Weighed down by the steep fall in operating and non-operating income and interest payment to its members on their deposits for building space, the Bhubaneswar Stock Exchange (BhSE) has reported a net loss of Rs 18 lakh for 2010-11, the first in the history of the regional exchange.
The loss is mainly attributed to factors like interest of Rs 4.70 lakh payable to the members on their deposit for building space and steep fall in operating and non operating income by Rs 8.98 lakh compared to the preceding financial year.
The profitability has been further eroded by charging Rs 7.51 lakh to the revenue as a rectification on account of erroneous treatment of one per cent security of listing company as listing fees income during 2007-08 as pointed out in the inspection report of the Securities and Exchange Board of India (Sebi).
Meanwhile, the annual general meeting (AGM) of the BhSE is set to be held on Saturday.
Out of Rs 11.51 lakh interest payable to trading members at the rate of 5.5 per per annum decided by the BhSE board on March16 this year, the cost of completed portion of the building has been capitalized by Rs 3.90 lakh after adding Rs 2.90 lakh to the capital work in progress and the balance being charged off to revenue.
“Interest payable, decided four years after the receipt of the deposit do not appear to be normal and inherent to the construction project.
“The management in order to hide its inefficiency has capitalized part of the interest which is not in accordance with the Accounting Standards (AS)-10 on 'Accounting for Fixed Assets' and AS-16 on 'Borrowing Cost' issued by the Institute of Chartered Accountants of India, required to be complied with as per Section 211 (3A) of the Companies Act, 1956,” said a member of BhSE, requesting anonymity.
The existing building project of BhSE has sunk into uncertainty with the board of BhSE deciding to put off the construction plan for the fourth floor.
The BhSE building is yet to obtain occupancy certificate from the Bhubaneswar Development Authority (BDA).
