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A Mint evaluation of disclosures made by Nifty50 companies in their March quarter earnings confirmed that they made selective disclosures based mostly on parameters of their selecting, fulfilling a compliance requirement however failing to watch the intent of the regulation. Still, the disclosures give a glimpse of the difficulties corporations are dealing with.
On 20 May, Sebi requested listed corporations to guage the impact of the pandemic on their enterprise efficiency and monetary outcomes, each qualitatively and quantitatively, to the extent potential and disseminate the identical.
However, the disclosures have fallen wanting attaining the goal of the Sebi mandate, specialists mentioned. Lack of detailed data is conserving investors guessing on the true extent of the impact, future efficiency, and methods adopted by these corporations for addressing the disaster, the specialists mentioned.
According to the evaluation, a complete of 16 corporations every have assessed the impact on manufacturing and provide chain, whereas solely three disclosed the impact on their stock. A mere 12 corporations assessed the impact on money flows, seven on debt ranges, three on fairness and 5 corporations disclosed the impact on profitability. Six corporations mentioned the curbs impacted their manpower and 9 disclosed cost-saving measures.
“Though the Sebi notification was detailed sufficient for the parts of fabric impact, many corporations haven’t disclosed or paid the covid-19 disclosures the severe consideration it deserves, because it not solely impacts short-term companies but in addition may have a longer-term enterprise impact,” mentioned Shriram Subramanian, founder, InGovern Research Services Pvt. Ltd, a proxy advisory agency.
Even in circumstances the place corporations have disclosed particulars, these turned out to be mere statements relatively than an precise impact on the financials of an organization. For occasion, on cost-conserving measures, Titan Co. Ltd merely mentioned it will scale back wasteful expenditure; Vedanta Ltd mentioned it’s focussing on operating operations at the lowest price potential. Britannia, on the different hand, disclosed its cost-cutting measures will result in a 40 foundation factors rise in working revenue.
HCL Technologies Ltd, whereas assessing the monetary impact, mentioned it has thought-about the inner and exterior data and has carried out sensitivity evaluation based mostly on present estimates in assessing the recoverability of receivables, unbilled receivables, goodwill, intangible property and different monetary property.
“However, the precise impact of covid on the group’s monetary statements might differ from that estimated and the firm will proceed to intently monitor any materials adjustments to future financial circumstances,” mentioned HCL in the disclosure.
Tata Motors Ltd mentioned its revenues have taken successful however added that the impact evaluation because of covid-19 is topic to vital uncertainties. “It would have been worthwhile to think about a degree of disclosures, particularly focusing on the impact on quantities acknowledged in the monetary statements and contemplating the heightened uncertainty, there wanted to be enhanced disclosures on areas involving vital judgements and estimates,” mentioned a senior auditor, looking for anonymity.
ITC Ltd mentioned it does estimate an impact on property, plant, gear, intangible property, investments, inventories and commerce receivables.
In many circumstances, corporations caught to a prepared script, utilizing the identical phrases akin to inner and exterior data.
Almost half the corporations mentioned they carried out a sensitivity evaluation on the assumptions used and based mostly on present indicators of future financial circumstances. They mentioned the impact of covid could also be completely different from that estimated and they’re intently monitoring any materials adjustments to future financial circumstances.
Some corporations additionally disclosed administration wage cuts.
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