The Institute of Chartered Accountants of India (ICAI) has said that the agriculture companies might not have to converge fully with international financial reporting standards (IFRS) and a part of their convergence process would be deferred by another one or two years.
This would come as a relief for those agriculture companies that are above the Rs 1,000-crore bracket since they will not have to follow one of the key standards of IFRS-IAS 41 (Agriculture Operations).
Some of the main agriculture companies include Mcleod Russel, Tata Tea, Ruchi Soya, Balrampur Chini. “ICAI has also constituted a group which has representatives from countries like India, Indonesia, Japan and Malaysia to discuss on this matter of convergence for agriculture companies. We will hand over the report to National Advisory Committee on Accounting Standard ( NACAS), a body of experts set up under the ministry of corporate affairs (MCA) who will then take a final call on this but we would not be able to say whether his convergence is possible in the beginning of next year 2012 or the end of next year 2012,” said Amarjit Chopra, president, ICAI.
“It is difficult to determine fair value for a vineyard, coffee or tea plantation as it involves estimating the production along with sales prices and costs for a number of years in the future together with estimating a terminal value and the application of a discount rate to calculate the net present value. This becomes an enormously complex and subjective task,” Chopra added.
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