 like the other faculty colleagues, he is also very keen that proper practices are established and accepted and utilized by all educational institutions and as I said the first day this is only a beginning I would like each one of you to go back convince your directors and others that your institution should become a center for subsequent trainings and with Bakshi ji and our mission director Praveen Prakash will work to conduct such future training programs from IIT Bombay to thousands of our other colleges so in that sense you are the pioneering people will of course make available all the recorded sessions for not only your benefit but for the benefit of others I would have personally like to sit here and listen to him at least partly because it is a long time that I have heard him speaking in those board meetings but unfortunately I have to go out immediately after this so I told Mr. Bakshi ji that whatever happens I will come here, I will have the privilege of introducing him and then I will take you leave so friends let's welcome with a big applause and Amarjit ji Praveen thank you for accepting my pleasure sir all yours sir my pleasure good afternoon friends it's a real privilege to be amongst you this afternoon there are two topics which have been assigned to me one is with regard to the segmental reporting that is AS 17 and the other one is with regard to the related party disclosures we call them accounting standards but there is no accounting in them let me be very clear about it both these standards are disclosure standards most of the time the questions have been asked that why do we require these kind of standards and why should we call them accounting standards at all because even if you go to AS 20 that is with regard to the EPS or you go to the discontinuing operations that's the AS 24 these are all disclosure standards it has nothing to do so far as the accounting part is concerned even if you look at it internationally from that angle you will find earlier they used to call it IS international accounting standard they no more call it international accounting standards they call it international financial reporting standards because the disclosures are part of the financial reporting so if you really ask me these two are part of the financial reporting and these two standards can improve upon you are understanding the understanding of any reader of the financial statements to a very very large extent to a great extent but then at the same time I wonder what kind of an applicability it can have to the educational institutions like yours because wherever the government institutions are there where is the question of the related party but I will deal with that also to some extent but in any case understanding of any accounting standard is better and my humble request to you will be when we leave this hall you shouldn't leave with any kind of a doubt anything that you want to ask any number of questions that you want to ask please ask rather I will feel pleased if at any point of time I can tell you that I will get back to you tomorrow on the mail that would be the test of your questions if you really ask me the first standard is the segmental reporting that I am going to do that is the A17 now number one this is not a standard which is applicable to all the enterprises no it is applicable primarily to level one entities if you ask me and when we talk of the level one entities you must have already discussed it in the earlier session somewhere or the other if you are dealing with the accounts of any entity which has its equity or debt listed either in India or abroad or which has the plan by way of a board resolution already that they are going to get it listed in India or abroad even the debt the debentures are really issued and those are listed bonds are issued and those are listed or it is a case of a bank including a cooperative bank if it is an insurance company from that angle in that case also this is then it becomes mandatory applicable or if it is an enterprise you could have educational institutions here where the cash would lie if your turnover exceeds 50 crores or if you are borrowing exceed 10 crores in that particular case it automatically becomes applicable irrespective of the fact whether you belong to a listed category or not you are a bank or not you are an insurance company or not you are a mutual fund or not in that if your turnover is beyond a particular level your borrowings are beyond a particular level so far as the borrowings are concerned it can be in the crunchier itself but so far as the turnover is concerned it has to be in the last audited financial statements basically and to that also I will be coming but this turnover will not include the other income why I am trying to say so is suppose you have the gross receipts by way of the educational receipts you have the tuition fees you have the sports fees you have everything that is covered but when it comes to interest on the bank deposits that is not covered by this that be very clear so far as your receipts on account of educational receipts are concerned the tuition fees are concerned the sports fees are concerned any other receipt which is concerned which is primarily on account of the educational activity that will be covered suppose you have suppose you sold out some scrap or you have the bank interest coming in because of the various deposits that you have made that will not be considered to be a part of your turnover for the purpose of this 50 crore limit under those circumstances that you will have to exclude now the paramount question and where I will like to draw your kind attention is why this standard at all believe me this standard has tremendous advantage to understand the functioning of an enterprise for the purpose of the decision making for the purpose of a better understanding over the any enterprise or the educational institution from that angle and I can tell you you might agree that we are all single segment institutions we are all we can say that we are only dealing with the education and