 I have not gone to the first slide so far. What it establishes? It establishes principles for reporting financial information about different types of products and services an enterprise produces and different geographical areas in which the enterprise operates to help the users of financial statements in better understanding to the performance of the enterprise as I gave you the example of without naming again Tobacco and the other products you can understand the performance of the enterprise where we are actually performing better and where we are not performing at all better assessment of the risks and returns of the enterprise if Tobacco goes off I am at a real risk of really closing down my business and making more informed judgments about the enterprise as a whole very frankly today even if you go to a bank for the loans they want this information from you know please produce the segmental information as to which of your segments is making profit and which of the segments is not making profits now if you look at the Bajaj itself Bajaj has the insurance Bajaj has the three wheeler also Bajaj has two wheeler also now three wheeler and two wheeler are two different segments all together if you ask me there is no doubt and insurance is a different segment altogether because these are different lines of business from that angle and these are applied in presenting general purpose financial statements general purpose financial statements mean when you prepare a profit and loss account and a balance sheet and a cash flow statement then you prepare this information but if you prepare some specific information like CMA data you have to give to the bank then you will not be applying the segmental information from that angle but whenever you prepare only balance sheet and profit and loss account in that particular case you will be preparing the segmental information wherever it is applicable or where the management wants to apply it even if it is not applicable but management wants that the segmental information to be generated the management can say okay generate the segmental information in the case of a single financial report contains now this is the important part now if of course in educational institutions I do not think that could be a situation but in the companies what happens is of course now in the private sector educational educational institutions this can also be one of the conditions I create a subsidiary in which I invest more than 51% of my capital or I control their composition of the governing body in that particular case if I am preparing both the standalone financial statements as well as the consolidated financial statement then the segmental information has to be prepared based upon the consolidated financial statements both of the of the subsidiary as well as the holding company not mandatory for small and medium sized and companies that I have already told you because it is applicable only to the level 1 organizations the standard defines the following terms business segment geographical segment reportable segment enterprise revenue segment revenue segment expense segment results segment assets segment liabilities now this you can read out and if you read out this and dissect it you will be able to know what does it mean it says business segment it is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services that is subject to now group of related products or services that is you are into the science education also and you are into the commerce education also it is a group of related products that is subject to risks and return that are different from those of the other business segments if the risks and returns are the same it is a single segment if the risks and returns are different then these are different business segments factors for consideration of the business segment nature of the product or services which I said to begin with nature of the product processes how you really proceed with that how do you produce that how you render that particular service that is very important type or class of customers of the product or services now if you are running normal courses a student comes to you but if you are running NDP courses in that case these are the already employed people who are coming to you the corporate people are coming to you so these are absolutely different class of customers or for the products or services which are coming to you methods used to distribute the products or provide the services if you have different channels of distribution suppose you outsource a particular activity in an in the other case you do it yourself you are running certain schools yourself and in the other case you have given it for franchises it does happen in the private institutions schools as well as universities that in certain cases you run it yourself and in the other case you run it through the franchisee whatever you are running through the franchisee is a different segment altogether to you because there you don't have any risk whatsoever because it is the risk of the franchisee he is your bound to get your money without a doubt so that that will be absolutely a different different kind of a segment geographical segment it is a distinguishable component of an enterprise that is engaged in providing products or services within a particular economic environment providing products or services within a particular economic environment what kind of economic environment as I said Russian block is different from your Europe block for that matter so that's very important economic environment is very important subject to risks and returns that are different from those of the components operating in another economic requirement and environments if the economic environment is the same absolutely not an issue within India I am my factory in Mumbai I am my factory in Delhi I may have two different geographical locations