Presented To: Presented By: Prof. (Dr.

) Paresh Shah Gandhi(11)

Krutarth

Srushti Mehta(21) Darpan Mittal(22) Kalgi Pandya(30) Nikita Patel(33)

Responsibility Centre Investment Centre Segmental Reporting - AS17

Case Study of ZEEL

Determination of segments Profitability IFRS V/S Indian GAAP (AS 17)

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A responsibility centre is an organizational subsystem charged with a well-defined mission and headed by a manager accountable for the performance of the centre. "Responsibility centers constitute the primary

building blocks for management control." It is also the fundamental unit of analysis of a budget control

system. A responsibility centre is an organization unit

headed by a responsible manager.
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Responsibility Centers

Cost Centers

Revenue Centers

Profit Centers

Investment Centers

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INVESTMENT CENTER is the responsibility center within an organization that has control over revenue, cost, and investment funds.

It is a profit center whose performance is evaluated on the basis of the return earned on invested capital, e.g.

corporate headquarters or a division of a large

decentralized organization.
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To enable the users of financial statements to:

Better understand the performance of the enterprise; Better assess the risks and returns of the enterprise; and

Make more informed judgments about the enterprise as

a whole.

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Listed Companies

Companies in the process of listing their equity or debt securities

Banks including Co-operative banks Financial Institutions Insurance companies All commercial and business reporting enterprises having turnover exceeding Rs. 50 Crore. All commercial and business reporting enterprises having borrowings including public deposits in excess of Rs. 10 Crore at any time during the accounting period.

Holding and subsidiary companies of above.

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Business Segment is a distinguishable component of an enterprise

o That is engaged in providing an individual product or service or a

group of related products or services and

o That is subject to risks and returns that are different from those

of other business segments.

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The nature of offered products, goods or services;

The characteristics of the production process;

The structure of customers or clients; Returns on offered products, goods or services; Business risk related to production, sales of goods or rendering of services;

Methods used to distribute products or goods or to render

services;

Legislation regulating the activities of entities.

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Geographical segment is a distinguishable component of an enterprise:

o That is engaged in providing products or services within a

particular economic environment;

o That is subject to risks and returns that are different from those

of components operating in other economic environments.

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Similarity of economic and political conditions; Links between operations pursued in different geographical areas;

Business risk in such economic environment;

Returns on offered products, goods or services provided in that economic environment.

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A business or geographical segment is a reportable segment only if:

Its revenue from sales to external customers and from transactions with other
segments is 10% or more of the total revenue, external and internal, of all segments;

Segment results make up at least 10% of the total operating profit (loss) of the entity

Segment assets make up at least 10% of the total assets of the entity (group of entities).

Additional segments shall be identified until the threshold of 75% of the sales revenue of the entity (group of entities) is achieved.

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A segment identified as a reportable segment in the immediately preceding reporting period because it satisfied conditions set in above shall continue to be a reportable segment for the current period.

A segment can be reportable if judged by management though it does not satisfy the above conditions.

If a segment is not reportable, it should be included as an unallocated reconciling item.

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Financial statements shall disclose information about both business and geographical segments,

But information disclosure requirements shall differ and depend upon which segments business or geographical - are chosen as primary and secondary.

Segments which have a larger effect on the profit and business risk of the entity (group of entities) shall be primary.

If the profit and business risk of the entity (group of entities) are affected predominantly by business segments, they shall be considered as primary segments, and if they are affected by geographical segments then the latter shall be treated as primary.
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If the profit and business risk of the entity (group of entities) are strongly affected both by business and geographical segments, the entity shall treat business segments as its primary segments.

If the system of internal financial reporting of the entity is based neither on individual goods or services, nor on the economic environment, the entity shall decide at its own discretion whether its business risk and profit is related more to business or geographical segments and which of them

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If primary format is geographical segment based on location

of assets and the location of its customers is different,

Revenue from external customers for each geographical segment is also required to be reported.

Similarly, if the geographical segment is based on location of

customers and the location of assets is different, the following information needs to be reported:
o Total carrying amount of segment assets by geographical location.
o Total cost incurred during the period to acquire segment assets.

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ZEEL, Annual Reports (2005 to 2011)

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Zee is one of Indias leading Media &Entertainment companies, and one of the largest producers and aggregators of Hindi programming globally.

It operate 25 TV channels in India and 17 beams in international markets. It is offerings span across various genres: Hindi Entertainment, Hindi Movies, English

Entertainment & Movies, Regional Language Entertainment,

Sports, Alternate Lifestyle, Music and Special Interest Channels.
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With

its

successful to align and

marketing with the

initiatives, changing investments

constant audience in new

evolution

preferences

continuous

technology platforms, it has positioned as one of the most popular entertainment networks.