since we are dealing with the education I have only one segment and I don't have any other segment but I will be able to say something else at a later point of time look at the case of one of the biggest groups in this country I am not naming that if you look at its total profitability out of that 80 to 85% of the profitability comes out of a product on the packet of which is written cigarette smoking is injurious to health and all these hotels gigantic institutions that they have set up the gigantic projects that they have set up these are not giving them the profits if you really ask me the real profit comes to them from the tobacco activity and on that particular packet is written cigarette smoking is injurious to health now if I have to go to a bank if I have to go to the shareholder and I say I want to expand my activity with regard to the hotel industry they will say hold on to us hotel industry is not very pertinent we are more willing to finance you for the tobacco activity whereas if you look from the social perspective probably you don't know which one day one of the prime ministers or one of the chief ministers can get up and say we ban the tobacco products after all it happened in Haryana few years back that one of the chief ministers got up and said that I want to ban the liquor though the liquor was more available at that time rather it was available at your home rather than going to the shops that was the kind of the situation but the fact remains that this can be one of the situations another example that I can give you is there was one company which is also engaged both in the development of the software for educational institutions for the not only educational institutions alone for the parties accounting software all other kind of softwares but they are also into the education now if you look at their accounts their position is that both of their these segments one segment is the educational segment the other segment is the technical segment and the technological segment is dealing with the development of the software but if you look at both these segments both these segments are showing losses the company is still showing profits one of the questions can be asked is how is it possible if you look at their net profit net profit is net profit it is not a loss but if you ask for the information under the segmental reporting both the technological segment as well as the educational segment is still showing losses their main income is coming from what they have invested in the subsidiaries by way of a dividend or what they have invested in the banks it is coming by way of the interest or what they are earning by way of certain commission income etc etc I don't think that any shareholder invests in the company for that particular purpose no shareholder invests in the company for that particular purpose the shareholder invests in the company for the purpose of and it is a listed entity minded the shareholders at the time when the prospectors came in the shareholders have invested in this particular company for the purpose that their money their funds will be utilized either for the technological developments or for the purpose of the educational but if you look at the segmental disclosures it is absolutely the reverse way round so what I am trying to tell you is at times this can be a very very important information from the educational institutions perspective it is very much possible that you run run of the mill courses you are running graduation courses you are running post graduation courses but suppose you run the specialized courses and you will agree with me in the specialized courses the elasticity of the demand is absolutely different from the run of the mill courses not only that probably the profitability levels are different in the specialized courses there you charge on a different pattern and in the run of the mill courses you charge on a different pattern all together and if you go to the definition of the segments you will find the definition talking of different risks and returns the product or services might be the same but even if they have the different risks and returns probably this could be considered to be a different business segment all together I am talking from your perspective it is very very much possible that when you run the specialized courses one of your auditors can come turn around and say I do not agree that you are a single segment company and you continue to say we only are dealing with the education so we will not do anything else this is one of the debates that we have in the institute ourselves also whether we can keep on saying that whatever we do with regard to the student activity and the member activity is the same or not to my mind student activity is different from the member activity if you ask me we should have two different segments rather than one segment so what I am trying to explain you before I really get into the standard is what is the objective of the standard if you find that our specialized courses itself are not running into the profits where is the question of running those and why should I run those unless the specialized courses run into the profits they show segmentally profit into those particular segments I think you will like to say that I want to discontinue so far as the specialized courses are concerned this is probably the hallmark so far as this particular accounting standard is concerned and then you can have different educational institutions where you are multiple locations you are having multiple locations rather than having one location now if you are having location of an education you may not have but I am telling you most of the private sector educational institutions today have they have not only presence in India they have the presence abroad also for that matter now the moment you have the presence abroad you get into the geographical segments also because they are the risk of the foreign currency is different from the risk of the local currency the perception, the fee structure the profitability levels