Petition to SEBI to include Customer Concentration Risk in Annual Reports

Hi Everyone,
As a fellow valuepickr member and a participant in the Indian Capital Markets, it is my persistent observation that the IPO documents (DRHP/RHP) in general contain a lot more information that yearly Annual Reports published by the companies, and probably rightly so.

I mean it is very evident that prospectuses contain numerous pieces of information which includes Risk Factors, Our Business, History and Corporate Matters, etc.

While it is understandable that mandating companies to include things like Risk Factors etc. in Annual reports might be an arduous task, I opine that mandating companies to publish what is the “Customer Concentration Risk” as in revenue-contribution from Top-5 and Top-10 customers would be a useful metric for investors at large (it being a heavily quantitative rather than qualitative stuff requiriing pages and pages of write-up) and at the same time it is not a costly affair for companies since it is all but just an Accounting/Excel sheet pull using a simple pivot table! :slight_smile:

Just as the SEBI mandates Foreign exchange earnings and Outgo in Annual reports, so too they can mandate Customer Concentration in Annual reports, just as they mandate in DRHPs is my intention.

Same way, we may probably ask for inclusion of:


revenue bifurcation for B2B, B2C and B2G segments of a business, where applicable.

I agree that Customer concentration would probably be apt more for a B2B company rather than a B2C(I mean a retail-centric) company, hence the reporting could be case-specific.

To this end, I did write to two SEBI people ananthg@sebi.gov.in and ashwani.bhatia@sebi.gov.in quite some time back and even the SEBI chairperson but none of them replied, even after following-up! :slight_smile:

It is my suggestion that, as fellow Valuepickrs, we as a collective body, as an influential community (with collective bargaining power) can take this task up with SEBI, with some prominent and eminent boarders in place here, taking a call to action and spearheading this initiative and accordingly conveying a petition to SEBI, requesting to effect this. It is my opinion that it will be futile as an individual pursuit it but collectively, we valuepickrs, could achieve wonders.

Hence, my post.

5 Likes

Hi Anant …Today , there are many basic flaws exist like many listed corporates take retails investors money and do not even bother to post any updates about the company or con calls or some update at least once in 3-6 months.

Further, I think its not about just one metrics but retail investors are left on mercy of god. Management should be accountable to what they say in con calls . Maybe a template or mandatory set of the thing should be followed periodically.

One another pattern ,Pumping and dumping is very common than before , I think this should be more controlled by regulator’s, its all happening everywhere.

Integrity of merchant bankers is also questionable as they help are helping the company management doing pump and dump.

I believe its a good start and thanks for initiating .

@Donald @harsh.beria93 @hitesh2710 @harshitgoel @basumallick
Want to tag some experienced members of the community in advocating this cause and if we could formulate a plan to approach this initiative.

Would anyone like to pick this from where it was last left?
I think this will be a great value-addition for our markets. I am ready for a collective effort towards this front. Please anyone can message me/esp. experienced boarders on this.