India Inc's outbound M&A deals at $21 bn during Apr-Sep: Assocham

New Delhi: Led by Bharti Airtel, India Inc's outbound mergers and acquisition (M&A) deals tally rose to $20.76 billion in the first six months of the current fiscal from a meagre $527.8 million in the previous year, reports PTI quoting a study.

"The rise in outbound deals provides clear evidence that the Indian industry is consolidating, and at the same time aggressively working on global expansion," the study by the Associated Chambers of Commerce and Industry (Assocham) said.

Total 59 outbound M&As took place during April-September 2010-11 against 27 in the same period of the last financial year.

The study said the total number of M&A deals (outbound, inbound and domestic) increased from 86 in first half of 2009 to 141 during April-September 2010. Of the 141 M&A, 68 were domestic deals and 14 inbound.

In value terms, the overall M&A deals rose 345.16% to $52.6 billion during April-September 2010 from $11.8 billion in the year-ago period.

The major mergers and acquisitions occurred in telecom, metal and mining and energy sector, the chamber said.

Among the major outbound deals during the period India's telecom major Bharti Airtel completed a deal to buy Kuwait-based Zain Telecom's African business for $10.7 billion.

In metal and mining sector Adani Enterprises, India's largest importer of coal, bought coal mine assets in Queensland from Australia's coal-to-liquid company Linc Energy for $2.7 billion.
 

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Pantaloon: On top of the piling debt burden, its auditor has pointed out to wrongful treatment of some expenses

The retail giant’s profits may be hurt as it adopts IFRS from FY12, which involves making provision for customer loyalty programs. Some auditor qualifications in its accounts are also a cause for concern

The piling debt burden may not be the only worrying aspect for shareholders of Pantaloon Retail. What could raise eyebrows higher is the treatment of certain expenses by the retailer, which has also attracted qualifications by its auditor. And with the mandatory migration to International Financial Reporting Standards (IFRS) just round the corner, the company could possibly get hit slightly on its bottom-line. 

Several wrongful treatments in the books of accounts of the company have even led its auditors to make qualifications in their report, according to a report by BRICS Securities. In the first instance, Pantaloon's auditors pointed out that the company, in its consolidated financials for the year ended 30 June 2009, recognised deferred tax assets by certain subsidiaries and joint ventures amounting to Rs46.4 crore, which led to profits being reported that much higher.

The report also points out that the company revised its method of valuation of finished goods for the year ended 30 June 2008, and that the same has been adjusted against brought forward balance in the profit & loss account. In doing so, reported profit for this period was higher to that extent.

The report has also found that there is a significant variation on treatment of expenditure on brand development between Pantaloon and its peers. Pantaloon, which spends a substantial amount on advertisements has capitalised the expenditure incurred on the same. However, none of its peers have the same practice. In fact, Pantaloon's auditors have qualified their report stating that "capitalising brand expenditure and treatment of royalty and advertisement expenditure as pre-operative by certain subsidiaries is not in accordance with accounting standards".

BRICS Securities points out in the report that Pantaloon may need to provide for its loyalty programs under the IFRS since over 50% of its sales come from loyalty card members. "With a higher proportion of sales from Green card members, Pantaloon will have to make provision for its loyalty program which will impact net income," says the report. Currently, provisions in the Indian Accounting Standards do not require companies to account for rewards accrued under loyalty programs. 

However, from fiscal year 2012, companies with a net-worth exceeding Rs1,000 crore will have to migrate to the IFRS, which includes provision for customer loyalty programs. Pantaloon's management, however, has signalled that they may not be required to make any such provisions as their program does not provide any freebies for shopping at their stores and only gives discounts.
 

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COMMENTS

Nagesh KiniFCA

6 years ago

suggest you forward this report to the professional development committee of the Inst of CAs of India to get the reaction of the auditors' apex regulator and Union Ministry of Corporate Affairs too.

k a prasanna

6 years ago

The future group is a bubble. It will burst one day.

Nagesh KiniFCA

6 years ago

pantaloon accounts - another case of corporate mis-governance!
what are the mandatory responses in the directors report to the qualifications, more particularly what has the audit committee to say? is it a cut, paste and copy repeating what appeared in the earlier report?

REPLY

nagesh kini

In Reply to Nagesh KiniFCA 6 years ago

already commented a little while ago.

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