Mumbai, April 27: Reliance Industries, which has undertaken an experiment of reconciling its accounts with the international standards, has come up with a surprising result: that whether you work out accounts of your company under the Indian generally accepted norms, or the international ones, the difference is not necessarily huge.Anil Ambani, Reliance managing director, said at a press conference in Mumbai on Monday that this was probably because Reliance's pricing mechanism was irrevocably linked to international price fluctuations (in fact, Reliance tries to maintain a price line just below the import parity levels) and this international exposure probably allowed its accounts to show Indian accounts that provided a virtually international bottom- line.
Reliance has sought to reconcile its annual accounts with the US Generally Accepted Accounting Practice (GAAP) as well as with the International Accounting Standards (IAS).
The company's record breaking net profit of Rs 1,653 crore during 1997-98declines marginally to Rs 1,572 crore if the profitability is computed in line with the stringent norms of US GAAP. The company's net profits, if computed as per the IAS, is however Rs 148 crore lower at Rs 1,505 crore."In line with the commitment given, the company has reconciled the accounts with US GAAP as well as with International Accounting Standards (IAS)," Reliance has said.
The difference in the 1997-98 net profit under the three accounting formats stem from variations in the accounting treatment. According to the company, the difference in net profits is represented by -- share in the income of affiliates, income in consolidation of subsidiaries, lease adjustments, decapitalisation of indirect pre-operative expenses, foreign currency translations, and deferred taxation, to name a few.
"However, since 97 per cent of the company's revenues are earned in the country, the true and fair picture is indicated as per the Indian GAAP," Reliance Industries has said.
Ambani said the reconciliation ofaccounts was attempted because the company wishes at a future date to file for registration with the Securities & Exchange Commission of the United States with the ultimate aim of a listing on the New York Stock Exchange.
Reliance has raised over $600 million in Yankee bond issues from the US notes market, and is among the only 30 companies in the last three years to have had access to 100 year money in the United States.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
