Firms' annual report nightmare

NEW DELHI: It''s an annual burden many companies just can’t circumvent. Apart from being a logistical nightmare, ballooning costs of producing and mailing annual reports is hitting where it hurts—the bottomline.
The problem is compounded by the sharp increase in the floating stock of companies like Infosys, Wipro, and Satyam thanks to overseas listings and stock splits to inject liquidity.
Take the case of India’s second-largest software exporter Infosys Technologies, which has 88,650 investors in the country and abroad. The company prints 110,000 copies of its annual report every year at a cost of Rs 143 per copy. Total cost of printing: Rs 1.57 crore. Add the cost of mailing, up to Rs 30 lakh at an average of Rs 30 per copy. The annual cost of the exercise comes close to a hefty Rs 2 crore.
But infotech companies are by no means the only ones facing the problem. Companies like HLL, SBI, and Reliance, which have a large family of investors, are also facing a similar situation. The Reliance group leads the pack with an investor base of over 5 million. Assuming a spend of Rs 50 per report, the total outgo will be Rs 25 crore. However, annual reports of IT companies are often thicker than those of old-economy firms.
Satyam Computers also faces a problem of plenty. Post a five-for-one stock split, Satyam prints two lakh copies of annual report, at a cost of Rs 63 per document. The total cost of mailing and producing the report: above Rs 1.5 crore.
Wipro Ltd does not face as big a problem as chairman Azim Premji is the largest shareholder. Still, Wipro prints 75,000 copies of its annual report at a cost of Rs 93 per copy, which takes the total cost to Rs 70 lakh per year. Add the cost of mailing, and it’s a cool Rs 1 crore.
While companies are grappling with ways to reduce such recurring expenditure, there seems no easy way out. Official guidelines make it mandatory to offer investors a printed report.