59% of India's top cos don't follow disclosure norms

Infosys, Bharti Airtel and ICICI Bank are the only companies who have managed to score 100% on a Composite Disclosure Index

Flagging serious shortcomings in corporate disclosures made by top listed companies, a study said on Tuesday that only 41 per cent of the 100 biggest firms have complied with the mandatory requirements in this regard, while the situation is even worse for voluntary disclosures.

Only three companies -- Infosys, Bharti Airtel and ICICI Bank -- 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.

The state-run companies are mostly at the bottom of the index, with Coal India being ranked last. Others having scored low include IOC, HPCL and Canara Bank, as also private sector entities like United Spirits and Unitech.

The low disclosures are particularly concerning at a time when international institutional investors are demanding higher levels of voluntary disclosure from emerging market companies, 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 six mandatory and five voluntary disclosure parameters.

According to 'India Disclosure Index', only 41 per cent of constituent companies of the BSE 100 index were fully compliant on mandatory disclosure parameters, while the remaining 59 falling short on either one or some of the mandatory disclosure parameters.

"Unavailability of updated analyst transcripts and sufficient public information regarding analyst engagements was the single largest reason for low mandatory disclosure scores, with 51 per cent of Indian companies not providing analyst transcripts on their corporate websites," the report noted.

"This is a glaring gap and a telling statistic indicating the unavailability of basic information that is required by law in the Indian capital markets," it added.

It also revealed that a third of all BSE 100 index constituent companies have voluntary disclosure scores of 3 or less, and 14 per cent have the lowest voluntary disclosure score of 1/6. Six of the lowest scorers were government-owned enterprises.

Only eight of the top 100 companies had a full 6/6 score for voluntary disclosure, reflecting the low priority placed on providing additional information in the interest of greater transparency by a majority of firms.

Banks account for six of these eight companies with a perfect score — Axis Bank, Bank of India, Federal Bank, ICICI Bank, IDBI Bank and IndusInd Bank.

Infosys and Bharti Airtel were the only non-bank players in this short list of high voluntary disclosure scorer.

The composite index measured companies on a scale of one to 10. A score of 10 indicates that all 11 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.

Illustration: Uttam Ghosh/Rediff.com