but I will not say that these are two different geographical segments but if I have one factory in India and the other factory in Libya or Iraq or Iran or Dubai in that particular case it will be considered to be two different geographical segments that's the point one is trying to make out and that is why I said that wherever universities are having certain offices abroad and you are running courses there all together there it becomes a different geographical segment all together factors to be considered similarity of economic and political conditions relationships between operations and different geographical areas proximity of operations if I am running within Gurgaw three different units at three different places in Gurgaw and it still is very much there is a proximity of the operation and it will still be considered to be one geographical segment rather than getting into too many special risks associated with the operations in a particular area yes people have been talking about it that if I have to run an operation in places like northeast at there were times probably it could be considered to be a different geographical segment all together because the situations are all together different rather than when I compare it while I am running that particular operation from daily for that matter but generally when you are within the same country you don't treat it that way but yes if you go abroad and then you are running it in that case it will become a different geographical segment and the underlying currency risks when I compare my parity with the Pakistan currency it is different when I compare it with Nepalese currency it is different when I compare it with US dollar it is different when I do it with the pound it is different pound it is different so that's very very important so that is where when I said when I am exporting it to Europe and when I am exporting it to US there could be two different geographical locations because of the currency risks involved in the two geographical locations for that reason management always has to find out what is my primary segment and what is my secondary segment when I talk of the primary segment what I am trying to say is whether my business segment is my primary segment or geographical segment is my primary segment please be with me on this particular point and I am just leaving it to you what can happen is because management wants to know this and believe me it is not for the auditor to challenge it it is for the management to say which is their primary segment and there can be situations where they say that to us both these segments have the same importance the geographical segment as well as the business segment but generally what happens is where the management does not lay down that kind of a matrix we always treat business segment to be the primary segment and geographical segment becomes the secondary segment but in the case of an exporter generally it is the geographical segment which becomes the primary segment if you ask me today all those people who are exporting particularly in the last one and a half year when the rupee we always treat rupee falling to be bad but you go to an exporter he says that he's making marry if you ask an exporter today he wants third front to come in because then the rupee can touch 70 he does not want the other government to comment because his benefit lies in because if he exports something if he exports something for a dollar what he will realize tomorrow may be 65 maybe said 66 maybe 67 if the third front comes in but yesterday itself the rupee has improved to 59.46 or whatever if which is the best possible thing to happen in the last few days exporters are very unhappy because from the exporter's angle the more the export and the more the crunch there is a volatility in the currency and in if the Indian currency keeps falling they stand to gain but if you ask an importer he says third front will be a disaster they don't want it similarly if you have a university abroad and you know that you can earn in the dollars there and then the remittance can come in India you will say that this situation should prevail because you will have the fee received abroad and when you remit it in India you will have it in dollars then geographical segment come becomes your primary segment generally it is the business segment which should be your primary segment and not the geographical segment which should be your primary segment so what it says is risks and returns are affected predominantly by differences in the products and services that produces if the main risks and returns are rising on account of the products and services in your case it is the product which will create the risk so into my mind if you ask me in all your cases that is the business segment which is going to be your primary segment and not the geographical segment unless you have the universities abroad somewhere unless you have educational institutions abroad somewhere unless you have given franchises to someone abroad there your receipts in India are lesser but from the receipts from your franchise they are going to be more in that case geographical segment will assume greater significance in your case than anything else and of course it says primary format business segment secondary format geographically internal organization and management structure of an enterprise and its system of internal financial reporting to the board of directors and CEO should be the basis for identifying the predominant source and nature of risk and differing rates of returns facing I leave this answer to you all together within your all organizations your management must be asking for some kind of information that what is the profitability of this mdp program what is the profitability of mcom program what is the profitability of the science program so all these so what is going to be your primary segment