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CSE plans austerity drive

Kausik Datta & Aniek Paul

The Calcutta Stock Exchange (CSE) has decided to introduce austerity measures to arrest capital erosion of nearly Rs 800,000 a day owing to drastic fall in its income vis-a-vis huge daily operational expenditure.

Confirming the development, CSE executive director Tapas Datta said, " the bourse is trying to identify areas where it can cut down expenditure to keep itself afloat."

Datta added that the complete range of belt-tightening measures would be introduced shortly. CSE sources said the exchange on Wednesday restricted subscription of newspapers and magazines.

Lyons Range sources said the bourse's daily turnover has gone down to below Rs 1 billion from Rs 15 billion in a month's time. This was partly on account of shrinkage of trades experienced in all bourses country-wide. In Calcutta, volumes had shrunk also because the badla markets have been wiped out by poor sentiment and market losses.

Considering the income of Rs 250 for business of every Rs 10 million, CSE's average daily income presently stands at meagre Rs 25,000. In addition to income from trades, CSE earns listing fees of nearly Rs 40 million once a year from the companies listed with the exchange.

In the financial year ended March 31, 2000, CSE incurred expenditure of Rs 277 million which was surpassed by income of Rs 377 million. The expenditure last year included donation of Rs 148 million towards Kargil Fund.

Apprehending that there would be no major improvement in its turnover and thereby income, the authorities' move to reduce expenditure has evoked good response among its employees.

A CSE employee said: "Given the tight income situation, the authorities would have to come out with austerity measures." However, the 125-odd employees were not sure whether the belt-tightening measure would call for sacrifices from them as well.

CSE sources said the on-going capital erosion, due to reduction in income, would take a turn for the worse if the bourse failed to raise Rs 600 million from the defaulting broking outfits.

The exchange has initiated criminal proceedings against 10 broking outfits of three defaulting brokers namely Dinesh Kumar Singhania, Ashok Kumar Poddar and Harish Chandra Biyani. However, the bye laws of the exchange give them a breathing period of 180 days to honour their commitments.

Lyons Range sources said even the authorities would manage to collect funds from the defaulting brokers, the amount would have to invested for improvement of the functioning of the exchange, including revival of the settlement guarantee fund. The amount, in no way, would be utilised to bridge the widening gap between expenditure and income.

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