Re: (CSchennai) creating of a 'provision for diminution' wrt overseas investments - reg.

[S.V. Raman]

It appears to me a diminution in value of investments would have been made in compliance of accounting standards; and such diminution may not amount to a permanent write off or restructuring exercise that need to be reported to RBI to satisfy the circular under reference. Diminution is essentially a provision for erosion in value [impairment] and I believe that the diminution may also be reversed when the basic circumstances that led to decline in value no longer exist. I would thus distinguish between diminution provision and write-off and restructuring.

Regards

S V RAMAN

On Sunday, 11 January 2015 12:33 PM, csyogan . <cs.y...@gmail.com> wrote:

an indian unlisted company has created a provision for 'diminution in value' in respect of its investment in overseas unlisted WOS

kindly advise if the same should the same be reported to rbi ?

the extracts of the wordings give in master circular on odi is given as an attachment to this mail.

members are requested to share their experiences in this regard.

yogan.

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[csyogan .]

[csyogan .]

at a fema seminar in hydearbad on last saturday, the speaker is of the opinion that said that creation of diminution by the investee company would tantamount to restructuring of the overseas companies balance sheet. that seemed illogical to me. anyways want to check experiences of group members.

thanks for the mail sir.. i concur with ur views. but can u pls. tell me if you have a practical experience on this !

regards,
yogan.

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