The Hindu Business Line : Nil trading helps DSE post higher profits

STRANGE things are happening at the Delhi Stock Exchange (DSE). For the past three years, the exchange has been posting higher and higher profits even as trading activities have slowly reached rock bottom.

During 2003-04, even though DSE recorded nil trading for the entire year, the exchange is set to post an all-time high profit of more than Rs 4 crore, sources said.

According to them, this is because the exchange's income remains the same while expenses are reducing.

The income comes in the form of listing fees and interest on fixed deposits while the expenses are mainly on account of running the electronic trading platform, establishment costs and salaries.

On one hand, there is savings as there is no trading and, therefore, nobody logs on to the system. On the other, people are leaving the organisation for better prospects.

During 2001-02, the exchange had 244 active members and recorded a turnover of Rs 5,825 crore. It recorded a loss of Rs 3.69 crore after providing Rs 3.96 crore for depreciation. It was in the second half of 2001-02 that trading activity started slowing down.

The next year, DSE recorded a turnover of Rs 11 crore with only 48 active members while the remaining 196 members had stopped using the system on the grounds that it lacked depth and liquidity.

But it augured well for the exchange's balance sheet. DSE recorded a cash profit of Rs 1.38 crore after providing Rs 2.73 crore for depreciation.

In 2003-04, though the final accounts are being prepared, the profit for the year is expected to be more than Rs 4 crore even after providing for depreciation, the sources told Business Line.

"This situation is also the outcome of a condition laid down by the SEBI regarding delisting, which stipulates that a stock can be delisted only after completing three years from the date of listing," officials said.

As a result, companies continue to pay the annual listing fees to the exchange despite the lack of trading.

The three companies that got listed on DSE most recently are Bharti Televentures, Punjab National Bank and Jindal Stainless.