Delhi bourse trades in controversy

Incidentally, these three organisations have also acquired stakes in the exchange when it was demutualised. BCCL that publishes The Times of India and The Economic Times has a 5 per cent stake, TV18 that owns runs the business channel CNBC in India has 3 per cent and NDTV 1 per cent.

Jignesh Shah-promoted Financial Technologies, which also has picked up a 5 per cent stake in the company, has been roped in as a technology-cum-business partner. It was recently awarded a contract to start an online trading platform for DSE. The exchange hopes to start operations by the end of the current financial year and plans to apply with capital market regulator, Sebi, for starting an exclusive exchange for small and medium enterprises.

When contacted, Pradeep Kumar Jain, chairman, Delhi Stock Exchange, refused to comment, but said these deals happened before he had come on board. HS Sidhu, executive director, Delhi Stock Exchange told The Indian Express that money was paid upfront because DSE had got the best rates from the three media companies. He said there was no conflict of interest since the two deals 8212; the media companies acquiring stake in DSE and the exchange giving advertisement contracts to them 8212; were distinct.

Some shareholders pointed out the strong qualification on DSE8217;s decision to make advances against the advertisement contracts by the auditor firm P Bholusaria 038; Co in the AGM last week. 8220;The advances given, being non-refundable, are prima facie prejudicial to the interest of company,8221; the auditors said. The management, however, was confident that DSE would fully utilise the advertisement services to its best interest.

Much of DSE8217;s income comes from interest earned from fixed deposits and listing fees that companies pay the exchange as per their listing agreement.

In 2007-08, the exchange, which has a paid-up capital of just about Rs 3 crore, reported profits of Rs 2.4 crore on a total income of Rs 7.24 crore. It has around 2,800 listed companies including 1,800 exclusively listed small companies. But, according to DSE8217;s last available quotation list of April 2005, as many as 2,161 companies have been suspended for trading for not meeting the requirement under their listing agreement with the exchange.

The new owners of DSE, which completed the government and Sebi-mandated demutualisation process separation of ownership and trading rights and giving 51 per cent stake to non-broker members in August 2007, include realty players Parsvnath Developers and Omaxe Ltd with 5 per cent each, media companies BCCL, NDTV and CNBC, besides foreign investors New Vernon, Passport Global Master Fund and Wilmette Holdings 5 per cent each and some individual shareholders. The exchange was then valued at Rs 212 crore.

What8217;s the issue?

8226; Some prominent shareholders of DSE doubted the need for paying the amount upfront to the media outfits especially when there has been nil trading for the last five years on the exchange

8226; These three organisations have also acquired stakes in the exchange when it was demutualised

8226;Excutive director H S Sidhu says that money was paid upfront because DSE had got the best rates from the three media companies. He also says there was no conflict of interest