Today, Zee enjoys a robust pan-India market share of

13%, and a healthy 16.1% in the Hindi speaking

markets.
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Broadcasting and content (B&C), which principally consists of

developing, producing and procuring television programming and

film content and delivering via satellites, thereby earning revenues by way of advertisement and subscription revenues and syndication.

Access, effective current year the Group has reconsidered recognizing Access segment separately on the demerger of its cable & DCS business, hence the same is now merged into Broadcasting & Content segment. The relevant figures of last year are also regrouped to show comparable position.

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Education, which principally consists of distribution of software

learning products, imparting education and training in IT.

Film Production and Distribution, which principally consists of

production, acquisition and distribution of feature films, animation

films and programs.

Others, This segment includes the sale of electronic devices.

Elimination, All other activities are catered in this segment.

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No. 1

Year 2005-2006

Segments Broad casting &Content Access Education Film, Production & Distribution Others Elimination Broad casting &Content Education Film, Production & Distribution Others Elimination

Remark In all segments there were some or other activity done

2006-2007

Access Segment has been discontinued in the current year due to demerges of distribution businesses to WWIL & Dish TV India Limited. Also there was no activity in Film, production and distribution segment

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No. Year 3 2007-2008

Segments Broad casting &Content Education Film, Production & Distribution Others Elimination Broad casting &Content Education Film, Production & Distribution Others Elimination

Remark There was no activity in both Film Production and distribution and Elimination segment. There was no activity in Elimination segment

2008-2009

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No. 5

Year 2009-2010

Segments Broad casting &Content Education Film, Production & Distribution Others Elimination Broad casting &Content Education Film, Production & Distribution Others Elimination

Remark There was no activity in Elimination segment

2010-2011

There was no activity in both Education and Elimination segment

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Aggregate the results of two or more segments if they have similar products, services, processes, customers, distribution methods, and regulatory environments.
Report a segment if it has at least 10% of the revenues, 10% of

the profit or loss, or 10% of the combined assets of the entity.

If the total revenue of the segments you have selected under the preceding criteria comprise less than 75% of the entity's total

revenue, then add more segments until you reach that threshold.
You can add more segments beyond the minimum just noted, but consider a reduction if the total exceeds ten segments.
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Total (Segments ) 400

Total (Enterprise)

1.

Segment Revenue (a) External Sales (b) Inter Segment Sales Total Revenue

255

15

10

15

50

20

35

100

60

30

200

100

315

45

15

15

50

25

35

600

400

2. Total Revenue of each Segment as a percentage of total revenue of all segments

16.7

52.5

7.5

2.5

2.5

8.3

4.2

5.5

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Total (Segments )

Total (Enterprise)

3. Segment Result [Profit/(Loss)] 4. Combined results of all Segments in Profit 5. Combined results of all Segments in Loss 6. Segment Result as a % of greater of totals at 4 & 5 above in absolute amount (i.e. 100) 7. Segment Assets 8. Segment assets as % of total assets of all segments
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5 5

(90)

15 15

(5)

8 8

(5)

5 5

7 7 40

(90)

(5)

(5)

(100)

90

15

15 15

47 47

5 5

11 11

3 3

5 5

5 5

9 9

100

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The segments whose total revenue from External sales and inter-

segment sales is 10% or more of total revenue of all segments external

and internal should be identified as reportable segments. Therefore segment B&C , Access and others are reportable segment,

It is to be first identified whether the combined result of all segments in profit or combine result of all segments in loss is greater in absolute amount. From the table it is evident that combined result in profit i.e (26, 71,982) is greater. Therefore the individual segment results as a percentage of Rs 26, 71,982 needs to be examined.

Here segment (B&C) is reportable segment as the segment asset is more than 10% of total segment assets. Thus Segment B&C is reportable segment.
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The segments whose total revenue from external sales and inter-segment sales

is 10% or more of total revenue of all segments external and internal should be
identified as reportable segments. Therefore segment B&C is reportable segment.

It is to be first identified whether the combined result of all segments in profit or

combined results of all segments in loss is greater in absolute amount. From

the table it is evident that combined result in profit (i.e. 30,96,248) is greater. Therefore the individual segment result as a percentage of Rs. 30,96,248 needs to be examined.

Here segment B&C is reportable segment as the segment result is more than
the threshold limit of 10%. Segment B&C is reportable segment as the segment assets is more than 10% of total segment assets.

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Thus B&C is a reportable segment.

