Annual Report Disclosure Dr D D Bedia Director

Annual Report Disclosure Dr D D Bedia Director Pt. Jawaharlal Nehru Institute of Business Management Vikram University, Ujjain (M. P. ) 1

Introduction In present scenario, despite the global change, HRA is major issue for research & analysis. It has been taken as very ‘soft & light issue’ whose contribution generally can’t be measured in monetary terms. Human Resource is not considered in the different balance sheet models, and only in the p & L statement, hr costs or expenditure are taken in account. Recent literature has focused on a broader measurement namely that of “ intellectual capital. ” 2

Introduction As it is the combination of HR & Accounting, joint efforts of behavioral scientists, accountants and managers are needed for the working and development of HRA. Human Resource (Qualitative term) + Accounting (Quantitative term) = HRA (Monetary term for qualitative factor) 3

Objectives of Study • To describe the systemized view of human resource accounting practices in India. • To make relative analysis of Indian companies on the basis of HRA annual disclosure attributes. • To find out the interrelationship between changes in intangible asset values and employees cost. • To find out the relationship between investments and employees cost. • To find out the relationship between profit and employees cost. • To find out the relationship between investments and total ranking of human resource accounting attributes. 4

• Secondary Data Based To identify the organization which publish maximum information regarding HRA, the annual reports of ten Indian companies were scanned. • Questionnaire Tool To evaluate quality of HRA disclosure certain 08 attributes were identified and on the basis of those attributes one questionnaire was prepared. 5

Research Methodology • Few Attributes are: ü Employee Cost ü Intangible Asset ü Particulars of Employees ü Distribution of employees ü HR Ratios ü HRA Model ü HR Valuation etc. 6

Research Methodology • Ranking Given for attributes 1 – High level disclosure 0. 5 – Moderate level disclosure 0. 25 – Low level disclosure 0 – No disclosure • Formulae used for measuring relationship Karl Pearson's Correlation Coefficient 7

Analysis & Findings S. N. Attributes ACC SAIL BHEL ONGC Mecon EIL Lt. 1 HR as intangible R NTPC Infosys MPRL Total Power (10) 0 0 0. 5 0. 25 2. 25 asset 2 HRA Model Name 0 0 0 1 0 2. 00 3 Separate 0 0 0. 25 1 0 0 1 0 2. 25 of 0. 5 0. 5 1 1 0. 25 6. 25 of 0. 5 0. 25 1 0. 5 0. 25 5. 5 0 0 0. 5 0. 25 0. 5 0 2. 00 1 1 10. 00 0. 25 0. 50 0. 25 0. 5 1 0. 25 4. 25 2. 00 4. 25 5. 00 3. 25 2. 75 2. 25 4. 25 6. 5 3. 00 8 HR valuation 4 Particulars employees 5 Distribution employees (Category, age etc. wise) 6 HR related ratios 7 Employee cost description (Salary, wages, welfare, benefits etc. ) 8 Disclosure of HRM Total (8)

Analysis & Findings • Changes in the values of intangible asset and employee cost as per annual reports of different Indian companies during 2007 -2008 S. No. Company Name Changes in employee Changes in intangible cost (in Crore) asset value (in Crore) 1 Infosys 1766 100 2 SAIL 2842 92 3 NTPC 733 24 4 ONGC 1146 13 5 BHEL -239 7 6 MPRL 70 2 7 ACC 59 1 Mean 911 34. 14 1103. 21 43. 02 St. deviation Correlation – r = 0. 88 9

Analysis & Findings • Changes in the values of investments and employee cost as per annual reports of different Indian companies during 2007 -2008 S. No. Company Name 1 MPRL 2 ONGC 3 Infosys 4 SAIL 5 BHEL 6 ACC 7 NTPC Mean St. deviation Correlation – r = -0. 01082 Changes in investment Changes in employee value (in Crore) cost value (in Crore) 618 70 198 1146 125 1766 24 2842 0 -239 -166 59 -827 733 -4 437. 5504 911 1103. 206 10

Analysis & Findings • Changes in the values of profit after tax and employee cost as per annual reports of different Indian companies during 2007 -2008 S. No. Company Name Changes in profit after Changes in employee tax (in Crore) 1 SAIL 2 ONGC 3 MPRL 4 Infosys 5 NTPC 6 BHEL 7 ACC 1335 1059 746 693 550 445 Mean -226 657. 4286 St. deviation 494. 3996 Correlation – r = 0. 725667 cost (in Crore) 2842 1146 70 1766 733 -239 59 911 1103. 21 11

Analysis & Findings Changes in the values of investments as per annual reports of different Indian companies during 2007 -2008 and total of attributes ranking of the same companies as per analysis. S. No. Company Name Changes in investment Total of attributes ranking out of 8 value (in Crore) MPRL 1 618 3 ONGC 2 198 5 Infosys 3 125 6. 5 SAIL 4 24 2 BHEL 5 0 4. 25 ACC 6 -166 2. 25 NTPC 7 -827 4. 25 Mean St. deviation Correlation – r = -0. 0178 -4 437. 5504 3. 89 1. 60 12

Analysis & Findings • The values of employee cost as per annual reports of different Indian companies for 2008 and total of attributes ranking of the same companies as per analysis. Total of attributes S. No. Company Name Employee Cost (in ranking out of 8 Crore) Infosys 8878 1 6. 5 SAIL 7937 2 2 BHEL 2370 3 4. 25 ONGC 2292 4 5 NTPC 1896 5 4. 25 ACC 416 6 2. 25 MPRL 125 7 3 Mean 3416. 29 3. 89 St. deviation 3530. 14 1. 60 Correlation – r = 0. 336 13

Conclusion Realizing this, many companies world-over are making HRA as a necessary element on their balance sheets. Experts point out that company can derive many benefits by going in for HRA. Not only they can measure the return on capital employed on total organizational assets (including the human assets), but the resources can also be planned accordingly. 14

Conclusion • The disclosure practices of various Indian companies which publish HRA information show that most of the companies have focused on the disclosure of general HR practice and employee cost valuation which shows only cost factor. The application of HRA is mostly used in public sector units but in private and service sector where human resource are being considered as key element for growth of the business should initiate HRA practices. 15

Conclusion Hence, considering the great significance of HRA proper initiation should be taken by the government along with those other professional & accounting bodies at national levels for the measurement of such valuable assets. 16