This article first appeared in Mint | 7 August 2012 | Written by Gayatri Jayaraman
In 2010, Maruti Suzuki India Ltd picked a ballerina “Surpassing Self” to represent its year. In 2011, it was “Techno logical”. In 2012, it chose love. “Every company has a story that is told through its annual report. The story need not be a sad one. It can be a positive, confidence-building story. It is a continuity in telling the tale, the ‘how we will move forward’, that we owe our investors,” says Vivek Kumar, deputy manager, investor relations,
This year, the annual report of the Austrian Solar Trade Association won the Design Grand Prix in Cannes for its use of photochromic ink, visible only in sunlight. The idea that the annual report fundamentally needs to draw eyeballs, be read, and must speak directly to a new demographic of investor, is taking root in India too.
It is why Kotak Mahindra Bank Ltd incorporates SMS language in the “Contnts” of “Its grt 2b 25” report of 2010-11 and includes images and coming of age stories of its board of directors when each was 25. The 2011-2012 report, more sober, is equally graphic. Karthi Marshan, executive vice-president and head, group marketing for Kotak Mahindra Bank, says the report tied into the ad campaign. “We were not shooting for cool, but it came along with young, as a bonus,” he says. “The annual report is a living brand document. We are investing in the future investor.”
McLeod Russel India Ltd, the largest tea company plantation in the world, drafted a premium report for the first time this year. Hindusthan National Glass and Industries Ltd (HNGIL) report forms die-cut butterfly wings, cocooning its financial statements. The Dainik Jagran group’s colour and numeric-coded report have received honourable mentions.
Jammu and Kashmir Bank Ltd’s report reads as a photo essay on the embroiderers and handicraft workers of the state.
Soy inks, brown paper, recycled paper, and microsites are hot. Parksons Graphics, an award-winning printer, is currently designing a 3D report for an energy company. At the ongoing PrintWeek India 2012 awards, entries range from leather bound books to eco-friendly brown paper reports. Indian energy and mining companies, such as Cairn India Ltd and Sesa Goa Ltd, conscious of their public image, have swept recent international design awards.
There are two key reasons for the evolution: the downturn, and foreign direct investment. It’s reflective of an industry in a state of upgrade. Infosys Ltd was one of the first to break the format back in 1993 when it was listed. Till then, V. Balakrishnan, CFO, Infosys, explains, the annual report was purely what was required by law. Time lags meant the report lost its importance by the time it reached an investor. “We wanted to change that,” he says.
Infosys began printing the balance sheet based on the accounting rules of six countries and the US and has since evolved to focus on a theme every year and progressively enhanced disclosures.
"Investors require the same set of global standards to be applicable to Indian companies. Corporates also try to benchmark against the best in the world. The global listings by companies have accelerated this process,” said Balakrishnan. “Global investors today do not distinguish between an Indian company and a US company. So companies which are better run and able to articulate it well through corporate statements like the annual report will be able to attract the global investors. It is clearly a reflection of the country and the companies in India coming of age.”
Balakrishnan is an advocate of the interactive online format and trends such as XBRL (eXtensible Business Reporting Language) that appeal to a tech-savvy audience and sends out only an abridged annual report
Tata Motors Ltd reports before and after the acquisition of Jaguar Land Rover are a case study of sorts. H.K. Sethna, company secretary, Tata Motors, says: “It’s not so much since the acquisition of Jaguar as since Tata Motors was listed at the New York Stock Exchange in September 2004. As the company started gaining acquisitions, we began printing two types of annual reports—one with a US listing, which is a consolidated report with GAAP (generally accepted accounting principles). The Indian report carries company information on a stand-alone basis.” There are no gimmicks, says Sethna. Even so, evolution is necessary. He adds: “What is key is functionality and friendliness, keeping MCA (ministry of corporate affairs) guidelines in mind. However, one wishes the investor would actually read micro details.”
Value investors such as Chetan Parikh read all manner of reports. He insists it’s important for companies to put out a penetrating strategy discussion, to ensure there are no typos, and not distort information with gloss.
“Some companies do a great job balancing gloss with information. But a Tata Global Beverages or a Nestle put out simple, clear information. Simplicity can be designed well too. I see the rise of gloss as a bandwagon effect or more outsourcing of the task, and pricing issues,” he says.
So, why should design matter as much as solid, functional figures?
K.V. Sridhar, national creative director of Leo Burnett India, explains: “You can call yourself all manner of a progressive company, but if the document that stands for you doesn’t spell progressive, your claims fall flat.”
It also distinguishes companies that claim the façade of a young image without imbibing it. Rajeev Ravindranathan, director of People Design and Communications India Pvt. Ltd, Bangalore, says: “It’s a fundamental fracture in a company’s philosophy of communication if a firm that spends crores on an ad campaign doesn’t treat the most important document it can put out, with respect.”
What a company won’t spend on its annual report, is as telling as what it will.
“Today companies are driven by their stories,” says Abhishek Kejriwal, director of Parksons Graphics, who designed and printed 86 annual reports in 2011, and has hit 100 in 2012 already. The industry is booming, he says. A figure is not always sufficient to tell the entire story.
What impedes design? New accounting standards, increasing mandatory pages and the number of shareholders. “Performance, life-cycle, management style and industry play a role,” says Arvind Agrawal, CEO of Atherstone Investor Communications Ltd, South Asia’s largest specialist annual report design firm. “Media (industry) is OK to be a little over the top but steel is not. We don’t think that such stereotypical boundaries should exist in the minds of companies, but they do. That impacts design,” he says.
Budgets in the West are larger for annual reports, and print runs smaller—in the 2,000-4,000 range. Reliance Industries Ltd printed three million copies of the annual report for its annual general meeting (AGM) this year. Only 250 companies currently opt for stylized reports out of 7,000 listed companies in India, says Agarwal.
The world over, annual report design is an exciting space. In 2007, the Netherlands-based design firm Fitzroy designed a report for IMC, an international derivative trading house, using green and red filters to demarcate increases and declines across 24 pages marking the 24 hours of a trading day. Only IMC’s trading fields remain visible through the filter. Bruketa and Zinic, a Croatian design firm, designed food company Podravka a report that had to be oven baked to be read. Each gimmick is a deliberate extension of a company’s core identity.
An older design Sridhar hands out as an example is by Orbit Corp. Ltd in 2008-09. The jacket is a bright red, to represent the downturn. “Yes, the going got tough,” it reads. The report itself is a vibrant green. “…We are confident the red will give way to green,” it says. A reader must pull the green out of the red, to read. Symbolism works just as well as high-end effects.
Mudar Patherya, Chief Positioning Officer of award-winning Kolkata-based boutique design firm Trisys Communications, says: “Overseas, innovation cuts clutter. In India, the need to communicate needs to be established. Our companies have to see themselves as worthy of a statement of an annual report.”
Because the bottom line is not just a figure, but a sense of self-worth.