With rotten timing, manufacturing cos have stopped declaring capacity & production stats
The revision to Schedule VI of the Companies Act that exempts companies producing defence equipment, export-oriented companies, shipping companies, airlines, hotels, manufacturing companies or multi-product companies, and trading companies from disclosing ?certain quantitative details? in their annual reports is justified by the corporate affairs ministry with the following logic: ?These requirements date back to the era when there was industrial licensing etc, and there was a regulatory purpose in monitoring quantitative aspects of production etc.? Further, the ministry notification submits, ?Indian companies have represented that such disclosure puts Indian companies at a competitive disadvantage where their details are known to foreign competitors, but they cannot get the details from the other side.? We are specifically concerned about the implications of manufacturing companies no longer reporting installed capacity and production statistics in their balance-sheets and profit & loss accounts.
First, this means that investors suddenly have access to fewer details than they have gotten used to over the decades, unless some manufacturing companies chose to continue to provide these voluntarily. Second, the move seems especially retrograde and counterproductive at a time when the government is also seeking to try to validate the IIP and like numbers with corporate data. In his inaugural address at RBI?s Statistics Day Conference last year, Governor Duvvuri Subbarao went into the need for more data and better data in some detail. He highlighted the lacunae in unemployment, wages and inflation data, but drew special attention to the ?analytically bewildering? volatility of IIP data. Stand-out instances include the downward revision of the January 2012 IIP estimate to 1.1% from 6.8%. Against such a backdrop, it makes little sense to say to auto, cement and like industries that they should prune back their disclosures, surely a useful indicator of industrial activity at a time when policymaking needs to nimbly chase new trends.