June 22, 2008

 

Go Green. Shun the Annual Reports.

annual-reports It is that time of the year when my hobby of stock market investing generates a sizeable number of mails. The annual reports of the companies start flowing in every week. These reports are of printed on A4 size paper (glossy ones in case of big names) and have more than 100 pages each. They are so huge that our humble mailbox can't take these reports, which forces the postman to fold and awkwardly put it in the mailbox. Also, postage paid for these reports is upwards of Rs 20.

Now think of the utility value for these reports on which so much of money and paper has been spent. I personally don't even look at it. If I need some information from the report, it can easily be downloaded from their website. If any company doesn't provide its annual report in pdf format on their website, it's time to revisit the decision to invest in such a company. In this age, when holding stocks for a few weeks qualifies as "long term investor" or people buy/sell stocks just because there is a positive or negative speculation on a business channel, it is too optimistic to think that majority of investors evaluate companies by going through their annual reports. Essentially average lifespan of the annual reports is somewhere between 18 to 42 seconds. That is a colossal and criminal waste of paper and money.

I can bore you with details of the number of investors in the large companies and size of their annual reports. But you can easily appreciate the magnitude and save efforts on my part.

Here is my suggestion to SEBI. Make filing of annual report mandatory in pdf format for companies and post it on the website of SEBI and the exchanges (BSE, NSE) where it is listed. Investors are sent a small booklet highlighting the achievements of the company. If somebody is interesting in a physical copy, they can SMS their demat account number to a short code. (Stock investor base is much larger than the internet penetration, so there should be a way to get printed copy.) The company will send the annual report in all its printed glory to those investors who have explicitly requested a copy of the same. Imagine all those forests we are leaving for future generations. And all the investors' money saved. It will give you a warm and fuzzy feeling.

Final twist to this idea is to take it global. Why should the average American or Chinese or Brazilian investor be different? If SEC adopts this idea in USA, other countries will follow the suit someday. Greenpeace can then pursue this matter vigorously across the globe.

Now, where is my Nobel Peace Prize?

Photo courtesy: Myself

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