Exemption to certain classes of companies from disclosing in their profit and loss account from certain information in terms of Part – II of Schedule – VI

Sl. No.

Class of companies

Exemptions from Paragraphs of Part-II of Schedule-VI


Companies producing defense equipments including space research

Paragraphs 3 (i)(a), 3(ii)(a), 3(ii)(d), 4-C, 4-D(a) to (e) except (d).


Export oriented company (whose export is more than 20% of the turnover)

Paragraphs 3(i)(a), 3(ii)(a), 3(ii)(b), 3(ii)(d).


Shipping companies (including Airlines)

Paragraphs 4-D (a) to (e) except (d).


Hotel Companies (including Restaurants )

Paragraphs 3(i)(a) and 3(ii)(d).


Manufacturing companies / Multiproduct companies

Paragraphs 3(i)(a) and 3(ii)(a).


Trading Companies

Paragraphs 3(i)(a) and 3(ii)(b).


Concerned requirements as to Profit and loss account (Ref Part-II of Schedule – VI):

Part- II of Schedule VI (herein after referred as “Part-II”) provides for “requirements” as to Profit and Loss Account. Part-II serves as a guiding factor as to disclosure requirements in a Profit and Loss A/c and the same is achieved via requisite disclosures by means of P&L  A/c and Notes on accounts. Disclosures via P&L A/c and Notes on accounts are complementary to each other.


Para – 3(i)(a)

The turnover that is, the aggregate amount for which sales are effected by the Company, giving the amount of sales in respect of each class of goods dealt with by the company, and indicating the quantities of such sales for each class separately.

The requirement is disclosure of turnover (aggregate amount of sales) for each class of goods along with quantitative details.

Para -3(ii)(a)

In the case of manufacturing companies –

(1) The value of the raw materials consumed, giving item-wise break up and indicating the quantities thereof. In this break-up, as far as possible, all important basic raw materials shall be shown as separate items. The intermediates or components procured from other manufacturers may, if their list is too large to be included in the break-up, be grouped under suitable headings without mentioning quantities, provided all those items which in value individually account for 10% or more of the total value of the raw materials consumed shall be shown as separate and distinct items with quantities thereof in the break-up.

Value of raw materials consumed, item wise details, and respective quantities are required to be disclosed.

While providing break-up all important raw materials shall be shown separately. Para 3(ii)(a)  provides  if list of raw material is too large for break up purpose, items may be grouped under the suitable headings without any mention of quantity. However, an item which account for 10% or more in terms of total value of raw materials consumed is required to be disclosed as a separate and distinct item with quantities.

[2] The opening and closing stocks of goods produced, giving break-up in respect of each class of goods and indicating the quantities thereof.

Goods produced (i.e. finished goods) disclosure requires giving details of opening stock and closing stock with quantity. The disclosure shall be in respect of each class of goods produced during the reporting period under consideration.

Para 3(ii)(b)

In case of trading companies, the purchases made and opening and closing stocks, giving break up in respect of each class of goods traded in by the company and indicating the quantities thereof.

Like Para 3(ii)(a) deals with Manufacturing company, Para 3(ii)(b) deals with Trading companies.  Disclosure covered by this Para is value and quantitative details of opening stock, purchases made during the reporting period, and closing stock of each class of goods traded in by the company.

Para 3(ii)(d)

In case of companies, which falls under more than one of the categories mentioned in 3(ii)(a)/(b) and (c) above it shall be sufficient compliance with the requirements herein if the total amounts are shown in respect of the opening and closing stocks, purchases, sales and consumption of raw materials with value and quantitative break-up and the gross income from the services rendered is shown.

This Para addresses the compliance issue when a company falls in more than one category, for instance – a company having business of manufacturing and trading. In such a case this Para provides that if such companies disclose value and quantitative details of closing stock, purchases, sales and consumption of raw materials, the same will be regarded as proper compliance of the disclosure requirements.     

