Mumbai, July 7: The National Stock Exchange (NSE) has given a detailed account of costs incurred by its members on V-Sats to dispel doubts that the exchange's charges are exorbitant when compared with that charged by other exchanges.

The move comes in the wake of a number of queries received by the bourse from its members to clarify the cost structure.

Responding to members' demands, NSE authorities have sent out a detailed note on July 5. The note informs its members that the initial amount of Rs 5 lakh collected from them against each V-Sat is primarily a deposit against the annual recoveries to be made from members and not the cost of the V-Sat.

"As prescribed by the Department of Telecommunications (DoT), the network has been installed and is being maintained and operated on a no profit basis. ``Every year, an independent chartered accountant firm is appointed for calculating and certifying V-Sat charges to be recovered for the year and on the basis of their certificate the charges are appropriated out of the V-Sat deposits placed by the members with the exchange", the note states."The V-Sat charges are essentially reimbursements which consist of reimbursements of revenue expenses and recovery of the entire capital costs (reduced to 95 per cent of the capital cost now) of a satellite-based telecom network constituting the hub and V-Sats over a preiod of 8 years," the note adds.

NSE has revealed that the amount so certified by the chartered accountants for the year ended March 31, 1997 as recoverable per V-Sat was Rs 1,33,884. The amount is recoverable with effect from the date of activation of the V-Sat proportionately rounded off to the nearest rupee instead of from the month of activation rounded off to the nearest thousand which was the earlier practice.

The break-up of Rs 1,33,884 amount is as follows: Rs 30,051 as payment to the government per V-Sat, Rs 35,152 - annual revenue expenses per V-Sat, Rs 6,743 - annual revenue expenses for the hub per V-Sat and Rs 61,938 as capital cost recovery per annum per V-Sat for V-Sats and Hub.

"To ensure that members are not overburdened in the intial years the recovery is spread over 1,750 V-Sats instead of only the number of V-Sats installed as on March 31, 1997. If more V-Sats are added then the annual recovery may further come down. ``Due to the inherent nature and necessity for constant upgradation and addition, the cost would have to be re-calculated before the close of every financial year and depending upon the expenditure involved, the recovery amount would vary," the note states.

"The exchange is setting up a disaster back-up facility at Pune which would act as a parallel system and take over from the moment a disaster strikes. The final cost of the disaster back-up would commence with effect from the date on which it becomes operational," it adds.

"As is the norm for all hi-tech items, the price of V-Sats has also come down drastically and the new procurements by NSE are at the reduced price. However, the actual recovery will continue to be made by averaging the cost across all members so as not to disadvantage older members over new ones who are acquiring V-Sats now," the note states.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.