ARTICLE 1

Indian auto manufacturers report mixed September sales results

EXPLAIN THE TOPIC

The topic discusses the mixed sales results reported by Indian automobile
manufacturers for the month of September. Here's an explanation of the key points:

 Overview of Sales Results: Indian automobile manufacturers, including major

companies like Maruti Suzuki India, Tata Motors, Mahindra & Mahindra, Hero
MotoCorp, TVS Motor Company, Eicher Motors, and Volvo Eicher Commercial
Vehicles, have released their sales figures for September.

 Performance of Maruti Suzuki India: Maruti Suzuki India, a leading player in the
Indian automobile industry, reported growth in total sales. However, it fell short
of Street estimates. Notably, there was a decrease in mini segment sales, but
this was offset by a significant increase in the utility vehicles segment.

 Tata Motors' Performance: Tata Motors experienced a decline in domestic

passenger sales. Still, it outperformed analysts' predictions, mainly due to the
positive performance of its electric vehicles (EVs). Commercial vehicle sales,
however, were lackluster.

 Mahindra & Mahindra's Sales Increase:Mahindra & Mahindra reported an

increase in total sales, surpassing estimates. The company's performance was
driven by robust demand across various segments.

 Future Outlook:The article concludes by mentioning that it remains to be seen

how these manufacturers will navigate the evolving market landscape and
changing consumer preferences in the coming months. This emphasizes the
uncertainty and dynamic nature of the automotive market.

DISCUSS

In September 2023, Indian auto manufacturers reported mixed sales results. Maruti
Suzuki India observed overall sales growth but fell short of Street estimates due to a
notable decrease in mini segment sales, which was offset by a significant increase in
utility vehicles. Tata Motors faced a decline in domestic passenger sales but
outperformed analysts' predictions, driven by success in electric vehicles despite
lackluster commercial vehicle sales.

Mahindra & Mahindra exceeded sales estimates, benefitting from robust demand
across various segments. Hero MotoCorp projected strong future demand, while TVS
Motor reported solid performance in the two-wheeler segment. Eicher Motors' Royal
Enfield met analysts' expectations, and Volvo Eicher Commercial Vehicles noted an
increase in total sales.

These results come amid a challenging market environment for the Indian automobile
industry. The article emphasizes the need for manufacturers to navigate evolving
landscapes and changing consumer preferences in the upcoming months.

COMMENTS

 Identifying Strengths and Weaknesses: By segmenting sales statistics,

organisations may see which product categories or business units are performing
well and which are struggling. For example, if Maruti Suzuki India had a decline
in the micro sector but an increase in utility cars, segment reporting would
emphasise these patterns.

 Segment Decision -Making : Segment reporting helps businesses to make

strategic decisions based on the performance of particular segments. For example,
if Tata Motors observed a drop in domestic passenger sales while outperforming
in electric vehicles, this may affect future investment decisions and strategic
emphasis.

 Investor and Analyst Insight: Investors and analysts scrutinise segment

reporting in order to get insights into the health of various components of a firm.
Positive success in one area may cancel out negative performance in another,
producing a more nuanced picture of a company's overall financial health.

 Stakeholder Communication: Companies utilise segment reporting to convey

their performance to stakeholders in a more transparent manner. It assists
management in communicating the reasons for overall financial outcomes as well
as outlining strategic goals for development or expansion.

 Monitoring Trends and sector Dynamics: In a difficult market situation, such

as the one described above for the Indian car sector, segment reporting is critical
for monitoring trends and industry dynamics. It enables businesses to react to
changing consumer tastes and economic situations by focusing on growth-
oriented areas.
 ARTICLE 2

Deficient disclosures: Audit regulator NFRA asks Mahindra Holidays to review

its ‘segment reporting’ policies

EXPLAIN ABOUT THE TOPIC

The topic revolves around the National Financial Reporting Authority (NFRA)
directing Mahindra Holidays Resorts India Limited (MHRIL) to conduct a thorough
review of its accounting policies and practices related to segment reporting. Here are
the key components:

