Engineers India Limited was set up in 1965 to provide engineering and related technical services for petroleum refineries and other industrial projects. Its range of services includes project management consultancy (PMC), project implementation services (PMS), engineering, procurement and construction (EPC) and lump sum turnkey (LSTK) contracts. The company has experienced a decline in revenue as well as profits in the last 5 years.
For the purpose of ‘segment reporting’ under Ind AS, the company has segmented its activities into two segments—consultancy and engineering projects and lump sum turnkey projects—taking into account the organizational structure and internal reporting system as well as different risk and rewards of these segment. Segment revenue and results are set out below:
Questions for Discussion
1. Which segment is more profitable?
2. Using the segment information, comment upon the decline in the revenue and profit of EIL. To what extent the segment reporting is helpful in analyzing the past performance of EIL?
3. How will the segment reporting be useful is making projections about the future?
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