Ind AS 108 Operating explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Ind AS 108 requires listed and to-be-listed entities to disclose information about their operating segments using the "management approach" — the same segments and measures that the chief operating decision maker reviews to allocate resources and assess performance — so users can see the business through management's own eyes.
Overview
Ind AS 108, notified under the Companies (Ind AS) Rules, 2015, replaces the risk-and-reward model of the old AS 17 with a management approach. Its premise is that the most useful segment information is the information management itself uses to run the business, disclosed with reconciliations back to the audited totals.
Scope and Applicability
Ind AS 108 applies to the financial statements of an entity whose debt or equity instruments are traded in a public market, and to entities that file or are in the process of filing financial statements with a securities regulator to issue instruments publicly. Where both consolidated and separate statements are presented, segment information is required only in the consolidated statements.
The Management Approach and the CODM
An operating segment is a component of the entity: (a) that engages in business activities from which it may earn revenues and incur expenses; (b) whose operating results are regularly reviewed by the entity's chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and to assess its performance; and (c) for which discrete financial information is available. The CODM is a function — often the CEO, a management committee or the board — that allocates resources and assesses performance.
Aggregation and Reportable Segments
Operating segments with similar economic characteristics may be aggregated if they are similar in the nature of products or services, production processes, class of customer, distribution methods and, where relevant, regulatory environment. An entity reports separately about each operating segment that meets any of the quantitative thresholds:
| Threshold (10% test) | Basis |
|---|---|
| Revenue | Segment revenue (external + inter-segment) is 10% or more of combined revenue |
| Profit or loss | Absolute segment result is 10% or more of the greater of combined profits or combined losses |
| Assets | Segment assets are 10% or more of combined assets |
Reportable segments must together represent at least 75% of the entity's external revenue; if not, additional segments are identified until that threshold is met.
Measurement and Disclosure
The amounts reported for each segment are the measures reported to the CODM, even if they differ from Ind AS measures used in the financial statements. An entity discloses a measure of profit or loss and total assets for each reportable segment, plus specified items (external and inter-segment revenue, interest, depreciation, material non-cash items, tax, etc.) if they are reviewed by the CODM. Crucially, reconciliations of total segment revenue, profit or loss, assets and liabilities to the corresponding entity totals must be provided, bridging any difference between internal and Ind AS measures.
Entity-Wide Disclosures
Regardless of the number of segments, the entity discloses (unless impracticable): revenues from external customers for each product/service group; geographical information — external revenues and non-current assets split between the country of domicile and all foreign countries (and each material country); and information about major customers — where revenues from a single external customer are 10% or more of total revenues, that fact, the amount, and the segment(s) concerned (though the customer need not be named).
Worked Example
A group's CODM reviews three lines: Manufacturing (revenue ₹500 crore), Trading (₹120 crore) and Services (₹30 crore). Manufacturing and Trading each exceed 10% of combined revenue of ₹650 crore and are reportable. Services at ₹30 crore is below 10% (₹65 crore) but is disclosed separately to reach the 75% coverage requirement or combined into an "all other segments" caption. Segment results are those the CODM sees, reconciled to the consolidated profit before tax.
Key Differences from AS 17
AS 17 imposed a risk-and-reward, business-vs-geographical structure with Ind AS-consistent measurement. Ind AS 108 lets the internal management structure and internal measures drive external disclosure, adds entity-wide and major-customer disclosures, and requires reconciliations — giving users a management-eye view rather than a standardised template.