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CMA Intermediate · Financial Accounting · Introduction to Accounting Standards (GAAP, AS and Convergence to Ind AS)

Ravi Textiles Pvt Ltd has unlisted securities, is not a bank or insurer, turnover of ₹200 crore last year, maximum borrowings of ₹40 crore last year, and is not a holding or subsidiary of any non-SMC. Is it a Small and Medium Sized Company (SMC)?

Ravi Textiles qualifies as an SMC because it is unlisted, not a bank or insurer, its turnover of ₹200 crore is within ₹250 crore, borrowings of ₹40 crore are within ₹50 crore, and it has no non-SMC holding or subsidiary link.

  1. AYes, all conditions of the SMC definition are satisfiedCorrect
  2. BNo, because turnover exceeds the limit of ₹250 crore
  3. CNo, because borrowings exceed the limit of ₹50 crore
  4. DNo, because every private company is a non-SMC

Explanation

SMC requires unlisted securities, not a bank/financial institution/insurer, turnover not above ₹250 crore, borrowings not above ₹50 crore, and not a holding or subsidiary of a non-SMC. Turnover ₹200 crore and borrowings ₹40 crore are within the limits, and all other conditions are met. So it is an SMC.

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