the product so business segment will become your primary segment for that matter and it is always we leave it to the management to decide we will not step in as charted accountants as auditors will we don't have to step in we will always be guided by the management because it is the management risk perception which is more important than anyone else's if the management feels that they will like to continue or discontinue or reform one of the business segments I think it is up to them and they must identify how to go about it and that is why to us then in that particular case the business segment will be a primary segment in those circumstances what is the significance of that to that I will come little later risks and returns are affected prime predominantly by the fact that it operates in different countries I think this is the point which I have already said I need not repeat it risks and returns are strongly affected both by the differences in the products and services and by differences in geographical areas in which it operates in that particular case where the risks and returns are strong in both the cases you will adopt business segment as the primary segment that is what I said a few minutes back reportable segment you see we all have been talking about segments now which segment is to be reported and which segment is not to be reported after all within your own segments there could be certain segments whether mdp needs to be reported or need not be reported separately there is a yardstick for this there are three yardsticks there are three options whenever you want to determine the reportable segment you have to apply three tests number one the test is whether this particular business segment say you are trying to judge your regular courses as a business compared to the mdp courses now whether this particular one this particular segment constitutes 10 percent of the total revenue external as well as internal what is internal it is very much possible that there is a case of transfer pricing which may not happen in your case I am very clear about it it will not happen in educational institutions but in the case of companies it happens I transfer my work in progress to some other department and there I charge the revenue so there this internal revenue also becomes a segmental revenue if the total if this constitutes 10 percent just one minute sir if my revenue from a particular segment is 10 percent or more of the total revenue that I have generated both to the external parties as well as internally in that case it becomes a reportable segment or if this is not satisfied then I go to whether this particular segment takes up 10 percent of my total assets or not whatever is the total amount of assets whether it accounts for my 10 percent of the assets or not if it accounts for more than 10 percent of the assets in that case also it will be accounted for but the third one is the most difficult as a part of the segment result segment result means loss or profit on account of a particular segment but that's not very important what is important to be understood is see I am not comparing apples with apples here I am comparing even apples with oranges suppose in the case of one there is a profit of say 100 in a particular segment now if other segments together give me either a loss of 1000 or either it is profit or it is a loss there could be certain segments which give me profit there could be certain segments which give me a loss okay now combined of the loss making or combined of the profit making if this particular segment constitutes 10 percent not necessarily of the profit making or loss making I may be making profit but there is another there are two more segments which are making losses but if my profit constitutes more than 10 percent of the losses combined being made by the others still it will become a reportable segment that's the point I'm trying to drive you home so that is why I said I'm not comparing apples with apples I'm comparing apples with oranges also in this particular case so what you have to remember is that if any of the three conditions is satisfied suppose your MDP program does not give you the turnover does not require the assets but if I look at the net result at the end of the period I find that MDP gives me a total profit of say 1000 and this particular segment gives me only say 50 then it does not constitute even 10 percent of that and if it does not constitute 10 percent of that then it is not a reportable segment but the MDP program becomes a reportable segment if and it will happen in many cases I can tell you that because generally MDP programs and specialized programs are all profit making programs compared to the others and they may constitute more than 10 percent of the they may not satisfy the criteria of the turnover they may not satisfy the criteria of the assets but they are likely to satisfy the criteria of 10 percent of the segmental result whether profit or loss that they will satisfy and that is why they will become a reportable segment so this part you have to be very clear about yes more than 50 departments and some departments are having very less students some some departments having more students means fee generation is different for the different departments it means we can go for the segmental reporting again I am saying one thing I am not going by the normal students at all no it's ultimately it's a resulting to the fee generation no no please try to appreciate that is my total you seen if you do not have the MDPs if you do not have the specialized courses then you have only single segment then you need not be worried about then you don't have to find out the reportable segment when you will be required to find out the reportable segment you will be required to find out the reportable segment when you are running MDPs you are running PHD you are running probably the specialized