Nowadays, the corporate annual report is dynamic and forward-looking. The corporate annual report (CAR) is available publicly, although mainly consumed by investors and shareholders. It is certified by a competent auditor and hence, reliable. The AI mainly segregates these into entities, extract value, derived and inferred, from which AI extracts custom data (entities) and insights. The AI provides the analysis (sentiment, trends of actual and forecast from data of last 3-5 years) of sections ‘Management Statement' and ‘Management Discussion' to the analyst. The AI helps in section 'corporate governance' by providing insights related to attendance in board meetings, compensation of directors, and suitability of independent directors' business profiles. The AI provides a network graph of directors and their appointments with various companies. In the past, the research used to happen manually and may take around 7-90 days, and the AI provides this information within one hour.
Top1. Introduction
The Corporate annual report’s (CAR) data is evolving from static and backwards looking to dynamic and forward-looking, harnessing the digital revolution. It has various purposes and various significant aspects for all concerned stakeholders. Let us dive into the details.
A. What is a Corporate Annual Report?
The corporate annual report (CAR) is the final report card of the publicly listed company. The primary audience is shareholders (current and prospects), and information is available online (on the company website) free of cost; hence, anyone can access it. It has various types of essential data and transactions to validate the company's health. CAR data is authentic, certified by the competent authority, and reliable. The tone of the reports conveys the sentiment of the company's overall prospects. The CAR is also a soft marketing tool.
The analyst and the media use this report for overall analysis. They provide an overall rating and persuade investors to remain invested or change the investment percentage. These activities are generally paid activities. The investor should make the payment, and sometimes, the companies pay for advertising a rosy picture. This leads to manipulation and suspicion. Hence, the analysis should be done by a self or trusted analyst. The manipulation aspect is out of the purview of this paper.
B. Why AI, for analysis of CAR
The CAR length varies from 50 pages to 500 pages. The analysis must be done along with the last three years so that trends can be verified, and forecasts can happen. The AI helps build a model for anomaly detection (deviation from movement) and forecast the growth in a few seconds. On average, the analyst takes from 1 day to 1 week per CAR, and the AI is getting the analysis done within one hour.
C. Various points to observe in CAR:
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How does the current performance of the company compare to past projections?
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Is recent performance in line with the industry's growth trends?
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Is growth projection (forecasted last year) achieved?
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If any loss is reported, then what was the value of the corresponding section for the last three years?
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Has loss changed the tone of the report and growth forecast?
- 6.
What is the projection for next year?
D. Challenges
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There is no unified format, and many write in their way.
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There are a few sections that state where this company stands. The lack of a standard format may result in incorrect data comparisons in those sections.
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The page count varies from 50 to 500. The analysis of content is a voluminous task.
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The number of entities varies from 500 to 2000.
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The financial table template differs a lot, even within the same industry.
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The subsidiary reports are not available in the primary information.
E. Samples
To make this paper objective and data-oriented, five different companies from diverse sectors have been chosen. The reports listed here are for two years, although for complete analysis, three years of data were used. The name of the companies is Infosys, Reliance, Cipla, State Bank of India (SBI) and Paytm. These are the leader in their respective fields and are internationally renowned. We want to put disclaimer that we are not associate with these companies in any way or connected in any ways. They have chosen for their leadership and diversity of samples. Here is a brief introduction about each of them.
Infosys is a leading global information technology and consulting firm based in Bengaluru, India. Founded in 1981, it specialises in software development, IT services, and consulting across various industries. Infosys is renowned for its technological innovation, research, and commitment to sustainability. With a robust global presence, the company is a trusted partner for businesses seeking cutting-edge solutions and digital transformation services (Infosys, 2022).