Why do so many Indian Companies delay their quarterly results?

In my ten years of tracking Indian stocks, the one thing that has intrigued me the most is the delay with which most Indian companies report their quarterly earnings. Let me illustrate this point with a delay summary for the current quarter, i.e. quarter ended Dec 2016. In the chart below, the x-axis shows the lag in reporting earnings in days from the end of the quarter and the y-axis shows the percentage of companies that have reported their quarterly earnings within that lag. This data comes from the icTracker database which tracks more than 400 of the largest Indian companies. 

Data from the chart lead us to the following conclusions

• Less than 10% companies reported their quarterly earnings within 20 days of the end of the quarter
• Despite a spurt of reporting activity in the next 10 days, less than 30% companies reported their quarterly earnings within 30 days of the end of the quarter
• At the end of 35 days of delay, less than 50% of companies had reported their quarterly earning
• At the time of writing this article, it is exactly 39 days of delay and yet less than 60% of companies have reported their quarterly results as of now.
• More than 40% of companies will be reporting their results with a delay between 40 and 45 days – which is the SEBI mandate for maximum delay.
• More than 20% of companies will be reporting their results on the last 2 days before the mandated reporting period end.

Isn’t this situation very appalling? This kind of lackadaisical attitude in reporting quarterly earnings by Indian companies not only smacks of apathy towards the capital markets but also betrays the trust with which investors have invested their hard earned money in such companies. More importantly it also raises questions in the mind of the investor about the (lack of) prevailing Corporate Governance within the Company. Management credibility is surely eroded in every company that this happens on a regular basis.

Why then do managements delay results so much at the risk of seriously eroding their own credibility? Here are some plausible answers and my own responses to them.

We have many locations and subsidiaries and have to collect and collate data from all of them - If large companies such as Infosys, TCS and Reliance Industries which have multiple locations and subsidiaries – and many of them overseas subsidiaries - can report their quarterly results within 15 days of the end of quarter, so can you.

We are ready, but our auditors are not available - Appoint an auditor who will be available.

A complete audit takes a lot of time - Investigate and fix the reasons for the delay in the audit. Consider reporting unaudited results with only a limited review by the auditors in the meantime.

Our auditors have submitted audit findings which we need to rectify - Do it quickly. This should not warrant delays of weeks.

And to those companies that delay results with the intent of delaying bad news, remember that the Internet is a great leveler. Capital Markets have an uncanny knack for sniffing out news about bad results much before the company reports them. Hence, discovery of such malicious intent only ends up denting the credibility of the management. On the other hand, the few companies that have made investments and efforts in reporting their earnings as quickly as possible not only find favor with analysts, but also with investors in the long run.