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Informist, Friday, Jun. 13, 2025

 

MUMBAI – Company valuation experts should increase the number of disclosures and be accountable for extreme deviations, said Ananth Narayan, wholetime member of the Securities and Exchange Board of India. He also raised concerns over conflict of interest between companies and valuation experts, and the trend of seeking favourable valuations.

 

"Just as Credit Rating Agencies (CRAs) now disclose rating histories and are held to standards, it may be time for valuers to disclose assumptions, sensitivity ranges, and track records, and be held accountable for egregious deviations," Narayan said. He made these comments at an event in Mumbai, a transcript of which was published on the SEBI's website Friday.

 

At the event, he also urged Indian companies' chief financial officers to work on releasing annual reports quickly and reduce the time lag between the report and financial results. He said companies currently release annual reports 70-140 days after their full-year financial results.

 

"Shortening this gap would significantly enhance transparency for investors," Narayan said. He also urged CFOs to ensure audit committees and auditors engage more with each other in framing a year's audit plan.

 

Narayan said companies need to safeguard investors from governance failures, technology breakdowns, fraud and manipulation, which can damage investors' trust. He acknowledged there have been several instances in the past when companies have breached investors' trust. "There have been cases of funds siphoned off from listed entities...insider trading...sharp accounting practices...," he said.

 

Such instances have pushed regulators to tighten norms around disclosures, which could also pose a risk, he said. "Over-regulations can hamper genuine capital formation", he said.

 

Narayan said companies' CFOs need to be more proactive and take part in SEBI's forums such as advisory committees, public consultations, and regulatory working groups. This would help SEBI create rules that are balanced, he said.  End

 

Reported by Anshul Choudhary

Edited by Deepshikha Bhardwaj

 

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