the returns are absolutely different from what you are earning in the local currency for that particular matter so what I am trying to explain you is it is not that it is totally not applicable to you you may have certain areas in which you can say probably this particular standard is also of some kind of an interest to you and you need to understand how to really reach what is the reportable segment and what is not a reportable segment from that angle and if it is a reportable segment what all you are going to report in that reportable segment all those things need to be taken care of any questions so far they are running many courses they are outside India so definitely you will have a position wherein you can say that one is domestic and the other is international you will have two different segments altogether take the case of air India I am giving you a parallel it may not be educational institution but I am giving you the parallel case or take the case of any airline when you run an airline which is domestic your risks levels are different when you start running it internationally your tariff structure changes your risk changes your foreign currency risk changes everything undergoes a change so those become two different segments and these are called two different business segments from that angle but in the case of IGNU it could be geographical segment also that can be the difference to that I will come little later there are great based courses there are great based courses online courses geographical boundaries are not there so in which segment it may be domestic, it may be international I think you have raised a very very pertinent point if you really ask me now the moment you have the web based you see you think of a particular organization which is running a normal trading business and which is running online business there is absolutely no boundary the risks could also be different because they are the IT risks the payment risks you have to really analyze all those so probably you can treat those as two different business segments altogether there is no doubt in my mind if I am in your place I will definitely treat them as two business segments I have been advocating even to the extent it may seem to be too far-fetched if you ask me when the standard came in as I had the privilege of heading even the accounting standard board of the institute for two years I have been of the view if I am a car manufacturing company and I am manufacturing one is Maruti 800 and the other is in the upper segment of 20 lakhs I think these are two different business segments to my mind in one if you increase the price slightly it does not make much of the difference people will still continue to buy Maruti 800 in the other segment if you raise the price slightly probably people go out of it so to my mind so one of the ways the Maruti could have said is that we are only car manufacturing we are only dealing into the automobiles and that is the end of it in my view it is altogether different so probably it can be a different segment from that end I have another question sir suppose one activity is there of any education of say examination which is conducted in India also and there are centers abroad also same examination, activity is one only now segments are two if you treat your foreign courses separate no I am talking about one examination then it is not a separate segment let me be very clear you have to have the business segment different you see when I talk of the business segment it is the same activity whether you treat as two activities or one activity examination is a subset of the entire process but whether you are that course can be treated as two activities or not my answer is no it is only one it is only examination that you are conducting outside some centers are abroad no but that does not make it two activities curriculum is the same curriculum is the same that is what I am saying the person is paying the same level and there is the risks and returns are virtually the same there is hardly any difference now from that angle we are having our chapters abroad as an institute but we do not treat it as a separate segment under any circumstances they are probably if you are an exporter and you are also dealing locally you have two different segments one is the export segment and the other is the domestic sale segment because your customers are different and the moment you get into the foreign currency part altogether as a customer in that case the risk if you have looked at the Indian scenario in the recent past there are companies which have booked losses derivative losses of 400 to 1000 crore rupees in one year whereas in local currency you have not booked any loss 25% they can sell it in Indian market again the segments are you can treat it I can tell you that whatever is your domestic product you see EOU under the law is permitted to sell specified percentage of the product locally but your local sale is different from your export sale again two segments departments will be separate segments for courses no it is not a department these are the courses these are the courses which have to be you see what is important is that if you are running different courses altogether in the same department you might be running two different courses so if you are running these different courses under the same department where the risks and returns are altogether different the product is different the customers are different in that particular case it becomes a different business segment if you are having normal physical teaching and distance learning education these are two different segments very clearly very very clearly because your entire process changes your customers change basically if you look at me if you look at it the student pattern undergoes a change the students who are opting for the distance learning a different class compared to the people who opt for the physical teaching can you please repeat your reply regarding courses and department segregation you see if you are running say science education