OPERATING SEGMENTS REPORTING - A CASE STUDY OF RELIANCE INDUSTRIES LTD. AND ITC LTD

Most businesses have extended their scope of operations in recent years to include new sectors, geographic locations, and markets. This widespread movement towards diversification has led to a need for information about the various segments of an enterprise in addition to the consolidated financial statements. The various industry segments may have different rates of profitability, degrees, types of risk, and opportunities for growth. The investors, therefore, can not successfully evaluate a diversified enterprise without information about its various segments. In this regard accounting bodies of various countries have issued Accounting Standards (AS) and segment reporting has been made mandatory. The International Accounting Standards Committee issued International Accounting Standard 14 (IAS14) in 1981 for Segment reporting. Similarly, The Financial Accounting Standards Board (FASB) of the United States of America (USA) issued the Statement of Financial Accounting Standards -14 (SFAS14) in 1974 for the implementation of segment reporting. In India Accounting Standard 17 (AS17) was issued for segment reporting. Accounting standards issued by different bodies are revised from time to time for effective and better implementation of segment reporting. In India also Ind AS 108 -Operating Segments was issued in 2015. This paper is a case study of Reliance Industries Limited and ITC. It is an attempt to show how segment information is reported by the companies and how it is useful for the external users of the financial statements. The study covers the period from the financial year 2019-20 to 2020-21.