As a shareholder how many times have you actually bothered to sift through companies’ annual reports packed with data, numbers, facts, information? Unless you are a Chartered Accountant, a Finance professional or someone who holds deep interest in business, it’s unlikely that you will take time out to go through a large annual report PDF or a printed brochure. In fact, HT recently reported that the annual reports of most shareholders go straight into the dustbin and soft copies of annual reports have still not caught the fancy of investors. As businesses constantly attempt to change with the constantly evolving economic scenario, annual reports too haven’t been lagging behind.
Many companies are now beginning to rethink the purpose of an annual report. In addition to its core function of giving a financial overview of the company, annuals reports are also assuming the function of being marketing tools that companies can use to re-enforce their brand image. A handful of companies are now adding innovative elements to their annual reports and sprucing them up so that they can directly connect with the younger shareholders and investors of their company.
Which companies are making the changes and why?
Imagine opening the first page of the annual report of a company like Emami and finding ‘Main Zandu Balm hui, darling tere liye’ written in bright and bold fonts. Zandu Balm is one of Emami’s many brands and this was a real phrase in the famous item number from the movie Dabangg. Well, that’s Emami’s youth connect for you. Flip through the pages further and you will find other hit Bollywood numbers like ‘Baar baar dekho…haazar baar dekho or Sar jo tera chakraaye" embedded with the company’s facts and figures to bring back a young fresh vibe. In addition to this wackiness, bright and young colors, lots of interactive info graphics and information snippets won’t fail to catch your eye. The aim here apparently is to use the annual report to treat the investor / shareholder like a customer, to retain their interest in the company and to maintain an emotional relationship with them.
Kotak Mahindra’s annual report won the Gold Award for being the most creative report in Asia Pacific and the Platinum Award for the best report in the Banking category at the League of American Communications Professionals Vision Awards in 2010. Knowing this you’d probably expect the report to be well illustrated, error-free, drenched in analyses, forecasts, estimates and some sales copy. But lo and behold, Kotak Mahindra’s award winning annual report sports the theme of SMS language to celebrate their 25th anniversary – "Its grt 2b 25, V r 25 too". They also used pictures of their board members when they were 25 years old to add some chutzpah. The management wanted to communicate a clear message with this theme – although we’ve been around since a long time, out blood is still young and we’re ready to adapt.
While a handful companies have begun to attempt such innovations in their vital documents, Infosys has been the forerunner. They used images of Madhuri Dixit, C.K. Prahalad, Anil Kumble and Shivram Karanth amongst many other celebrities in one of their annual reports all the way back in the nineties, reported ET. Maybe, they envisaged the annual report as a marketing tool a little too soon.
Is the innovation worth it?
All the wackiness aside, brand experts do acknowledge that the urgent need of companies to communicate with the youth should not result in flippancy. This may end up having a reverse effect by tarnishing the company’s well built image.
The second flipside is that the youth actually wants to be treated as adults who can read serious texts of traditional financial documents. In such a scenario, companies need to think about who they are attempting to win over.
And lastly, innovative elements in annual reports need to be universal. At the end of the day, they are important legal documents. Using SMS lingo may be well taken in India but how is it going to speak to a person in American reading the annual report? They don’t text as much as Indians do and they may or may not be well versed with lyrics of Bollywood numbers floating around important company facts and figure. To re-iterate the popular management funda – innovating is good, but innovating for the sake of innovating is not!
With a balanced amount of innovation in the style and format of annual reports, companies should focus more on including CSR Indices, Carbon Footprint Indices and Sustainability forecasts in their annual reports. ET recently reported that compliance and recognition of Human Rights violations too may form an important part of a company’s annual reports, as soon as the Ministry of Corporate Affairs introduces the changes and guidelines formally.