The decision of Dr. Reddy's Laboratories to delist its shares from four regional stock exchanges has come as a shock for the Hyderabad Stock Exchange (HSE) which is now surviving purely on the listing fee income in the absence of trading volumes.
Dr. Reddy's decision looks like the beginning of a trend which is likely to see the exit of several local and non-local companies in the near future.
Currently, about 900 companies are listed on HSE, of which 350 are non-local companies. Of the 550-odd local companies, only 250 to 300 companies are promptly paying annual listing fees which make up an aggregate amount of about Rs 1.8 crore.
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If more and more companies opt for delisting on the pretext that their shares are not at all traded on the exchange over the last few years, HSE runs a risk of losing most of its listing fee income.
On the non-local companies front, companies like ITC and Jindal Vijayanagar Steels have already initiated steps to delist their shares from the exchange.
HSE presently gets annual listing fee based on a slab system, which is pegged at Rs 16,800 for the companies with a paid-up capital of upto Rs 5 crore, Rs 28,000 for companies with a paid-up capital of Rs 5-10 crore, Rs 56,000 for companies with a paid-up capital of Rs 10-20 crore and Rs 84,000 for companies with a paid-up capital of Rs 20-50 crore.
However, as per the SEBI (Delisting of Securities) Guidelines 2003, companies have an option to delist their shares from the regional exchanges by passing a special resolution at the general body meeting. These guidelines come into effect from February 2003.