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C.R. Sukumar

HYDERABAD, May 27

WITH the deadline issued by the Securities and Exchange Board of India (SEBI) for completing the corporatisation and demutualisation of stock exchanges nearing, the Hyderabad Stock Exchange (HSE) has stepped up the process of valuation of its assets and liabilities and preparing a golden handshake package to its employees.

According to sources close to the exercise, the six-member Committee on Corporatisation and Demutualisation has expressed the view that the transformation of stock exchange in the recent past from traditional outcry and manual system to online, electronic and demat system has made the exchange `highly overstaffed'.

As on March 31, 2003, the regional bourse has 113 employees on its rolls. Stating that the exchange has no choice on restructuring and viability exercise as directed by the market regulator, sources told Business Line that compulsory retirement has to be given to a sizable number of staff.

Admitting that the issue always has been a sensitive and emotional one, they said the panel would, however, be finalising the optimum staff structure only after holding discussions with the employees' union and provide the compulsory retirement scheme to the surplus staff.

Sources indicated that the Committee has favoured retaining the younger employees, who completed below eight years of service, and to offer compulsory retirement scheme to almost all those employees who completed service from eight years to 28 years.

Stating that there were around 65 employees who had completed service from eight years to 28 years, sources, however, said certain key personnel of these senior employees were likely to be retained.

"In the case of providing compulsory retirement scheme to all these 65-odd senior employees, the Committee prefers to give them half-year's salary for every completed year of service. This works out to a maximum amount of Rs 32 lakh towards VRS, which the exchange has to pay," sources said.

Having discarded the proposal made by Deloitte Haskins & Sells for associating with the exchange as demutualisation advisors, the HSE panel has preferred to avail of the services of two of the Chartered Engineers and Approved Valuers for the exercise of valuation of assets and liabilities.

"While the assets were valued at around Rs 68 crore, the liabilities were estimated at around Rs 11.5 crore, taking the networth of HSE to little over Rs 56 crore. The complete report on corporatisation and demutualisation is expected to be ready by June-end for submitting to the SEBI. However, the deadline issued by the market regulator is July 30, leaving enough time for the exchange to complete the exercise of golden handshake to its employees," sources added.

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