 Directive by NFRA :The National Financial Reporting Authority has instructed

MHRIL to review its accounting policies and practices, particularly in the context
of segment reporting.
 Deficiencies in Accounting Disclosures:NFRA identified deficiencies in
MHRIL's accounting disclosures, prompting the need for a review. These
deficiencies may include lapses or inaccuracies in how MHRIL reported its
financial information.
 Specific Issues Raised:The complaint highlighted that MHRIL generates
significant revenues through the Annual Subscription Fee (ASF) but does not
report it as a separate operating segment, as required by Ind AS 108. This lack of
segmentation could lead to a lack of transparency in how ASF charges are
determined and utilized.
 Impact on Promised Obligations:The article mentions that MHRIL does not fulfill
its promised obligation of providing a one-week vacation to members due to non-
availability of rooms. This, even though rooms for the same duration could be
booked through other channels as non-members. NFRA concluded that these
issues impact the implementation of accounting standards.

DISCUSS

The National Financial Reporting Authority (NFRA) has instructed Mahindra

Holidays Resorts India Limited (MHRIL) to conduct a comprehensive review of its
accounting policies and practices related to segment reporting. The directive comes
after the NFRA identified deficiencies in MHRIL's accounting disclosures. MHRIL is
required to make changes aligning with the requirements of the Companies Act 2013
and SEBI LODR regulations, completing the review process by June 30, 2023. The
NFRA's order follows a petition filed in the Delhi High Court by Brigadier Vivek
Kashinath Chhatre, alleging irregularities, including accounting and auditing issues, in
MHRIL's operations. The issues raised include a lack of transparency in reporting
revenues from the Annual Subscription Fee (ASF) and MHRIL not fulfilling its
promised vacation obligations to members. The NFRA's order emphasizes proper
documentation of the review and changes, including the Chief Operating Decision
Maker's monitoring and control activities. MHRIL and its statutory auditor are
required to report separately to NFRA by July 31, 2023. NFRA will further evaluate
the reports and take necessary actions as per existing provisions of the Companies Act
2013 and NFRA Rules.

COMMENTS

 Identification of Revenue Sources:Segment reporting allows for the

identification of different revenue sources within a company. In this case, the
issue raised is related to the Annual Subscription Fee (ASF) not being reported as
a separate operating segment. Segment reporting would have highlighted the
importance of ASF as a distinct revenue-generating segment.

 Transparency in Operations:The lack of transparency mentioned in the article,

especially concerning the determination and utilization of ASF charges, could be
addressed through segment reporting. Detailed reporting on each segment
would provide clarity on the financial operations, helping stakeholders
understand the basis of charges and their utilization.

 Compliance with Accounting Standards:Segment reporting is essential for

compliance with accounting standards, such as Ind AS 108. If ASF is a significant
source of revenue and constitutes a distinct business segment, failing to report it
separately could be a violation of accounting standards. Clear segment reporting
ensures adherence to accounting regulations.

 Impact on Financial Performance:Segment reporting would reveal how the

issues mentioned, such as not providing promised vacations and the impact on
members, are affecting specific segments of MHRIL's operations. This
breakdown allows stakeholders to understand the financial implications and
operational challenges in each area.

 Decision-Making and Strategy:For management and investors, segment

reporting aids in decision-making and strategy formulation. Knowing the
performance of individual segments helps in allocating resources efficiently,
 identifying areas for improvement, and developing targeted strategies for
growth.

 Documenting Changes and Monitoring:As per NFRA's directives, documenting

changes in accounting practices and reporting, especially at the Chief Operating
Decision Maker’s level, is crucial. Segment reporting provides a structured way
to document these changes and monitor them at both aggregated and
disaggregated levels.

 Verification by Statutory Auditor:Segment reporting facilitates the verification

process conducted by the statutory auditor. The auditor can assess the changes
brought about in accounting practices and ensure compliance with accounting
standards, contributing to the overall transparency and integrity of financial
reporting.

 Reporting to Regulatory Authorities:When regulatory authorities like NFRA

intervene, segment reporting becomes a vital tool. It enables companies to
report specific details about each segment's performance, changes made, and
the impact on financial statements, as seen in the case of MHRIL.