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Section 211 of the Companies Act, 1956 states that every balance sheet and every profit and loss account of a company shall give a true and fair view and that they shall be in the form set out in Part I & II of the Schedule VI respectively. Schedule VI was introduced by Companies (Amendment) Act, 1960. Ministry of Corporate Affairs (MCA) had revised Schedule VI of Companies Act, 1956 (Act) and notified the same on 1st March 2011. The refreshed Schedule VI shall apply to all companies from 1st April 2011 onward.

Requirements of the Act and / or Accounting Standards will prevail over Schedule VI. Only vertical format is allowed.

All items of assets and liabilities are to be bifurcated between current and non-current.
The concept of schedule is eliminated. Hence information now needs to be furnished in the notes to accounts.
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Explicit requirement to use the same unit of measurement throughout the financial statement. Rounding Off: T/o less than Rs. 100 cr. : R/off to nearest hundreds, thousands, lakhs or millions T/o more than or equal to Rs. 100 cr. : R/off to nearest lakhs, millions or crores
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Structure of the Revise Schedule VI is as follows;

Number of shares held by each shareholder holding more than 5% shares needs to be disclosed. Shares allotted for consideration other than cash, buyback of shares to be disclosed for five years preceding the balance sheet date. Specific disclosures are prescribed for Share Application money.

Any debit balance in the Statement of Profit and Loss will be disclosed under the head Reserves and surplus.

Long term borrowings to be shown under non-current liabilities and short term borrowings to be shown under current liabilities, with separate disclosure of secured / unsecured loans. All defaults in repayment of loans and interest to be specified in each case. Sundry Creditors is named as Trade payables and there is no mention of micro & small enterprise disclosure. Current maturities of long term debt or finance lease are to be disclosed under other current liabilities.

In the Old Schedule VI, details of only capital commitments were required to be disclosed. Under the Revised Schedule VI, other commitments also need to be disclosed.

Fixed assets to be shown under non-current assets and it has to be bifurcated into Tangible & intangible assets. Tangible assets under lease are required to be separately specified under each class of asset. Current and non-current investments are to be disclosed separately under current assets & non-current assets respectively. Deferred Tax assets / liabilities to be disclosed under noncurrent assets / liabilities as the case may be.

Loans & Advances to be broken up in long term & short term and to be disclosed under non-current & current assets respectively.

Capital advances are specifically required to be presented separately under the head Loans & advances rather than including elsewhere. The term sundry debtors has been replaced with the term trade receivables. The Old Schedule VI required separate presentation of debtors outstanding for a period exceeding six months based on date on which the bill/invoice was raised whereas, the Revised Schedule VI requires separate disclosure of trade receivables outstanding for a period exceeding six months from the date the bill/invoice is due for payment.

Cash and Bank Balances have now been termed as Cash and Cash Equivalents. Balances earmarked as margin money against borrowings, etc. with more than 12 months maturity, each of these to be shown separately. Inventories Goods in transit shall be disclosed under the relevant sub-head of inventories. Misc. Expenditure (to the extent not written off or adjusted) shall now not be shown separately under head Other Current Assets
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The name has been changed to Statement of Profit and Loss as against Profit and Loss Account as contained in the Old Schedule VI. Revised Schedule VI format prescribes such below the line adjustments to be presented under Reserves and Surplus in the Balance Sheet.

As per revised schedule VI, any item of income or expense which exceeds 1% of the revenue from operations or Rs.100,000 (earlier 1% of total revenue or Rs.5,000), whichever is higher, needs to be disclosed separately.
In respect of companies other than finance companies, revenue from operations need to be disclosed separately as revenue from (a) sale of products, (b) sale of services and (c) other operating revenues.
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Net exchange gain/loss on foreign currency borrowings to the extent considered as an adjustment to interest cost needs to be disclosed separately as finance cost. Payments to Auditors should be disclosed under following heads - As auditor - For taxation matters - For Company Law Matters - For management services - For other services - For reimbursement of expenses

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Break-up in terms of quantitative disclosures for significant items of Statement of Profit and Loss, such as raw material consumption, stocks, purchases and sales have been simplified and replaced with the disclosure of broad heads only. The broad heads need to be decided based on materiality and presentation of true and fair view of the financial statements. In case of a company falling under more than one category, it shall be sufficient requirement if above requirements are shown under broad heads.

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Other disclosures - Earnings in foreign currency - Expenses in foreign currency - CIF Value of imports - Expenses in foreign currency (including dividend remitted) - Value of raw materials, spare parts and components consumed - Value of indigenous raw materials, spare parts and components consumed
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The format of Balance Sheet currently prescribed under Clause 41 to the Listing Agreement based on the Old Schedule VI is inconsistent with the format of Balance Sheet in the Revised Schedule VI. Till Clause 41 is revised, this issue to be addressed by companies as explained below;

For Half yearly results: companies will have to continue to present their half-yearly Balance Sheet based on the format currently specified by the SEBI
For Annual audited yearly results: Revised Schedule VI format, companies should use the same format of Revised Schedule VI for submission to stock exchanges as well.
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Disclosure as required under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is dropped. However it is desirable to show this disclosure as MSMED act mandates buyers of goods to give such information. Disclosure relating to managerial remuneration is also omitted. However the exercise for ascertaining the managerial remuneration will continue.

Disclosures of information relating to licensed capacity, installed capacity and actual production as per old Schedule VI are not required now. This is a welcome omission as companies can block this information keeping their rivals in dark.
Disclosure of Information on investments purchased and sold during the year is not required as per new Schedule VI. Maximum amounts due on account of loans and advances from directors or officers of the company.
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The revised Schedule VI intends to familiarize companies with Indian-AS / IFRS by using certain concepts such as current / non-current classification. The revised Schedule VI has eliminated the concept of schedules and such information will now be provided in the notes to accounts. This is as done when applying IFRS. Better presentation, disclosure is intended to facilitate better organised data for users of financial statement.

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Is the revised Schedule VI, based on Indian AS converged with IFRS?

Will the revised Schedule VI apply only to the companies covered under the roadmap for convergence with Indian AS? Whether the recent notifications of MCA granting exemption from certain disclosures are applicable on revised Schedule VI as well? Whether the Balance Sheet abstract and general business profile as contained in the old Schedule VI needs to be given?

Whether the Balance Sheet format required under Clause 41 would undergo any change?

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~~ Thank You ~~

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