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DEFINATION

Annual report is audited annual disclosure of performance

to shareholders of a public corporation, as required by the
Securities and Exchange Commission. It contains
management's review of financial performance, the
corporate income statement, balance sheet, as well as
other schedules, such as flow of funds and changes in
capital accounts.
O AT IS ANNUAL REPORT?
[ An annual report is a statement prepared by a publicly
traded company and distributed to employees, customers,
shareholders, and the general community.
[ Annual report provide information about how well the
business is doing financially, upcoming changes projected
for the next year, and the management staff of the
company.
IMPORTANCE OF ANNUAL REPORT

[ Annual reports provide the rich text which accompanies

annual financial statements.
[ Therein lies an explanation for changes found in the
numbers and importantly a section on prospects for the
coming year.
[ They are a particularly valuable resource for strategy and
marketing researchers
[ Archived annual reports offer the opportunity to see the
actual disclosure and any textual explanation, but at the
price of significant extra search costs.
O
 

[ The submission of facts and details concerning a situation
or business operation. In general, security exchanges and
the SEBI require firms to disclose to the investment
community the facts concerning issues that will affect the
firms' stock prices. Disclosure is also required when firms
file for public offerings.
[ For example, publicly traded companies must provide all
available information that might influence your decision
to invest in the stocks or bonds they issue.
DISCLOSURE BY T E OAY OF NOTES

[ Disclosure by the way of notes also refers to

significant accounting policies of the concerned
company.
[ Company reveals or disclose its information to
general public and its share holders through its
accounting policies.
[ So accounting policies play a vital role in disclosure
of facts and figures
DISCLOSURE OF ACCOUNTING POLICIES

‡ Significant Accounting Policies followed in

preparation and presentation of financial statements
should form part thereof and be disclosed at one place
in the financial statements.
‡ Any change in the accounting policies having a
material effect in the current period or future periods
should be disclosed.
‡ If fundamental assumptions (going concern,
consistency and accrual) are not followed, fact to be
disclosed.
RELIANCE POOER LTD.
‡ Basis of preparation - The financial statements are
prepared under the historical cost convention, except for
certain fixed assets which are revalued, in accordance
with the generally accepted accounting principles in India
and in accordance with the International Financial
Reporting Standards and the companies act,1956.
‡ Use of estimates - The preparation of financial statements
requires estimates and assumptions to be made that affect
the reported amount of assets and liabilities on the date of
the financial statements.
‡ Fixed assets - Fixed Assets are stated at cost net of
cenvat / value added tax and includes amounts added
on revaluation, less accumulated depreciation and
impairment loss, if any.
‡ Lease Assets-
a) Operating Leases : Rentals are expensed with
reference to lease terms and other considerations.
b) Finance leases on or after 1st April, 2001 : The lower
of the fair value of the assets and present value of the
minimum lease rentals is capitalized as fixed assets with
corresponding amount shown as lease liability.
‡ Intangible assets - Intangible Assets are stated at cost of
acquisition less accumulated amortization. Technical
know how is amortized over the useful life of The
underlying assets
‡ Depreciation - Depreciation on fixed assets is
provided on written down value method (ODV) at
the rates and in the manner prescribed in Schedule
XIV to the Companies Act, 1956 over their useful
life.
‡ Impairment of Assets - An asset is treated as impaired
when the carrying cost of assets Exceeds its
recoverable value. An impairment loss is charged to
the profit and loss account in the year in which an
asset is identified as impaired. The impairment loss
recognized in prior accounting period is reversed if
there has been a change in the estimate of recoverable
amount.
‡ Foreign Currency Transactions ±
(a) Transactions denominated in foreign currencies are
recorded at the Exchange rate prevailing on the date
of the transaction.
(b) Non monetary foreign currency items are carried at
cost.
‡ Investments - Current investments are carried at the
lower of cost or quoted / fair value, computed
category wise. Long Term Investments are stated at
cost. Provision for diminution in the value of long-
term investments is made only if such a decline is
other than temporary.
‡ Inventories - Items of inventories are measured at
lower of cost or net realizable value after providing
for obsolescence, if any.
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Employee Benefits
Short-term employee benefits are recognized as an
expense at the undiscounted amount in the profit and loss
account of the year in which the related service is
rendered.

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Provisions involving substantial degree of estimation in
measurement are recognized when there is a present
obligation as a result of past events and it is probable that
there will be an outflow of resources. Contingent
Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor
disclosed in the financial statements.

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I would like to conclude that disclosure forms an integral

part of the annual report and thus disclosure is very
important from the investor¶s point of view otherwise
investor would find it very difficult whether the company
is functioning properly or not or whether the investment
made in the company is safe or not.
$ %&

I OOULD LIKE TO T ANK MO INA MAM FOR

GUIDING ME T ROUG OUT T E PROJECT.

AS OIT OUT YOUR GUIDENCE IT OOULD AVE

BEEN VERY DIFFICULT FOR ME TO GAT ER
INFORMATION ON SUC A TOPIC.
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