Annual Report - Mr. Shankar Jaganathan

1. C O M F E S T
A S S O C I A T I O N O F B U S I N E S S C O M M U N I C A T O R S O F I N D I A
S T A T U T O R Y G O E S S T R A T E G I C
A N A P P R O A C H T O S T A T U T O R Y
C O M M U N I C A T I O N S
Shankar Jaganathan
F e b r u a r y 2 7 , 2 0 1 5

2. Reporting & Communication
The Two Extremes

3. Evolution of Annual Reports
A Journey in Progress
A Gold i ers Gift
½ for 1,
½ for 1,
½ for 1
Self-interest wins
Not once but
many times
Indian Response
From I to We

4. A Gold miner’s Gift:
The Birth of Annual Report
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• Victorian Gold Rush
– 500 gold mining companies formed
between 1851-1864
– Companies Act 1864 repealed the Mining
Companies Act of 1855
– New act required MoA, AoA and Register
of Members to be filed
– Miners requisitioned for simpler provisions
of 1855 Act
– In return for simple registration, Annual
Information Sharing was accepted –1871:
The Birth of Annual Report
• Mandate for Companies
– Victoria in 1896 AD
– England in 1928 AD
– USA in 1934 AD
Compliance with the Letter of Law

5. Communication:
The Four Quadrants
Reduce social cost:
Statutory Communications
Mandated, Safeguard
Others
Increase Social Gain:
Sharing negative news
Voluntary, Safeguard
others
Reduce compliance cost
L Board driving
Mandated, Self-interest
Increase personal gain:
Marketing Communication
Voluntary, Self-interest
The Options

6. Minimum to Optimum:
Share if Beneficial
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Likely triggers
• Strategic shift
• Branding/ marketing
shift
• Perceived
undervaluation
Helping Others to Help You

7. The Rich Treasure:
First Billion $ Company
US Steel Corporation 1st Annual Report, 1902
• Formed by merger of 8
companies
• Sales of $423 m and Profits $90
m
• Comprehensive Reporting
1. Consolidated Financials (2001)
2. Cash flow statement (1995)
3. Quarterly Profits
4. Data on production (1973)
5. Inventory classified into RM, WIP
and FG (1956)
6. Department wise # of employees
7. Orders on hand
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8. Glossy Look & Graphic Design
Attract & Educate New Investors
1955 Annual Report
• Paul Rand a Graphic designer
engaged
• Produced a glossy magazine
look and feel Annual Report
‘by using a photo that is non-
representational, non-
recognizable, and abstruse,
a bit mysterious, I am able
to convey what IBM really
is.’
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9. Theme to Brand:
Litton Industries, 1960s
Global Thirst for Freedom Corporate Calling Card
• Salesman used Annual Reports
to build credibility
• A small company that grew
big through acquisitions
• Distributed 220,000 Annual
reports, shareholder base
140,000
• Annual reports in French,
German and Italian
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Business Defense Contractor
Annual Report: A Marketing Tool

10. From I to We:
The Trigger
• Birth of IT sector &
ESOP introduction
• Interest alignment of
Employee with investors
• Focus on Shareholder
Value Creation &
Market Capitalization
10

11. Annual Report to Page 1
What Do They Have in Common?
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12. Infosys Annual Reports:
1995-2000
Year Distinctive Feature
1995 World of Infosys through
Stakeholders Eyes; US GAAP
1996 Pursuit of Excellence: HR Valuation
1997 CSR: Brand Valuation
1998 Infosys Software at Work: Report on
Corporate Governance
1999 IT in next Millennium: Risk
Management Report
2000 Infosys Technology at Work: Current
Cost Accounting
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13. From Paper to Bytes
A Vacant Space to Capture
• From 2011, shareholders choice to
receive Annual reports
• Can be viewed as cost saved, or
• Use it to design better report to hold
investor attention
• E-reports need good selection and
better design
1. Content Rich
– Executive message, theme, key
financial data, ratios, MDNA, Risk
Management
2. Data Rich
– Financials, Corporate Governance
reports, Board of Directors report
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14. A Few Insights
Good Annual Reports need
1. Thought and efforts, must be planned
– Consistency in communication: Berkshire Hathway
2. Is balanced, share both good and bad news
– Tennis equivalent of Unforced Errors
– ‘I was dead wrong’ on housing recovery
3. Is educational, share new thoughts and insights
– Basis for share buyback: like shooting fish in a barrel
– Price below 110% of book value and excess cash ≥ $20 billion
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15. We can make Reports
Communicate
15But Will We?