 21 -

As at March 31, 2010 2009

9 CURRENT LIABILITIES
Sundry creditors
Goods and services 10 27
Accrued salaries and benefits
Salaries 55 71
Bonus and incentives 594 472
For other liabilities
Provision for expenses 645 666
Retention monies 72 55
Withholding and other taxes payable 250 218
Mark-to-market loss on forward and
options contracts - 114
Payable for acquisition of business 68 3
Gratuity obligation – unamortized
amount 26 29
Others 8 11
1728 1666
Advances received from clients 8 5
Payable by controlled trusts 74 -
Unearned revenue 531 331
Unclaimed dividend(1) 2 2
2343 2004

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As at March 31, 2010 2009

10 PROVISIONS
Proposed dividend 861 773
Provision for
Tax on dividend 143 131
Income taxes 724 581
Un-availed leave 302 291
Post-sales client support and
warranties 82 92
2112 1868

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 Accounting for Managers – Schedule VI

SCHEDULES TO THE CONSOLIDATED PROFIT AND

LOSS ACCOUNT

in Rs. crore, except as otherwise stated

For the Year ended March 31 2,010 2,006

11 SOFTWARE DEVELOPMENT AND
BUSINESS PROCESS MANAGEMENT
EXPENSES
Salaries And Bonus Including Overseas
Staff Expenses 10,319 9,650
Overseas Group Health Insurance 146 142
Contribution To Provident And Other Funds 281 245
Staff Welfare 44 72
Overseas Travel Expenses 488 609
Technical Sub-Contractors 372 396
Software Packages
For Own Use 336 320
For Service Delivery To Clients 17 41
Communication Expenses 83 94
Rent 73 71
Computer Maintenance 29 25
Consumables 25 22
Provision For Post-Sales Client Support And
Warranties (2) 39
Miscellaneous Expenses 40 39
12,071 11,765

For The Year Ended March 31 2,010 2,006

12 SELLING AND MARKETING
EXPENSES
Salaries And Bonus Including Overseas
Staff Expenses 92 81
2 9
Overseas Group Health Insurance
6 6
Contribution To Provident And Other
Funds 4 3
Staff Welfare 2 4
2 4
Overseas Travel Expenses 9 11
9 0
Travelling And Conveyance

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7 5
Brand Building 5 6
7 2
Commission Charges 1 1
6 1
Professional Charges 2 2
3 2
Rent 1 1
5 6
Marketing Expenses 1 2
5 0
Telephone Charges 1 1
1 4
Printing And Stationery
1 1
Advertisements -
2
Sales Promotion
1 2
Communication Expenses
3 4
Miscellaneous Expenses
2 3
1,18 1,10
4 4

For the Year ended March 31, 2010 2009 2010 2009
13 GENERAL AND ADMINISTRATION
EXPENSES
Salaries and bonus including overseas
staff expenses 51 44
5 4
Overseas group health insurance
5 3
Contribution to provident and other
funds 2 1
1 7
Overseas travel expenses 2 2
3 9
Traveling and conveyance 7 9
5 2
Telephone charges 12 16
8 0
Professional charges 25 23
5 7
Power and fuel 14 14
5 7

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Office maintenance 16 16
5 8
Guesthouse maintenance
4 5
Insurance charges 3 2
1 6
Printing and stationery 1 1
1 2
Rates and taxes 3 3
1 4
Donations 4 2
4 1
Rent 3 2
7 7
Advertisements
3 4
Professional membership and seminar
participation fees 1
9 0
Repairs to building 3 3
4 3
Repairs to plant and machinery 3 2
2 2
Postage and courier 1 1
2 1
Books and periodicals
4 3
Recruitment and training
2 6
Provision for bad and doubtful debts - 7
5
Provision for doubtful loans and
advances
1 1
Commission to non-whole-time
Directors
6 6
Auditor's remuneration
Statutory audit fees
2 2
Bank charges and commission
2 3
Freight charges
1 1
Research grants 2 2
3 0
Miscellaneous expenses 1
5 0

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1,62 1,62
6 9

For the Year ended March 31, 2010 2009 2010 2009
14 OTHER INCOME, NET 2010 2009
Interest received on deposits with banks
and others(1) 77 87
5 1
Dividend received on investment
in liquid mutual funds (non-trade
unquoted) 10
6 5
Miscellaneous income, net
(refer to Note 24.2.10) 2 3
3 8
Gains / (losses) on foreign currency 3 -
0 439
93 47
4 5
(1) Includes tax deducted at source 9 18
7 4

For the Year ended March 31, 2010 2009 2010 2009
15 PROVISION FOR TAXATION 2010 2009
Income taxes(1) 2,05 1,03
9 5
MAT credit entitlement - -
307 109
Deferred taxes - -
71 7
1,68 91
1 9

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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.

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BIBLIOGRAPHY
 Annual Report 2009-10 – Infosys Technologies

 www.google.co.in

 www.icai.org

 www.caclubindia.com

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