PANEL RECOMMENDS SUSPENSION OF MTM NORMS

India Inc may get 2-year relief over forex losses

This is super good news for the share market

Are we heading towards 4200 mark on Nifty going forward; with the crude oil now heading towards 72$ per barrel mark ahead of the US summer driving season??

Did you see my recommendation of Reliance Industries Ltd (The stock was recommended a day after Kotak Securities Ltd downgraded the scrip), RDB Industries Ltd, KEC International Ltd and Unitech Ltd among many such recent recommendations??!!

That is why I say, please do not go anywhere for ur investment decisions, just come to this blog to get solutions to your stock related problems; 100% Free of Charge. Also do not get fooled by the gimmick (tall and lofty talks) driven Paid Stock market advisory Services.....

By the way, what is the latest on Kohinoor Broadcasting Corporation Ltd??

Now buy in bulk Reliance Industrial Infrastructure Ltd (RIIL), U B Engineering Ltd and Sunil High Tech Engineers Ltd

Now do you remember the case of Pyramid Saimira Theatres Ltd (PSTL) and its notes on FCCB ??

To tell a little briefly, it is like this: The Company had raised USD 90 million in July, 2007 at 7.75% interest and @1.75% coupon rate redeemable in 2012 and convertible at the option of the investor @Rs.246.50 per share (as per latest trust deed). The company deployed these funds overseas investments and in overseas subsidiaries and the deployment was in dollar terms and the loand was in dollar terms. Therefore, the company has not incurred actual exchange loss on account of Rupee depreciation but as a matter of conservative accounting, the company has decided to fully provide for the probable exchange looses on MARK TO MARKET BASIS. THUS THIS LOSS IS NOTIONAL AND HAS NOT BEEN INCURRED. Consequently in Q3FY09, the amount of Rs.76.32 Cr has been provided for as an external loss towards foreign exchange.

Moreover, in the latest announcement, Pyramid Saimira Theatres has said: "The honorable High court of Madras has heard its writ application on 23.3.09. After the detailed hearing, the court ordered the following:

1. That the court has accepted the writ of mandamus and directed that the Income Tax Department should consider on merits the representation of the Company dated 9.3.09. (regarding the revised return).

2. The attachment the department has done should be restricted to Rs.26 crores only (the claim of the department) and the Company and the department should mutually agree as to the exact items to be attached for this Rs.26 crores out of the Rs.246 crores already attached.

What do all these suggest?? What to do with Crompton Greaves, Dish TV Ltd, and J P Associates?? (This portion is for the Paid Group Members only).

THE National Advisory Committee on Accounting Standards (Nacas), which is the final word on accounting policies followed by the Indian industry, has favoured suspending for two years a key rule that requires firms to mark-to-market foreign exchange assets and liabilities, a decision which comes as a victory for corporate India, as it sits down to draw yearly financial results.

The demand to suspend this rule, known in accounting circles as AS-11, was made by the Confederation of Indian Industry (CII) on grounds that it could severely distort the earnings of many companies. It was contended that this accounting standard, designed to address normal conditions, should be suspended for the time being, as the present market conditions were not normal.

India Inc may post better results if Nacas’ recommendations are accepted, as it would spare several companies from taking a hit to reflect the 27% depreciation of the rupee against the dollar in the past one year. Higher profits would mean higher tax collections for the government.

A similar debate is now raging in the US on whether the capital market regulator, Securities and Exchange Commission, should suspend mark-to-market accounting rule that has forced banks to report billions of dollars in asset writedowns. Nacas’ recommendations are usually accepted by the government. Nacas chairman YH Malegam declined to comment on whether the body, which was constituted by the ministry of corporate affairs, had asked for the suspension of AS-11 until April 2011.

The ministry of corporate affairs, which gives statutory force to Nacas’ suggestions through notifications, also declined to comment. Nacas consists of representatives from the ministry of corporate affairs, the Reserve Bank of India (RBI), Comptroller and Auditor General of India (CAG) and various chambers of commerce.

The decision to hold off implementing AS-11, which would have forced companies to mandatorily account their foreign exchange losses, was taken at a Nacas meeting held in Mumbai on Tuesday.

SAVING ACCOUNTS:

What is AS-11?

Accounting Standard-11 mandates MTM provisioning in the P&L a/cs for forex-related gains and losses. It moots forex assets & liabilities be recorded at a fair value on the date of preparation of balance sheet.

Why are cos against it?

CII wants suspension of this norm on grounds that it has distorted the earnings of many cos. It contended that this accounting standard, designed to address normal conditions, should be deferred as the present market conditions were not normal.

ICAI objects to Nacas plan

THE decision was strongly opposed by the accounting regulator, the Institute of Chartered Accountants of India (ICAI), said one official who attended the meeting.

ICAI, whose objections were overruled by the Nacas board, said it continued to maintain its opposition to suspend implementing AS-11. “We believe that an accounting standard should not be changed because of any change in circumstances. We are not interested in going for any changes in the regulation because we want consistency and prudence,” said ICAI president Uttam Prakash Agarwal, who was also present at Tuesday’s meeting. ICAI further said that with India’s accounting norms set to converge with the International Financial Reporting Standards (IFRS) by April 2011, the decision to suspend AS-11 will not be a prudent step.