courses only then you will be required to do this. If you are running Mcom, Vcom or the other run-of-the-mail courses, you don't want to, you should not get into this particular part. You should say that you are a single segmental educational institution. Sir, in case we go for the segmental reporting even though, what is the harm in it? Why do you want to do that? Just to understand. You just generate your internal information. You need not get into this particular part at all. That's the point I am trying to advocate. You see, otherwise there is no end. Otherwise, every class, first year should be a different segment, second year should be a different segment, third year should be a different segment. I don't want that to happen. I am trying to make your life easier. I am saying that in your case, only when you run PhD programs, when you run MDP programs, when you run specialized courses, then try to get into the reportable segments or when you are having certain universities abroad, you are accredited institutions abroad, then you start looking at it, whether there are reportable segments or not. Otherwise, there is no need to look at it. That's the way I look at it. Anyone else? If university, sir, if university having two campuses, two campuses at different locations, then will it be considered as a separate segment? Geographical segment can be there, but not business segment. What will happen is that business segment is your primary segment and geographical segment will be your secondary segment and that geographical segment information you provide. The university, sir, this segment after your explanation, most of us, I mean, because when you go back and you apply, probably you will have more questions. Of course, we have campuses, but that is not a primary segmentation. You will have more questions at that time. Yes, I understand. Probably not right now. We have understood your earlier. And whatever is not a reportable segment is the residual part. And what you have to ensure one thing very clearly is what I said to begin with was that one is your segmental revenue from the external customer, whatever you get from the students. Suppose you are charging even to the other departments certain revenue. Now, that is your internal revenue, basically. For the purpose of determining reportable segments, you consider that. But what you have to ensure is that when you come to the reporting of the segmental information, 70, you have to make, you have to report the segmental information in a manner that 75% of the external customer revenue is reported. Why I am saying so? Please, there is a possibility because I am talking of 10%. And I am also talking of, you have to minimum make sure that 75% of the external customer revenue is to be reported. Now, suppose you have three of the segments. Now, in two segments, what happens is one segment constitutes 15%. One constitutes say 55%. Now, if this constitutes 15% of the external customer revenue and this constitutes 55% of the external customer revenue, you are stopping at 70%. But what this standard says is, then you go down, you forget 10% threshold. You should not be bothered about the 10% threshold in that case. You go down to the next one where it may be 7% or 8% or 9% and add that also and show that also as a reportable segment. Because ultimately what you have to make sure is that 75% of the segments have to be reported in a manner that whatever you receive from the external customers, that's for your students, you report at least those segments where 75% of such revenue is reported. You cannot report less than in the reportable segment less than 75% of the external customer revenue under any circumstances. So whatever you have got from the students, whatever way it has come to you or from the MDP programs, you should bring it in a manner that at least 75% of whatever has been received by you from them is being reported. And the rest, say 23% whatever is left, you can say it is the residual one. So far as the 75% is concerned, you will say this A segment, B segment, C segment by name, MDP, specialized courses or something else. The rest you can say residual courses or residual. And what you have to make sure is that if in profit and loss account, please try to be with me on this point, if in profit and loss account the turnover is say 100. In the reporting also it should be 100 only, it should not be 98 or 101. We have seen certain financial statements where people have committed this mistake. What can happen is that you only report say 78% plus 22% of the residual, but you have to be very clear that whatever has been reported there in the profit and loss account, in your case it will be income and expenditure account. Whatever has been reported in the income and expenditure account, the same turnover is reported here also. There should be no difference. And when we talk of the reportable segment, it talks of segmental assets also. It talks of segmental revenue also. It talks of segmental results. Segmental result is the net profit, if you ask me. But segmental asset or segmental liability is what? Any asset which is directly used in a segment, that is my asset. Any asset which can be reasonably allocated to me, that becomes my asset. And then suppose I am also receiving income by way of interest or dividend. I will not include that. Generally I don't include the income, the deposits with the banks or the investments with the various bodies as the segmental asset. I never do that if you ask me. I never include it unless my segment is such and which is not applicable to an educational institution. Let me be very clear. I will not include that asset until I have only financial activity. If I have only financial activity, in that case the income will also be included. I do not include in the segmental revenue the interest income and the dividend income. Unless I am a company, I am