Applicability of Ind AS to Joint Venturer

Facts of the case:
Company A has a joint venture having 6% stake with company B. Company B is an associate of company D, which is an IND AS compliant company.

As per INDAS rules Company B has to comply with IND AS as it is an associate of company D.

Issue/Query:
Whether Company A is also required to comply with IND AS.

Response:
Company A is not required to comply with Ind AS by virtue of it being a joint venturer or joint operator of Company B.

Basis for Response:
Appendix A of Ind AS 111 Joint Arrangements defines Joint venturer and party to a joint arrangement as under:
“Joint venturer
A party to a joint venture that has joint control of that joint venture.
Party to a joint arrangement
An entity that participates in a joint arrangement, regardless of whether that entity has joint control of the arrangement.”

Therefore, Company A is either a joint venturer or a party to a joint arrangement in Company B

Clause (c) of sub-rule (ii) and sub-rule(iii) of Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015 states as under:
“holding, subsidiary, joint venture or associate companies of companies covered…”

A joint venturer or a party to a joint arrangement is not specified in the Companies (Indian Accounting Standards) Rules, 2015. Therefore, Company A shall not be required to prepare and present its financial statements in accordance with Ind AS by virtue of it being either a joint venturer or a party to a joint arrangement in Company B.