Over the years, the Government has introduced several schemes that set measurable targets and compliance requirements to support achieving net zero emissions by 2070. The introduction of the Greenhouse Gas (GHG) Emission Intensity Target Rules, 2025, marks a significant step in formalising these expectations, requiring entities to achieve prescribed outcomes. These prescribed outcomes are likely to affect financial reporting. Entities will need to consider the financial obligations that may arise if these targets are not met. They must also assess how such obligations should be measured and presented in their financial statements. Such financial reporting implications are governed by Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets, which necessitates the exercise of judgement in recognising provisions and estimating settlement costs. This edition of the Accounting and Auditing Update (AAU) includes an article that discusses the key provisions of the GHG Emission Intensity Target Rules, 2025 including the associated accounting considerations for emission related obligations.
Accounting for financial instruments is often regarded as one of the more intricate areas of financial reporting, given the extensive guidance and the evolving nature of these instruments. Debt and equity arrangements, in particular, require careful analysis to ensure compliance with the principles set out in Ind AS 32, Financial Instruments – Presentation. For companies preparing for an Initial Public Offer (IPO), Securities and Exchange Board of India’s (SEBI) Issue of Capital and Disclosure Requirements Regulations, 2018 add an additional layer of scrutiny by restricting IPOs where outstanding convertible securities exist, unless such instruments are fully paid up and mandatorily convertible before filing the offer document. This AAU covers an article that outlines some of the key features commonly found in convertible instruments and explains how such features are classified in accordance with Ind AS 32. It also includes an analysis of Draft Red Herring Prospectuses (DRHPs) filed between August 2025 and November 2025, providing insights into how companies have classified their convertible securities and similar instruments in practice.
As always, we have included a digest of recent regulatory updates in India and internationally.
We would be delighted to receive feedback/suggestions from you on the topics we should cover in the forthcoming editions of AAU.
For more information on this update, please write to aaupdate@kpmg.com.
