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Commentary

SEBI Asks for Consolidated Results, Cash Flow and Book Values Every 6 Months

SEBI has published draft changes to the way companies report financial results. The revisions are available for public comment till Sep 13, 2013.

Companies must disclose consolidated results every six months. Finally! Consolidated results are the only way you can get a full understanding of a business, especially where more and more companies are doing business through subsidiaries. But I wonder why this was not done for every quarter. They could have relaxed the rules to allow reporting upto 2 months after the end of the quarter. (currently 45 days)

Cash flow statements and Book Values are required every six months. This is also good. I wish it was for every three months, but I’ll take six.

Companies must report results in Rs. crore, and not millions, billions, gazillions etc. This is already standard for reporting at NSE and BSE, but they should do this in public releases.

All exceptional items to be detailed. This helps understand why something is exceptional, like forex losses, which are not.

Finance companies will now report like banks. Banks start reporting by interest income, interest paid out, NIM etc. Finance companies currently have to talk about “Revenue”, “expense” etc. which may not be detailed enough, and their business is like banks. So they’ll be moved to bank-type reporting.

Impact: Consolidated result requirements add transparency but it would be more useful to have them at quarterly timeframes. Companies might complain about paperwork, but honestly, this is something they should be doing monthly anyway, at least in a rough manner, and creating the discipline to report it quarterly will help the investing community.

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