SEBI to keep closer tabs on tight-lipped companies
30 September 2009
Securities and Exchange Board of India chairman C B Bhave yesterday said the market regulator will keep a sharper eye on reclusive listed companies which are not ready to provide information to independent research units.
SEBI will keep tabs on listed entities and issuers unwilling to cooperate in this regard, Bhave said at the launch of rating agency CRISIL's equity research division, Independent Equity Research, in Mumbai (See: CRISIL enters independent equity research).
He said in such cases, SEBI will go beyond the statutory disclosure norms and look at independent research agencies for more details. He said disclosing such information will ensure transparency and help investors to understand their investment decisions better.
Through IER, CRISIL will provide independent assessments on the fundamentals and valuations of listed Indian companies. It will analyse the business prospects of both, the industry and company, as well as management and corporate governance, financial performance, and outlook for earnings growth among other factors.
A CRISIL research report shows that out of the 3,500 active listed companies, large capital stocks attract most of the research coverage, while a massive 80 per cent of all traded companies have no analyst coverage. Among those covered, only 170 companies, or 6 per cent of the traded volume, are covered by more than 10 analysts.
Bhave said there would be reports commissioned by investors for which CRISIL may not get cooperation from the concerned company. ''I hope that in such cases, CRISIL will state in its report that the information provided by the issuer was not sufficient to evaluate. It will help us regulators to know which companies are not ready to give out information, and focus on such companies in greater detail. It will also help investors,'' he said.