an enterprise which is dealing purely in the financial activity. And if I do not include income, I cannot include the asset also. You will agree with me one thing very clearly. If I do not include income, I will not include the asset also. And if I do not include the asset, I will not include the income also because the results have to be derived from there. So, this part you have to be very, very clear. Similarly, the segmental liability, deferred tax asset I will never include. I think you have done deferred tax asset so far or not? Have you standard AS 22? No. No. Deferred tax asset. Deferred tax asset is never treated as a part of the segmental asset. Similarly, deferred tax liability is never treated as a part of the segmental liability. So, this part you should be very, very clear of. Now, suppose you include something as a segment. In that case, whatever is payable in respect of that segment directly, that will be considered to be a part of the segmental liability. But at the same time, it is very much possible that you have to pay something which is indirect, not directly in respect of this particular segment. So, that will also be included as a part of the segmental liability. So, this particular part you should be very, very clear of, clear about. I can only say when you go back and you apply the standard, only then you will come to know what all is to be done. But please go through the definitions of segmental asset, segmental liability, segmental revenue, segmental result. Please go through these definitions and then try to apply it. But if you have any questions, I am willing to answer it out. You were trying to ask a question. The sponsor projects, separate sponsor projects that and we charge 50 percent overhead charges on that. And that can be treated as a segmental liability. If you want to treat it as a separate segment, you can. There is no doubt about it. In any government sector, in any institute, or in any private sector, in any institute, it has already been done. It has been shown in the reporting. Can we see the live example of this, whether we have this? So, you are trying to ask the question whether any of the institutions has done it or not done it. That is your question. That is the question. I can only tell you the year I was the president, the chairman of the institute. I was the one to go to Mr. Kapil Sibble and say that you need to implement the accounting standards to the various educational institutions. And I must compliment him. He took no time to call the secretary and said that I personally feel that it needs to be done because that will improve the corporate governance. If you ask me on their own, no institution would do it. It is clear about it. It is only when these standards will become mandatory and these standards are bound to become mandatory and you will not be listed in any case. But these will become mandatory on account of this 50 crore part or because of the 10 crore borrowing if at all anyone has taken from the banks or financial institutions. So, when this is going to happen, in that case these disclosures will start coming. I will be sure about it. But if to say today if you ask me I will be really hard pressed to tell you the names of any of the educational institutions which have done it. I don't think that I have many names to really give you out. Not even few of the names to give you out in respect they are off. But yes, there are certain private universities if you ask me who are doing who are showing it different geographical locations as the primary segments. Because that is what is happening in their cases and that is what is to be encouraged further even in the educational institutions which are more government oriented. Sir, this segment reporting is entirely with the presumption that the performance of the universities are measured based on profitability. It is not profitable, it can be like that to take decisions. Profitability I can find out from the income and expenditure account. Segment wise. It is not with regard to the overall profitability. It is with regard to the segmental profitability. Segment wise performance are measured in terms of profitability. There is no doubt about it. Are measured in terms of profitability whereas the purpose is enhancing the knowledge and it is somewhat abstract. Which cannot be easily measured. For example, some segment wise report shows that it is less in terms of revenue whereas it would have resulted in more publications, research, patents, etc. Without that, partially giving only the financial data about a particular segment may vise the picture, I feel. Moreover, in the selection of reportable segment also we are only taking financial factors. But I feel some physical factors like number of students, publications, faculty, etc. may be considered. Because as such, applying the financial performance I think is some two higher educational institutions. The objective of them which are entirely different I think is somewhat without modification applying this segment, this particular segment may not hold good, I feel. Whereas I may agree with you partly, not entirely. What you are trying to say is that this standard does not take into consideration the social aspects. Because there could be social compulsions to introduce certain courses and then because of certain social reasons you are able to introduce some of the courses. And you are also talking of that number of students, etc. could be a ground to really find out which we are not considering, we are only considering the financial parameters thereof. I can only say accounting standard is what it is, I cannot change it, you cannot change it. But the moment you start bringing in qualitative aspects or the social angle, in that case the judgment becomes absolutely subjective. And in any case I can tell you nobody forces, nobody on the earth can force the management to close