The Hindu Business Line : A number cruncher looking for value reporting

VIPIN Malik is a chartered accountant whom banks may be afraid of, especially after his latest work, Value Reporting and Global Comparative Advantage published in two volumes by VMA Infomerics P Ltd (vmalik@spectranet.com). Unlike most number crunchers whose only focus is a bulkier bottomline, Malik is a chaser of value in reporting by banks. `Key attributes' of value reporting, according to him, include comparison of the bank performance with economic development, disclosure of government directed lending and investments, providing statistics such as business per branch, list of major clients and sector exposure, and disclosure of penalty/warnings issued by regulators. A report card that is a must-read benchmarks public sector banks against 27 `attributes', indicating, using ticks and crosses, information availability. There are rows such as `dividend policy', `disclosure of review by analysts/ FIIs and so on', where you find `X' uniformly for all banks. Black holes, beware.

Ranking of banks, both public and private, Indian and foreign, is also presented, wherefrom you'd know that none makes it to the A-1 grade. At the next rung, `A-2', are Canara, Corporation, OBC, PNB, J&K, Citi and HDFC. The bottom league of `C' includes Dena, Punjab & Sind, Catholic Syrian, Dhanalakshmi, Centurion and so forth.

Malik reworks net income of five banks, namely OBC, HDFC, ICICI, PNB and Corporation, as per US GAAP. Coefficient of variation is the highest, at 112 per cent, for ICICI, shows a table in the book. For the financial year 2003, its `net profit as per Indian standards' is Rs 11,520 million, but the same translates to minus 7980 `as per US GAAP', after considering the following: "Profit on sale of ICICI Bank shares, higher provision for loans & investments, lower treasury income, amortisation of intangibles" and so on.

The author has made available the spreadsheets on www.infomerics.com, so you can study the database. `Ultimately', Malik aims to provide on the site `balance true worth' of banks and companies. BTW, is that not ominous?

Charts are sprinkled throughout the book to educate the reader. One such gives the synopsis of the Banking Regulation Act, while another presents the `environment of the financial sector'. Yet another deals with `risks': those that banks manage, and those not managed separately. Heavier concepts such as OCB and money laundering are also explained diagrammatically.

Recent changes, as for instance, the `fit and proper' criteria for board of directors, find place in Malik's discussion. Nuts and bolts of financial metrics are elaborated upon in the second volume. Section XIV of the book may interest analysts; for `top twenty banks in India' there is a complete analysis.

Malik's work is good value for money.

BooksOfAccount@TheHindu.co.in

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