 "Sebi cuts required size of results' ads")
The new format is prescribed in Annexure XI of a circular dated November 30. Companies need to publish the current and corresponding period figures of six key items — total income from operations, net profit/loss before and after extraordinary items, share capital, reserves and earnings per share.
Mumbai-based Shailesh Mehta, 70, who says he's invested in 30-odd companies, said: “Everybody does not have internet. Why should they change what was prevailing for 60 years?” Nor, he said, did the Sebi circular give a rationale for prescribing a shorter version. “If you are going to give incomplete details, why publish at all?”
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Mehta said it was not practically possible for investors to look into numerous companies online. “There are 6,000 companies. Which company will I look into? If it was published in the paper, it is easier.”
Investors like him feel this also gives companies the leeway to sweep things under a carpet. Another investor felt the Sebi chairman should not take such as major decision when there is a change of guard (at the regulatory body) coming up.
Virender Jain, president, Midas Touch Investor Association, said: “There is no data on how many investors get their results information from newspapers. Certainly, it should not be a problem for institutional investors.” According to Jain, the larger problem with disclosures is effective monitoring of timing and quality of disclosure.
Compliance professionals, though, did not see any major hitch. “An informed investor is internet savvy. He will not be affected,” said S N Viswanathan, a senior company secretary. “Newspapers might take a hit, as the standard format used to be at least a quarter of a page and could be bigger, depending on the graphs and pictures that companies published. The new format can be fitted in a tenth of a page.”
Newspapers and financial dailies, including this one, are among major carriers of corporate results advertisements every quarter. Just going by the size of the ads, quarterly revenues from this segment could be hit as much as 60 per cent.
Larger media houses feel the impact of this new regulation would be minimal on overall ad revenue. The inventory rate of these ads is very low and usually they do not occupy prime positions in large publications. For example, Free Press Journal, one of the major publishers of results, charges a ‘special rate’ of Rs 42 a sq cm for results ads, as against Rs 570 a sq cm for commercial display ones.
“Ad revenues of the results used to go to the cheapest newspapers. Also, these are quarterly revenues. So, I don’t see much impact. Also, the compressed version might look too muddled and not many may opt for it,” says Vinay Mittal, chief financial strategist, HT Media.
Apurva Purohit, group president, Jagran Prakashan, also felt most companies would stick to larger size ads. “My observation has been that 60 to 70 per cent of the companies that give ad results in newspapers will stick to the earlier format. The compressed format will mean less information and that will defeat the purpose of giving the ad in the first place,” she said.
Many companies including multinationals such as Colgate and Hindustan Unilever continued to publish in the longer format. Some like Reliance have started using this shorter format from the December quarter itself.
Some media companies saw a silver lining, too. There is the possibility that with the space taken by the ad results reducing, companies might prefer premium publications to give these to. “One possibility is that some of the ads will shift to premium newspapers. The other is that the space freed by the compressed results will mean papers will have more space to sell. In any case, the ad revenues for papers won’t take a big hit and the overall pie can grow. We shall know in the coming quarters for sure,” said Mittal of HT Media.