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The segments whose total revenue from external sales and inter-segment sales is 10% or more of total revenue of all segments external and internal should be identified as reportable segments. Therefore segment B&C is reportable segment. It is to be first identified whether the combined result of all segments in profit or combined results of all segments in loss is greater in absolute amount. From the table it is evident that combined result in profit (i.e. 50,63,704) is greater. Therefore the individual segment result as a percentage of Rs. 5,70,63,704 needs to be examined. Here segment B&C is reportable segment as the segment result is more than the threshold limit of 10%. Segment B&C and unallocated are reportable segment as the segment assets is more than 10% of total segment assets. Thus B&C and Unallocated is a reportable segment.
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The segments whose total revenue from external sales and inter-segment sales

is 10% or more of total revenue of all segments external and internal should be
identified as reportable segments. Therefore segment B&C is reportable segment.

It is to be first identified whether the combined result of all segments in profit or combined results of all segments in loss is greater in absolute amount. From the table it is evident that combined result in profit (i.e. 44,87,481) is greater. Therefore the individual segment result as a percentage of Rs. 44,87,481 needs to be examined.

Here segment B&C is reportable segment as the segment result is more than the threshold limit of 10%. Segment B&C and unallocated are reportable segment as the segment assets is more than 10% of total segment assets. Thus B&C and Unallocated are a reportable segment
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The segments whose total revenue from external sales and inter-segment sales

is 10% or more of total revenue of all segments external and internal should be
identified as reportable segments. Therefore segment B&C is reportable segment.

It is to be first identified whether the combined result of all segments in profit or combined results of all segments in loss is greater in absolute amount. From the table it is evident that combined result in profit (i.e. 62,71,617) is greater. Therefore the individual segment result as a percentage of Rs.62,71,617 needs to be examined.

Here segment B&C is reportable segment as the segment result is more than the threshold limit of 10%. Segment B&C and unallocated are reportable segment as the segment assets is more than 10% of total segment assets. Thus B&C and Unallocated is a reportable segment
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The segments whose total revenue from external sales and inter-segment sales

is 10% or more of total revenue of all segments external and internal should be
identified as reportable segments. Therefore segment B&C is reportable segment.

It is to be first identified whether the combined result of all segments in profit or combined results of all segments in loss is greater in absolute amount. From the table it is evident that combined result in profit (i.e. 85,25,301) is greater. Therefore the individual segment result as a percentage of Rs.85,25,301 needs to be examined.

Here segment B&C is reportable segment as the segment result is more than the threshold limit of 10%. Segment B&C is reportable segment as the segment assets is more than 10% of total segment assets. Thus B&C is a reportable segment.

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IFRS

Indian GAAP
Applicability

This standard is applicable to separate This standard is applicable to all level I or individual financial statements of an entities. entity whose debt or equity instruments are listed or proposed to be listed, and Consolidated Financial Statements of a group with a parent whose debt or equity instruments are listed or proposed to be listed.

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IFRS IFRS imposes a Management Approach to the identification of operating segments which is to be based on internal reports that are regularly reviewed by the entitys Chief Operating Decision Maker (CODM) in order to allocate resources to the segment and assess its performance.

Indian GAAP Determination of Segments AS 17 requires an enterprise to identify two sets of segments (business and geographical), using a risks and rewards approach, with the enterprises system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments.

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IFRS
Segment profit or loss is reported on the same measurement basis as that used by the chief operating decision maker. There is no definition of segment revenue, segment expense, segment result, and segment asset or segment liability

Indian GAAP
Measurements Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the enterprise as a whole. Segment revenue, segment expense, segment result, segment asset and segment liability have been defined

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IFRS
IFRS does not define segments as either business or geographical segment and does not require measurement of segment amount based on entitys accounting policies, an entity must disclose how it determined its reportable operating segments and the basis on which disclosed amount have been measured

Indian GAAP
Conformity with accounting policies AS 17 requires that segment information must be prepared in conformity with the accounting policies adopted for preparing and presenting the Financial Statements of the consolidated group or entity.

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IFRS IFRS allows for discrete reporting of a component of an entity that sells primarily or exclusively to other pertaining segments of an entity.

Indian GAAP Discrete reporting AS 17 requires only those segments which sell exclusively or primarily to external customers to be deemed reportable segments.

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Jon A. Booker. (2009). Accounting: Information for Decision Making. In J. A. Booker, Accounting: Information for Decision Making. California: Tata McGraw Hills.

Ministry of Corporate Affairs. (2011, July 26). Accounting Standards. Retrieved July/August 2011, from MCA:

http://mca.gov.in/Ministry/pdf/Ind_AS17.pdf

Zee Entertainment Enterprise Ltd., (ZEEL). (n.d.). Annual Report from 2005 to 2011. Mumbai: ZEEL.
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