Corporate announcements continue to resemble a game of smoke and mirrors. Take the case of Wockhardt Ltd, India’s fifth largest drug maker by revenue. It has now admitted in its annual earnings statement that the mark-to-market losses on its derivative positions last year totalled Rs27.9 crore. Mint had reported in March that Wockhardt would take a significant hit because of cross-currency options and other structured products. The company denied this and said in a statement that it will “neither incur any losses arising out of the derivatives-hit scenario in the current quarter, nor will there be a situation of such losses to occur subsequently.”
As we have said here before, companies are not taken to task for such misleading statements. Unfortunately, neither do we have strong regulatory mechanisms to pull up companies that give misleading information nor do we have activist institutional shareholders who will subsequently ask tough questions. It’s time we took corporate disclosure far more seriously.