down one of the MDP or specialized courses merely because it is running into losses. If the management is of the view that it is adding to the social value, the cultural values, they may continue with the course, nobody forces them to close it. Let me be very clear about it. In a private organization the considerations could be different. In a government educational institution the considerations are going to be different. It is only that it is giving you a parameter for judging the performance based upon the segment information. Rest is for the management to take the action not to take the action. Accountants cannot force that you need to do it under all circumstances. There is no way that we can say this. So, we leave it to you. So, most of the organizations, they get the government grants and they make expenditure out of government grants and revenues also they are. This revenue whether it is to be taken as turnover of the institutes because the entire revenue is adjusted by the government in the next year grant. Either they have to refund or it is adjusted in the next year grant. They cannot retain it. But the government gives you the grant. The government is given 100 rupees. We spend 100 rupees. We earn 20 rupees. Next year 20 rupees if not refunded 80 rupees only will come if the budget of next year is 100 rupees. You refund 20 rupees to them. No, we do not refund. We do not refund but next next next year. The profit. It is adjusted only. To me the turnover will be what you earn. The concept of turnover is little bit confusing in this sense. No. Very frankly even if you are receiving the grant let me give you an example. You will be receiving grant for what? Meeting the salaries of the staff members. Primarily. Let me say primarily it is to meet the salaries and to meet the running expenditure. But this running expenditure or the meeting of the salaries is to be otherwise met out of the receipts that you get. It is your receipt which is more important from the students and not the aid. Aid is not your turnover. Let me be very clear about it. It is what you get from the students. You get from the MDP which is a part of your turnover. The aid is not a part of your turnover. Aid is not a turnover. We cannot increase from that way also. No, it is fine. But whatever fee you receive that is a part of your turnover. Yeah, it is clear. That is as simple as that. But you cannot increase it. Income from operation only. Yeah. Income from operation. Fine. Whatever you receive from the students it is a part of your turnover. Simple. Whatever you receive building fee building fee is not a part of your turnover because building fee will go only to building fee because you will create a fund in respect thereof. Anything that you receive specifically for a particular purpose it is not a part of your turnover. Anything that you receive general which you can utilize anywhere else that is a part of your turnover. Let us be clear about it. Friend kind of revenues will be there. The organization may receive donations they may receive fees. Donation is a part of your turnover. Grant is not. Where it will find that these are part of turnover or these are not. Your gross receipts leave out the aid out of it. Because aid will be determined under AS-12. Okay. Ten percent of that income from operations only will be taken as total reporting. Ten percent of the total turnover plus if you are charging anything to your own departments anywhere. Again I am coming to that. Say there are segment one B C A B C if A charges something to B or B charges something to C or C is charged by A. That is also part of the turnover along with the turnover which you receive from the outside. When you get to begin with generally it will not happen in the government universities. It happens in the private organizations. So in your case ten percent will be of the receipt that you get from the students basically. Okay. Lastly which I would like to say is when you prepare segmental information also accounting policy that you follow for a particular segment will be the same that you follow for the enterprise as a whole. It is not possible that for the purpose of enterprise you follow an accounting policy which is absolutely different from the policy that you follow for the purpose of the segment. If in enterprise you follow the accrual system of accounting for the purpose of segment also you will follow the accrual system of accounting. So that part you have to be following follow for the purpose of the enterprise the same accounting policy you will follow for the purpose of determining the segment result also. That part you keep in mind. I think rest is all these are disclosures. Revenue from sale to customer segment revenue from transactions with the other segments. That is what I talked of the definitions because of that. Total carrying amount of the segment assets total carrying amount of the segment assets to tangible and intangible fixed assets depreciation and amortization for the period, significant as the non-cache expenses. Other disclosures? This is inter-segment transfers that was talking about the revenue which is to be derived there form. How to segregate the assets into, in between two different segments like if we use this lecture all for the beta students as whether PhD students and how to segregate value into two different segments. Based on the number of students, there is a reasonable basis for allocation. Can be allocated on the basis of fees collected also. Yes, you see the other all expenses can be allocated based on the number of students. There can be certain courses which are for three years, there are certain courses which are there for one year. Exactly. So you will have to find a reasonable basis on which this allocation of expense can be paid. Yes, sir. Okay. Thank you, sir. But you will have to disclose what is the basis. Yes, sir, yes. Thank you.