IR is a strategic management responsibility that is required to be met incessantly, especially for publicly-traded companies.
Shareholders are getting powerful. Investors are demanding Transparent Business Information, Regulators are forcing companies and promoters to abide by RBI and SEBI norms, and overall, it is becoming a cumbersome business experience for the company which believes that having a section of Investor Relations on their website and uploading financial results and stock exchange communications is more than enough to address Investors.
It was never the case and certainly not in the present business scenario where shareholders and investors expect to communicate with them all the time, inform them, engage them and address their concerns, if any, before making any major business decisions.
Presently, shareholder activism in Indian is at its peak and in a very robust stage. Shareholders and now taking decisions to reject salary hikes of managing directors, striking down promoters’ plans to delist their companies, challenging promoters’ decision to sell the company, objecting to the appointment of independent directors, and all.
Shareholders are now only satisfied with multiple returns on investments, many folds increase in share prices and with handsome dividends. They are demanding more, they are demanding information, demanding participation, they are judging the personal performance of MD, CEO, and CXO’s, they are also keeping close on any M&A attempt made by the company without their consent.
It is wake-up time.
It is a time for promoters, board members, and C-suite executives to wake up to the needs and demands of shareholders and starts playing an effective role in trusteeship, and avoid extending and pushing unreasonable financials.
While shareholders flexing muscles is good to an extent, any delay in taking the right decision can lead to regulatory non-compliance, loss of financial and share value, and job losses, and therefore one needs a dedicated Investor Relations professional to handle and tackle this crucial aspect of the business.
Investor Relations is a Strategic Management Function.
Investor relations ensures that stock is being fairly traded through and no insights and key information is leaked to surge share movement. A fair flow of information helps investors to determine whether, they invest for short terms or long term as per their needs. Investor Relations function is an associate function of two of the most important department of a listed company, Secretarial department and Finance departments and assist in communicating with investors, shareholders, government organizations, and the overall financial community.
The objective of the IR department within a company is to help investors make informed decisions in their actions regarding the company’s equity. The IR department does this by providing up-to-date information about the company’s operations, financial statements to current and potential shareholders, as well as third-party equity research analysts.
IR is a strategic management responsibility that is required to be met incessantly, especially for publicly-traded companies. It integrates finance, communication, marketing, and securities law compliance and enables effective two-way communication between a company, its shareholders, and the financial community.
How to Build Investor Relations Strategy.
Understand your shareholder base: Research your shareholders’ investment styles to determine why they may have purchased shares – and what can cause them to sell.
Review a disclosure policy: A detailed disclosure policy controls the communications that a corporation has with the investment community. Try and understand all the channels of communication at your company, and also make sure that the corporate spokespeople listed in the disclosure policy are suitable.
Develop an IR plan: IR strategy should focus on key messaging, targeted investors, and outreach plan. It is also very important to determine a right mix of investor conferences and invite sectoral analysts to communicate and highlight key achievements and issues.
Develop investor positioning: The main messages to the investment community within all of your communications should address the question, “Why should investors buy stock from the company?”. Develop a clear, financially oriented investment thesis that conveys the value drivers of the business.
Review the IR website: Make sure your platform has all the functionality and information which the investors typically expect on IR pages.
Ensure IR execution: A company is valued on the basis of the on the basis of financial performance and shareholder value creation and communicating those results to investors regularly
Investor Relation Process:
• Financial and Result Based Communication
• Stakeholders and Analysts Communication
• Financial Media Relationship
• Shareholders Activism –Proxy Campaign
• Shareholders Perception Audits
• Reputation Management
• Non-aggressive sales promotion
• Compliance with the rules and regulations of securities commissions and stock exchanges with which the company is registered
• Presenting the feedback from investors to the company’s management and Board of directors
• To build long-term credibility with the investment community
• Creating responsive capital markets at attractive terms for future financing
Praphull Chandan Jha is Head–Investors Relations & Strategy at PR Professionals Group.