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Vedanta, Infosys top disclosure ranking scale

Our Bureau Mumbai | Updated on January 20, 2018 Published on June 23, 2016

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Lower compliance on voluntary front, that too with inadequate info, says FTI Consulting

Vedanta, Infosys and Shriram Transport Finance score the best on a ranking of disclosures by companies in the BSE 100 index, while Indian Oil Corporation and Asian Paints have scored the lowest. According to the 2016 edition of the India Disclosure Index by business advisory firm FTI Consulting Inc, the average score for BSE 100 companies in making mandatory disclosures was 3.7 out of 4, up from 3.1 in 2015, while for additional voluntary disclosures, the figure was 3.7 out of 6, up from 3.5 in the previous year.

The average composite disclosure score was 7.4 on 10, up from 6.7 in the previous year. When scored on a composite scale with 14 mandatory and 14 voluntary disclosure parameters that are publicly and readily available, the India Disclosure Index 2016 revealed that 71 per cent of constituent companies in the BSE 100 index (up from 41 per cent last year) were fully compliant on the mandatory disclosures front. However, the findings reveal much lower compliance of voluntary disclosures, with most companies providing inadequate information relating to risk mitigation.

Mandatory disclosures have to do with financial information, shareholding and board evaluation information, risk management policy, whistleblower policy and transcripts of analyst engagement and earnings calls. For the report, voluntary disclosures were defined as information about profitability and margin improvement, operating metrics, business strategy information and information on debt, and key corporate developments.

Combined disclosure scores

The report also found that almost 45 per cent of companies in BSE 100 have combined disclosure scores of eight or more, up from 26 per cent in 2015. Of these, eight stood out for achieving the maximum score of 10 (Axis Bank, Bharti Airtel, Federal Bank, IndusInd Bank, Infosys, Shriram Transport, Sun Pharma and Vedanta). Only six companies, compared to 25 in 2015, of the BSE 100 index constituent companies have low disclosure scores of five or less.

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

The study also looked at BSE 200 companies (excluding the BSE 100 constituents), which, taken as an aggregate, lag the aggregate BSE 100 constituents’ in mandatory disclosure scores, but beat them (albeit marginally) when it comes to voluntary disclosure. This, the report speculated, may be strategy on their part as they seek to attract investment.

Published on June 23, 2016
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