Globex Holdings International Financial Reporting Standards | Page 2

1. Why IFRS

International Financial Reporting Standards( IFRS) convergence, in recent years, has gained momentum all over the world. As the capital markets become increasingly global in nature, more and more investors see the need for a common set of accounting standards.

India being one of the key global players, migration to IFRS will enable Indian entities to have access to international capital markets without having to go through the cumbersome conversion and filing process. It will lower the cost of raising funds, reduce accountants ' fees and enable faster access to all major capital markets. Furthermore, it will facilitate companies to set targets and milestones based on a global business environment, rather than an inward perspective.

Furthermore, convergence to IFRS, by various group entities, will enable management to bring all components of the group into a single financial reporting platform. This will eliminate the need for multiple reports and significant adjustment for preparing consolidated financial statements or filing financial statements in different stock exchanges.

2. How the world is converging into IFRS

IFRS is used in many parts of the world, including the European Union, Hong Kong, Australia, Malaysia, Pakistan, GCC countries, Russia, South Africa, Singapore and Turkey. As in December 2011 more than 110 countries around the world, including all of Europe, currently require or permit IFRS reporting. Approximately 85 of those countries require IFRS reporting for all domestic listed companies.

Timeline for Convergence( major countries)

In India, there will be two set of Accounting Standards �

1. The existing Indian Accounting Standards( IAS) � will be applicable to all companies which are not required to adopt IFRS converged standards.

2. Indian Accounting Standards, as converged with IFRS( Ind-AS) � will be applicable to companies operating in India in phased manner. The date of implementation of the Ind-AS is yet to be notified.

There are conceptual differences between IAS and IFRS. Keeping in view the extent of gap between IAS, Ind-AS and the corresponding IFRSs � conversion process would need careful handling. By introducing a new company law, the Indian Government has initiated the process to amend the legal and regulatory framework. The conversion would involve, Impact Assessment, Revisiting Accounting Policies and thereafter changing the Accounting & Operational Systems( including ERP) in order to be fully compliant with Ind- AS or IFRS.