Sectors impacted by Schedule VI :Business Line

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Infrastructure, real-estate and airlines could be some of the sectors that could feel the heat of these changes more, say experts from audit firms we spoke to. For example, land for real-estate companies is generally considered part of inventory and treated as a current asset.

However, if the company is holding the land for capital appreciation and has not yet earmarked it for any project, it is to be classified as a non-current asset. While many real-estate players already follow this practice, making this method of disclosure into a norm could impact the others who don't.

Moving out of such land banks will bring down their current assets and the current ratio could turn bad.

Similarly, airlines, which have long due recoverables and at the same time loans whose repayments have been demanded by banks, will see their current assets go down and their current liabilities move up.

Some grey areas also creep in. The new Schedule VI treats assets expected to be realised within twelve months after reporting date or those held primarily for trading purposes or those expected to be realised/consumed within the normal operating cycle as current assets.

Going strictly by this definition, slow-moving finished goods could still be classified as current assets since they are held for trading purposes.

Similarly, take the example of a developer, whose operating cycle will definitely be more than, say, an FMCG company.

If he has taken a term loan for three years and his normal operating cycle is four years, this loan will then have to be classified as current