Para 4-C


In the case of a manufacturing companies, the profit and loss account shall also contain, by way of a note in respect of each class of goods manufactured, detailed quantitative information in regard to the following, namely –

a)      The licensed capacity (where license is in force);

b)      The installed capacity; and

c)       The actual production

Note 1: The licensed capacity and installed capacity of the company as on the last date of the year to which the profit and loss account relates, shall be mentioned against item (a) and (b) above respectively.

Note 2: Against item (c), the actual production in respect of financial products meant for sale shall be mentioned. In cases where semi-processed products are also sold by the company, separate details thereof shall be given.

Note 3: For the purposes of this paragraph, the items for which the company is holding separate industrial license shall be treated as a separate classes of goods but where a company has more one industrial license for the production of same item at different places or for expansion of the licensed capacity, the item covered by all such licenses shall be treated as one class.

Para 4-C specifically deals with “capacity and actual production” disclosures in case of manufacturing companies. Disclosure is prescribed by means of a note for each class of goods manufactured by them. Further, the notes provided by Para 4-C are self explanatory and does not give any room for confusion.    

Para 4-D

The profit and loss account shall also contain by way of a note the following information, namely—

[a] value of imports calculated on CIF basis by the company during the financial year in respect of—

1)      Raw materials;

2)      Components and spare parts;

3)      Capital goods;

[b] expenditure in foreign currency during the financial year on account of royalty, know how, professional, consultation fees, interest and other matters;

[c] value of all imported raw materials, spare parts and components consumed during the financial year and value of all indigenous raw materials, spare parts and components similarly consumed and the percentage of each of the total consumption;

[e] earnings in foreign exchange classified under the following heads, namely –

1)      Export of goods under FOB basis;

2)      Royalty, know-how, professional and consultation fees;

3)      Interest and dividend

4)      Other income, indicating the nature thereof.

Para 4-D provides for certain disclosure by way of a note.

Para 4-D (a) requires disclosures of the value of imports on CIF basis for raw materials, components and spare parts and capital goods.

Para 4-D(b) requires disclosure of forex expenditure incurred in relation with payment towards royalty, know-how, professional, consultation fees, interests and other matters.

Para 4-D (c) requires disclosure regarding value of consumption and percentage of each compared with total consumption during the reporting period for imported raw materials, spare parts and components, indigenous raw materials and indigenous spared parts and components.

Para 4-D (e) requires disclosure of foreign exchange earnings under the headings prescribed viz., -Export of goods on FOB basis; royalty, know-how, professional and consultation fees; interest and dividend; any other income indicating the nature such income.

As per new notification, companies covered by the notification are being exempted from disclosing in their profit and loss account the respective information sought by Part of Schedule-VI to the Companies Act, 1956.

However, the notification provides for certain conditions for the exemption, in other words, new exemption is subject to certain conditions. The conditions are –

[1] The Board of directors has given consent with regard to non-disclosure of information as sought by respective paragraphs of Part –II of Schedule – VI.

[2] Disclosure in the Notes on accounts – the fact that exemption is granted by the notification.

[3] Compliance with prescribed and applicable Accounting Standards.

[4] The company shall ensure that its financial statement represent “true and fair state” of affair of its finances.

[5] The company shall maintain and file such information as may be prescribed/called for/required by the Government, RBI or any Regulator.

[6] For representation of foreign currency holdings, if any, exchange rate as on date of closing of accounts shall be applicable.

Manufacturing companies / Multi-product companies / Trading Companies –

The exemption shall be applicable only for those goods which form less than 10% of total value of the turnover, purchase, consumption of raw materials, etc., as the case may be.

Applicability of the Notification:

In respect of financial statement prepared on or after 31-03-2011.

[Ref: Notification No. S.O. 301(E), dated 8th February, 2011 and F. No. 51/12/2007-CL.III]

Alok Rudra


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