Madan Lal Bhasin
Objective: This is an exploratory study, which focuses on two issues: (a) mapping the current state of intellectual capital (IC) reporting scenario, and (b) attempt to measure the value of IC by the selected 8 companies in the Indian pharmaceutical industry during the 5 financial years.
Methods: The Modified Intangible Assets Monitor is used to capture the reporting of elements of the IC framework. The technique used for calculation of reporting index is content analysis applying the five-point rating scale.
Results: The findings show that, on an average, the sample companies reported a positive value of IC; significant correlation has been noticed between tangible assets (TA) and net operating profits (NOP). However, no significant difference was found between percentage of IC to MV, and per cent of TA to MV. The study finds wide-disparity, low-level, and purely voluntary nature of the ICR made by the selected companies. But as expected, IC reporting are very low and substantially differs across these companies. First three top ICR scorers were: Dr. Reddy’s, Aventis Pharma and Aurbindo; they get first, second and third ranks.
Conclusion: The IC reporting done by the sample companies does not adequately fulfill the information needs of stakeholders, and hence companies need to report more meaningful information in their annual reports or in separate IC Reports. Furthermore, the above analysis reveals that the IC Reporting among Indian pharmaceutical companies is very low. It is recommend to the international accounting bodies, to take the lead by establishing a harmonized ICR standard, and provide guidance to the big listed companies for proper measurement and disclosure of IC, both for internal and external users.
