71 pc of cos comply with mandatory disclosure norms: Study

Last Updated : 23 June 2016, 13:56 IST
Last Updated : 23 June 2016, 13:56 IST

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 Showing improvement in corporate disclosures made by top listed companies, a study today said 71 per cent of the 100 biggest firms have complied with the mandatory requirements in this regard in 2016, which is much higher than last year's 41 per cent.

However, the findings revealed much lower compliance of voluntary parameters with most companies providing inadequate information relating to risk mitigation.

A total of eight companies -- Vedanta, Shriram Transport, Infosys, Indusind Bank, Federal Bank, Bharti Airtel, Axis Bank and Sun Pharma -- have managed to score 100 per cent on a Composite Disclosure Index, which has been prepared after taking into account both mandatory and voluntary disclosure parameters. In comparison, only three firms had achieved the feet in 2015.

State-run Indian Oil Corp is at the bottom of the Composite Disclosure Index. Others having scored low include Coal India, Asian Paint, Divis Lab, United Breweries and United Spirits.

The most significant reason for improvement has been the improved individual scores regarding 'analyst engagement information and earning call transcripts' with 73 per cent providing this information, which is up from 49 per cent in 2015, FTI Consulting said in its report.

The report reviewed publicly available disclosed information by publicly-listed companies to create a weighted, composite disclosure scoring system with seven mandatory and seven voluntary disclosure parameters.

According to 'India Disclosure Index', 71 per cent of constituent companies of the BSE 100 index were fully compliant on mandatory disclosure parameters, (up from 41 in 2015), while the remaining 29 falling short on either one or some of the mandatory disclosure parameters. This is a significant improvement within the last year.

However, there are still close to a third who fall short of complying with full mandatory disclosure, it added.

BSE 100 index constituents have an average voluntary disclosure score of 3.7/6 in 2016 up from 3.5/6 in 2015.

Only eight of 100 firms in the BSE 100 Index had a full 6/6 score for voluntary disclosure, reflecting the low priority placed on providing additional information.

Banks including Axis Bank, Federal Bank, IndusInd Bank and Shriram Transport account for half of this group with a perfect score. Infosys, Bharti Airtel, Sun Pharma and Vedanta were the non-bank players in this list of high voluntary disclosure scorers.

The composite index measured firms on a scale of 1 to 10. A score of 10 indicates that all 12 mandatory and voluntary disclosure parameters are publicly and readily available.

The voluntary disclosure index ranked the companies on a scale of 1 to 6, while mandatory disclosure was measured with a score of 1 to 4.

Lack of risk management metrics or mitigation information was the single largest reason for low voluntary disclosure scores, with 68 per cent of firms not providing adequate information in their annual reports or their websites.

Published 23 June 2016, 13:56 IST

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