you are running commerce education but you can say we are educational institution for that angle so it could be construed as a single segment enterprise as an institution but if you have presence abroad or say one of the say commerce you can talk of commerce department they run besides running the courses on B-com or M-com they also run on export management at separate course and there the fee levels are absolutely different you charge maybe to somebody 20,000 30,000 40,000 the mode of apprentice is different that could be construed as a different segment not that one is a science department and that is a commerce department so these will be considered as a different segment that is not going to happen that means the courses are going to be the product it is the product which is more important when I go to the definition of the business segment you will find it is referring to any product or service which is identifiable in any case and if you can come to a product where the process of production etc is the same it is one segment if the channels of distribution can be different this can be a different segment from that angle like I was talking about exports basically now in export you will have absolutely different mode of apprentice so far as selling part is concerned compared to the other part and when you go to the geographical segments there it is the economic environment which is going to be different now if you are exporting within even that export I can tell you we have a situation if I was exporting to Libya there is a Russian block there is a European block and there is an American block these three different blocks could be considered as three different segments because the risks of the currency in all the three different blocks are going to be absolutely different the political environment in all the three blocks is going to be absolutely different so that is where it matters ultimately we are having separate community college where community colleges where constituent colleges will be there which deals with some vocational courses vocational courses and run of the mill these can be two different segments altogether I will try to encourage you to show more segments if you really ask me because as a management you will be better place to take decisions if you are able to identify different segments bring out segment results segment assets segment liabilities differently then you can take a better decision whether to continue with it or to discontinue the same in technological institute where btech mtech phd mba phd could be considered to be different but not the btech or mtech if I am running bcom or mcom it is more or less the same but phd is something different mba mba could also be the same if you run bba and mba to my mind it is more or less the same to my mind still it is the same but phd is altogether a different preposition again I am coming to it is not merely the fee structure because in bcom you could be charging may be 1000 rupees and in mcom you could be charging 1500 rupees it does not mean that these are two different segments the product the customer are more or less the same but wherever the products are more or less different now phd is absolutely a different product it is not the same product there the emphasis is not on a degree the emphasis on a research part basically the research findings and getting into the doctorate part thereof and then coming out with a particular document and the fee levels are absolutely different rather some of the people who are doing doctorate may be getting the stipend also may be getting some kind of a scholarship so there the entire preposition is different compared to the normal courses sir most of the educational institutions apart from doing education they are involved in research and development getting projects and giving consultancies all should be different that is altogether a different project definitely a different segment you see if as an institute I personally tell you we generate we produce chartered accountants but on the other side of it if we do undertake some project for conversion from single entry to double entry it is definitely a different segment there is no doubt in my mind project is different and teaching is altogether different these are absolutely different segments there is no doubt sir certain services in universities its very difficult to universities normally have a publication unit universities have a sophisticated analytical unit these are normally considered auxiliary services so under this segment reporting will these be treated as separate segments to me probably know though I have been encouraging if as a university I am not supposed to produce some kind of boats for the students I will still treat it as a part of the educational system and I will of course I may show it in the profit and loss account differently the purchase material and the sale material in respect thereof but I will still treat it to be the same segment see there are two kind of things which you have to be very clear about one is when you have different segments and one is different disclosure has to come by way of the AS 17 or now even certain disclosers would be required by the companies act wherever it is a company or alternatively you will be disclosing certain things in the profit and loss account now if you are receiving tuition fee it is a normal receipt but if you sell off some of your fixed assets and you make a profit out of that then the profit has to be shown in the profit and loss account but it does not become a different segment similarly when as an educational institution I develop certain literature and I sell it and I charge for it probably it is not a different segment but I will be showing it differently sale of the literature so to that extent that will prevail in case of consultancy we are receiving as well as consultancy I have already answered that question if you are undertaking consultancy along with the educational part then it is a different segment books of accounts remain the same please no difference as