MCA to mine and hawk corporate data

Vendors selling data on Indian corporations are likely to confront a powerful new competitor: the government.

The ministry of company affairs is in the process of introducing new rules to collect financial data in a standardised format. Once the data comes in, it will start mining to sell them onward to customers as a value-added service.

Last month, the National Advisory Committee on Accounting Standards submitted its recommendations on 28 accounting standards to the ministry of company affairs.

The MCA will soon introduce subordinate legislation which will be notified without going through the Parliament to make the standards compulsory in drawing up financial statements. Once all companies started presenting financial data and statements in the standardised form, it would be possible to mine them to extract all kinds of information, government officials said.

In about four to five years, the government's database will have the depth to yield rich information and help it earn additional revenue.

The market size for stand alone company data was about Rs 60 crore, and was growing annually at about 30 per cent, said industry sources. Demand for company data comes largely from banks, mutual funds, and brokerages.

The main player in this segment is the Centre for Monitoring Indian Economy (CMIE), but agencies such as Reuters also sell company data bundled with other kinds of information. If bundled products came into the picture, the market size could be around Rs 100 crore, industry sources said.

While a significant amount of data collated by the MCA is available to customers for a niminal fee, the government is likely to tailor the new system to further its goal of earning additional revenue.

The introduction of new accounting standards will come on the heels of the MCA making it mandatory for all companies to file annual returns in electronic format. The government does not have to deal with the challenge of digitising legacy data.

The Institute of Chartered Accountants has been suggesting accounting standards since 1977, but its suggestions have not been binding on companies. With the MCA entering the picture, companies will soon have no choice in the matter.

The National Advisory Committee has ensured its recommendations on accounting standards are in sync with global standards. The spin-off is that the government's proposed database will be of use to customers the world over in the backdrop of growing interest in Indian corporates.