New a/c rules to hit FMCG firms' revenues

New a/c rules to hit FMCG firms' revenues

Ind-AS, the new accounting standards that came into effect from April 1, might squeeze the revenues of fast moving consumer goods (FMCG) companies by up to eight per cent in 2016-17.

The key cause is deduction of sales promotion expenditure from the revenue figure, hitherto part of the profit & loss (P&L) statement under the earlier IGAAP accounting norms.

In the just-concluded June quarter, for instance, the top line of the country's largest consumer goods company, Hindustan Unilever (HUL), was affected by 2.6 per cent or Rs 214 crore under Ind-AS. Godrej Consumer Products’ revenue was squeezed 10.4 per cent.

Sunil Duggal, chief executive, Dabur India, said six to seven per cent of its FY17 revenue would be hit. “Some part of promotional expenditure, mainly below-line expenses, will be deducted from revenue, expected to be around Rs 600 crore,” he said.

Vivek Karve, chief financial officer, Marico, said: “On an annualised basis, sales will get restated downwards by approximately Rs 100 crore under Ind-AS. But, as the previous year's numbers are also restated, there is hardly any impact on year-on-year growth.”

At a time when companies are struggling to improve revenue growth, a readjustment of expenses in the P&L statement hardly bodes well for them, sector experts said. Many see an impact on margins, both operating and net.

Companies are also studying the possibility of contract manufacturing being considered as a finance lease, as opposed to an operating expenditure, under Ind-AS. This is key since mostFMCG firms have opted to have an asset-light strategy, choosing to outsource manufacturing to third-party entities. Experts say there might have to be a re-look at strategy. Read Full Story>>>

5 tax reforms India Inc wants from Budget 2016

With Finance Minister Arun Jaitley all set to present the Budget 2016 next week, all eyes are now on the tax reforms promised by Prime Minister Narendra Modi and Jaitley during their interaction with India Inc leaders at the Make-In-India week. Here are some of the top tax reforms Jaitley can look at

Read Full Article Over Here: Business Standard

Cognizant rings alarm bell for Indian IT services players

With Cognizant, which has so far defied the trend of moderate growth in information technology (IT) services sector, projecting lower growth in calendar year (CY) 2016, export-dependant Indian companies have a major reason to worry.

The Nasdaq-listed IT services company on Monday said it expects revenue to grow at 9.9–14.3 per cent, one of its lowest ever, and cautioned about spending cuts by the clients in financial services and healthcare sectors.

It has come as a surprise for many that Cognizant, which was known for best growth among its peers, has given outlook whose lower end trails the overall industry guidance issued by Nasscom. For CY16, Nasscom expects IT services to grow between 10-12 per cent, lower than the previous year.

Real Estate: Key expectations from Union Budget 2016

The Union Budget is an eagerly-awaited annual event which Indians follow closely, as the decisions and allocations announced by the Finance Ministry have great pertinence to both individuals and industries. The real estate sector is sensitive to many of policies that are announced both for various industries and individuals. The realty sector is just emerging from a prolonged and painful slowdown, and is looking for all and any signs of light at the end of the tunnel. This fact makes Union Budget 2016 all the more critical, and the real estate industry has many expectations from it.     

·Offer financial protection from project delays to home buyers

The Union Budget 2016-17 should pay specific heed to this pressing need. On purchase into an under-construction property, buyers can only claim tax benefits of Rs. 2 lakh after possession if construction is completed within three years. The benefits reduce to Rs. 30,000 if the builder delays construction beyond this - and they pay higher interest. First-time home buyers purchasing properties for self-use additionally pay rent.

Budget 2016: Realtors Seek Loan Restructuring, Tax Sops

Faced with acute slowdown in demand and delay in delivery of projects, realtors’ apex body Naredco today demanded tax sops for affordable homes and restructuring of bank loans.

 As part of its pre-budget Click Here recommendation to the government for revival of the sector, National Real Estate Development Council (Naredco) has sought infrastructure status for the housing sector, industry status of the entire real estate sector, which would help the developers to get bank loans at less interest.

 "We have submitted our pre-budget 2016-17 memorandum to the finance ministry and Housing and Urban Poverty Alleviation. We have demanded infrastructure status for housing and single- window approval for realty projects,“ Naredco President Parveen Jain told reporters here.