Segment Reporting Practices A Study of Selected Oil and Gas Companies in India

Abstract

Financial reporting can differ from firm to firm within an industry and between industries. Therefore, with implementation of Ind AS 108 from 1st April, 2016, it becomes necessary to analyse the determinants of reporting practices of the firms. The corporate sector is developing in leaps and bounds, horizontally and vertically. Many companies provide groups of products and services or operate in geographical areas that are subject to differing rates of profitability, opportunities of growth, future prospects and risks. With the help of segment reporting - segment information is made available, facilitates better transparency, improves quality of financial statements and also helps stakeholders to reach at more judged quality decisions. This study aligns with the identification and reporting of operating segments with internal management reporting. It highlights the information and measures that are important and are used to take key decisions. For these top 5 listed companies on S and P BSE Oil and Gas indices based on market capitalisation has been considered, namely, BPCL, IOCL, HPCL, ONGC and RIL. The study has examined and compared SRDP on the basis of information available on annual report of selected companies and also significant factors have been identified influencing SRDP. Researcher has also analysed segment performance of selected companies. Investor s perception regarding the same has also been considered for this study. For the purpose of analysis of data, period of 6 years i.e. 2013-14 to 2018-19 has been considered. To achieve these objectives various descriptive and inferential tools has been used in this study like: Percentage, Skewness and Kurtosis, paired t-test, Wilcoxon Signed Rank test, ANOVA, Kruskal Wallis test, Levene s equality of variance, Post Hoc test, OLS and Chi- square test. The research indicates that there is no significant difference in SRDP of selected companies. Ind-AS doesn t have impact on segments of BPCL (Downstream Petroleum and EandP), HPCL (EandP), IOCL (Petroleum Products and Petro-Chemicals), ONGC (Offshore (EandP)-India, Onshore (EandP)-India and Outside India) and RIL (Other Businesses) and there is no significant difference in perception of investors regarding segment reporting. The significant factors influencing SRDP are Return on Capital Employed, Leverage and Market Capitalisation. newline