205 listed companies have not disclosed consolidated financial data during financial year 2010-11.
Even as the new Companies Bill, 2011, reportedly asks for filing of consolidated balance sheets over standalone financial accounts for companies that have subsidiaries, at least 205 listed companies have chosen not to disclose consolidated financial data during financial year 2010-11, despite stock market regulator Sebi’s mandate.
Among these are Kingfisher Airlines, Bosch, NMDC and Punjab & Sind Bank. Though such disclosures are not compulsory under the existing Companies Act, Sebi says filing of consolidated financial results is a must for all listed companies.
An analysis of Capitaline data by the Business Standard Research Bureau indicates that of the 1,490 Bombay Stock Exchange-listed companies that have subsidiaries, 205 or 13.8 per cent have not provided consolidated statements. There are 5,732 companies listed on the BSE.
| INDIAN COMPANIES: DATA SHY Latest balance sheet available | |||
| Company | Consolidated | Standalone | M-cap (Rs cr)* |
| NMDC | FY08-09 | FY10-11 | 73,822.71 |
| Bosch | NA | FY10-11 | 21,890.67 |
| KPIT Infosys. | FY09-10 | FY10-11 | 1,413.26 |
| Texmaco Rail | NA | FY10-11 | 1,287.14 |
| Kingfisher Airlines | NA | FY10-11 | 1,276.81 |
| State Trading Corp. | FY08-09 | FY10-11 | 814.50 |
| Orissa Sponge | NA | FY09-10 | 810.00 |
| Swan Energy | FY04-05 | FY10-11 | 598.03 |
| Chromatic India | NA | FY09-10 | 540.62 |
| Sanwaria Agro | 200903 | FY10-11 | 453.79 |
| * As on Dec 7 NA: Not available Data Source: Capitaline | |||
Company law experts say companies are allowed to make exceptions if the auditors provide the reasons in their observations. “From a corporate governance point of view, consolidated financial statements provide the true financial health of the company, across investments, across subsidiaries,” said Niraj Kumar, partner, DSK Legal.
It is known that the government has preferred submission of consolidated balance sheets over standalone financial accounts in the new Bill, whose contents have yet to be made public. It was approved by the cabinet last month and is yet to be placed before Parliament.
While the government officials feel filing of consolidated balance sheets would lead to better corporate governance, experts are worried about the fine print. The basis of this apprehension is the reported government plan to do away with the existing practice of attaching separate balance sheets of subsidiary companies with the standalone results of the holding companies once the consolidated accounts regime sets in. Current law requires directors and auditors’ reports of the subsidiary to be attached with regulatory filings of the holding company.
Manoj Kumar, managing partner of corporate law firm Hammurabi & Solomon says leaving it to the discretion of company managements on filing standalone accounts for each firm in the group is not a good thing for transparency and investor protection. “The new law dispenses with attaching balance sheets & P&L (profit & loss accounts) and leaves consolidation of holding-subsidiary accounts to the discretion of the board of directors of the holding company,” he says.
