The ministry of corporate affairs (MCA) plans to proceed only gradually on its ambitious scheme, proposed late last month, to convert statutory information of 1.39 million registered companies into readable statistical information.

The proposed 'corporate data management' scheme was aimed at more transparency in company functioning and wider dissemination of sectoral data. It was to be launched in a phased manner. As a first step, it was proposed to cover about 7,000 listed companies in three years.

At present, it becomes difficult for users to read balance sheets of companies the way these are posted on MCA21, the e-governance site of the ministry on which all registered companies have to file their information.

An official said, "A user trying to get, say, the debt-equity ratio of four different companies of the same sector, gets confused as each company's balance sheet is written in a different manner." He said the initiative would give the user the required information in a reader-friendly way.

MCA had sought stakeholders' comments on this initiative. The official said, "We are proceeding cautiously with the pilot project. This programme is basically for public awareness, so we have to see how the public will respond."

User response apart, MCA's challenge is that it does not have any successful model in the government to rely on. It had said last month, it "would enlist services of information technology (IT) firms, consultants and experts engaged in outsourcing services" for the scheme. As there is no precedent, getting an IT company for this job might be a challenge.

The formal notification for launch of the pilot scheme is expected by September-end or the start of October, after MCA takes into account the feedback from stakeholders. If the pilot projects are successful, the ministry plans to create a new data set in the second stage of the scheme, when data from about 60,000 public companies will be gathered and disseminated in a reader-friendly way. Ultimately, the programme expects to cover all 13,94,000 registered companies.

Beside balance sheets, this new data set is expected to be created from additional information to be had from companies such as job details, export-import revenue and external finance transactions. The pilot one would cover only the balance sheets of listed companies.

"There is a need to seek supplementary information from companies as and when needed for policy analysis and regulation, etc," MCA said in its note.

Nobody is sure on the extent of disclosure that companies will be comfortable with. "Stakeholder readiness is always taken into consideration. We will try to take industry into confidence while seeking such information. But they have to understand that this information is only for better policy making," the official said.

At present, most of the supplementary information is provided by different industry lobby groups. "No disregard but they are not basically for public purposes. Compared to this, MCA's information will always be more reliable," the official added. (Business Standard)