I said it is not an accounting issue this entire accounting standard is not an accounting issue it is a disclosure issue what you are supposed to do later on is to find out which are the reportable segments let me complete the standard at that time I will be able to answer your question but I am just you have preempted me so I will answer it right now in a different manner you can be sure about it that in those circumstances you will have segments different segments but those different segments you can have a memoranda record if you want to maintain but not different books of accounts books of account remain the same how do you maintain and when they are all in common what do you expect what are the opportunities and experiences that you come in executive development programs and MBA these are two different segments let us be very clear about it there is no doubt about it but what is important to be understood there is that the moment you start receiving fee for the MDP programs you will show it as MDP receipts and all the expenses link there will you will debit to that and you will be able to reach the profitability in respect thereof the only difference will be that in the books of account you will have direct expenses and direct incomes whereas when you come to the segmental reporting you will have to identify their segmental assets and segmental liabilities and also probably which has been allocated even for the MDP program please try to appreciate one thing it is not only the teacher whom you pay who is really getting paid for it even certain peons even certain other staff is there he may not be rendering entire service for the MDP program but part of his time might have gone there so on a reasonable basis you will attribute to that and show as a part of the segmental information to that I will come later ok may I ask you one question sir will there be any impact on balance sheet for this S17 no impact on the balance sheet no impact on the profit and loss account it is only an additional disclosure it is only from the perspective that the reader more than the reader your own management I will come to that particular part also we like to find out which segment is contributing and which segment is not contributing and any segment which is not contributing why to continue with that as simple as that see ultimately Maruti 800 has been phased out you ask me why there should be a reason once Maruti came to a conclusion that segment is not giving me the profit enough profit in terms of the resources that I have deployed probably they have discontinued with it that is how it happens anyone else but I am really delighted by the number of the questions which have come in I never thought that on segmental reporting in educational institutions so many questions can come in yes sir so I understand that these universities most of them are grantee universities salaries most of the central universities are grantee universities we depend on grants from the government grants okay but within the university there are expenses which are outside the grants like the award funds and nowman funds we call instituted by in memory of by any of the prominent citizen or any of the prominent instituted to give an award to any student so these are outside the grants so these are reported separately but this is not segmental part these are reported it is a fund please try to appreciate so anything which is not from the grants are reported separately I am pre-empting your question and then there are the university also yes all the departments of the university depends on grants I fully concur but within them they run self-financing courses also so these self-financing courses also are reported separately but finally they amalgamate in the same balance sheet both courses I have already said if you feel that these are specialized courses self-financing which have different takers from the normal courses that you run probably you can treat those as different segments I have already said I have already said but so far as the other part is concerned that you talked off suppose I receive sports grant from the student itself so those comes in the fees those are fees the fees is the income of the university not the income of that particular self-financing course absolutely whatever you receive against that that will be considered to be your segmental revenue and whatever you expand against that that will be considered to be your segmental expenditure but in addition there too you will still have certain expenditure which you will have to allocate to those expenses to reach the correct segment result we have nursery to phd nursery to phd we have art and culture sculpture department we have science we have literature we have music be it and amade how will segregate segment I will be there I think your question is the toughest of the lord that I have got so far you see the point that you have raised is you have the music section you have the science section you have the commerce section I still repeat probably to my mind these may not be different segments these will still be a part of my educational segment because the takers are the normal ones but yes if music is absolutely a specialized course that you are running and there is no degree that you award for that in that you may be able to treat it as a different segment altogether but how to reach that segment result I will be able to come only when I proceed because I have to tell you how to reach that segment result I am not able to proceed on that no sir I will reach the segmental report how I will segregate it segment I will show it in which segment it will come that I am asking I will definitely come to that when I come to the allocation part but allow me to proceed no sir not allocation whether nursery will separate segment nursery and masters we have nursery we have secondary okay what you can do is you can have nursery as one primary as another one secondary as another one and then the other one you can have those kind of segments if you like it satisfies okay can we move on okay