KARACHI – The Karachi Stock Exchange (KSE), facing a loss of around Rs 10 million every month, has embarked upon, what the sources call, an austerity plan. In a move to curb losses at the bourse, the KSE management has terminated the services of at least three general managers as a part of its austerity plan under which the termination of some 83 non-management staffers of the KSE is also being considered.
According to sources, the country’s largest bourse is incurring sustained financial loss; a loss of over Rs 10 million on monthly basis. “The austerity plan is part of the management’s drive to cut on its additional expenses, in the course of the last three months, the KSE has had to face a loss of some Rs 30 million,” sources told Pakistan Today.
Sources disclosed that the KSE has started work on an austerity plan to restrict the cost of management at the stock market. They said heavy remunerations of the KSE personnel, particularly for the managerial staff, had proved to be a white elephant for the previously profitable KSE.
According to KSE’s Annual Report 2010, comprehensive earning of the stocks exchange for the year ended on June 30, 2010 has declined by 78 percent or Rs 239.451 million and that total comprehensive income of the KSE for the year under review decreased to Rs 67.329 million compared to Rs 306.78 million of the last year.
“Besides the unpopular Capital Gains Tax, the heavy remunerations especially that of the managers are the key attributing factors behind such a huge decrease in the earnings,” the market analysts had told Pakistan Today after release of the report on October 25.
The report shows that the aggregate amount paid by the KSE on account of ‘managerial remuneration’ during the year amounted to Rs 19.724 million against last year’s Rs 17.52 million, registering an increase of 12.57 percent or Rs 2.204 million.
Analysis of the amount indicates that the chief executive and the Board of Directors had, respectively, drawn Rs 30.769 million and Rs 1.763 million during the period under various heads such as managerial remuneration, annual performance payout, reimbursement of expenses and the fees.
Now, the sources said, the KSE management had terminated the services of three general managers (GM), identified as Jawwad Bashir, Leghari and Shafquat, and had merged their respective departments, human resource, internal audit and market control, into other departments.
They said the fresh layoffs would have an overall financial impact of Rs 30 million with the terminated GMs costing the bourse the same amount on account of salaries and other perks and privileges. “Each of the three managers was drawing over Rs 700,000 as monthly salary as well as other benefits and allowances,” the sources said.
They stated that formal termination letters would be issued to the concerned managers next week. The sources went on to say another plan being considered entails the removal at least 83 of the total 135 non-management staffers of the KSE, some stakeholders have rejected the proposal on the contention that this would render the poor staffers unemployed and without livelihood.
“The management calculated that the termination of 83 non-management staff would help the KSE save some Rs 120-140 million annually,” they added.
The sources said the previous KSE management had also made some critical mistakes through setting up a marketing department which was manned by “well-connected political people”.
The “useless” department was, however, later closed down as its annual cost had climbed to Rs 50 million. “The austerity plan would focus on cost-cutting and amalgamation of the administrative affairs,” the sources said. They said that the human resource department would be made part of the finance department while other departments would also be merged into the relevant ones.
