Whether interest expense relating to overdrafts and other operating liabilities identified to a particular segment should be included in the segment…

The interest expense relating to overdrafts and other operating liabilities identified to a particular segment should not be included as a part of the segment expense unless the operations of the segment are primarily of a financial nature or unless the interest is included as a part of the cost of inventories. In case interest is included as part of the cost of inventories where it is so required as per AS 16 "Borrowing Costs”, read with AS 2 “Valuation of Inventories", and those inventories are part of segment assets of a particular segment, such interest should be considered as a segment expense. In this case, the amount of such interest and the fact that the segment result has been arrived at after considering such interest should be disclosed by way of a note to the segment result.